Investing in individual stocks can be overwhelming. With thousands of publicly traded companies to choose from, it’s not always easy to determine which ones will perform well and which ones won’t. This is where industry investing comes in. Rather than focusing on individual stocks, industry investing involves investing in a particular sector or industry as a whole. By doing so, you can benefit from the overall growth of the industry rather than relying on the success of individual companies.
Industry investing can also help diversify your investment portfolio, reduce your risk, and potentially increase your returns. However, it’s important to understand that investing in a particular industry can also come with challenges. For example, some industries can be highly cyclical, meaning they are subject to economic downturns.
In this blog post, we will take a closer look at industry investing and explore the top industries to invest in for 2021 and beyond. We have selected industries based on growth potential, upcoming trends, and other factors that could make them a solid investment choice.
Technology Industry: Trends to Watch Out For
The technology industry has been a top-performing sector for years, and it continues to show promise for 2021 and beyond. With the acceleration of digital transformation due to the pandemic, the technology industry has become more essential than ever.
One trend to watch out for in the technology industry is the adoption of artificial intelligence (AI) and machine learning (ML). According to IDC, worldwide spending on AI could reach $110 billion by 2024. Major tech companies like Amazon, Google, and Microsoft are investing heavily in AI and ML, and this trend is likely to continue.
Another trend in the technology industry to watch out for is cybersecurity. With the increasing number of cyber threats, companies are investing in robust cybersecurity measures. According to Cybersecurity Ventures, global spending on cybersecurity is expected to exceed $1 trillion from 2017 to 2021.
Healthcare Industry: Growth Opportunities and Challenges
The healthcare industry is one of the largest and most critical industries in the world. Healthcare spending continues to rise globally, and the industry is expected to grow at a healthy rate in the coming years.
One growth opportunity in the healthcare industry is telemedicine. Telemedicine has become more popular due to the pandemic, and it is expected to continue to grow. According to Grand View Research, the global telemedicine market could reach $155 billion by 2027.
However, the healthcare industry also faces challenges, such as rising healthcare costs and regulatory uncertainty. Additionally, the pandemic has disrupted the industry, causing delays in clinical trials and elective surgeries. Despite these challenges, the healthcare industry remains an essential and promising sector for investors.
In the next sections, we will explore other industries worth considering for investment, and discover what makes them attractive options for investors in 2021 and beyond.
Energy Industry: Shifting to Renewable Sources
The energy industry is undergoing a major transformation as a result of the shift toward renewable energy. Renewable energy sources such as wind and solar power are becoming increasingly cost-competitive, and many countries are setting ambitious targets for transitioning to a low-carbon economy.
One trend to watch out for in the energy industry is offshore wind power. According to the International Renewable Energy Agency (IREA), offshore wind has the potential to generate more than 5000 GW of power, more than 18 times the global electricity demand. Major companies such as BP and Shell are investing in offshore wind projects, and this trend is expected to continue.
However, the shift to renewable energy sources can also present challenges for traditional energy companies. The transition requires significant investments and changes to the existing infrastructure, and there may be a need for regulatory and policy changes to support the transition.
Consumer Goods Industry: E-commerce and Sustainability
The consumer goods industry is a vast and diverse industry that includes everything from food and beverages to clothing and electronics. Two key trends in the consumer goods industry worth watching are the rise of e-commerce and sustainability.
E-commerce has been growing rapidly for several years, and the pandemic has accelerated this trend as more people have shifted to online shopping. According to eMarketer, e-commerce sales are expected to reach $5 trillion by 2022. This presents opportunities for consumer goods companies to expand their online presence and optimize their e-commerce strategies.
Sustainability is another trend that is increasingly important in the consumer goods industry. Consumers are becoming more environmentally conscious and are looking for sustainable and eco-friendly products. To meet this demand, companies are adopting sustainable practices such as using renewable energy, reducing waste, and using recycled materials.
Financial Industry: Recovery from the Pandemic
The financial industry has been significantly impacted by the pandemic, with many companies reporting lower revenues and profits. However, the industry is expected to recover as the economy recovers and interest rates rise.
One trend to watch out for in the financial industry is the growth of digital banking and fintech. The pandemic has accelerated the shift toward digital banking, and this trend is likely to continue. According to a survey by the World Bank, between 2014 and 2017, the number of adults with a bank account increased by 515 million, and most of this growth was due to digital banking.
Another trend in the financial industry to watch out for is the rise of sustainable finance. Sustainable finance involves investing in companies that are aligning with environmental, social, and governance (ESG) goals. This trend is expected to continue as more investors become environmentally and socially conscious.
Real Estate Industry: Adaptation to Changing Needs
Real estate is a diverse and essential industry that includes residential, commercial, and industrial properties. The pandemic has impacted the real estate industry in several ways, with many companies experiencing lower demand and revenues. However, the industry is adapting to changing market needs and presents opportunities for investors.
One trend to watch out for in the real estate industry is the shift towards remote work and the impact on commercial real estate. Many companies are now embracing remote work, which has led to a decrease in demand for office space. However, the demand for other types of spaces, such as warehouses and data centers, has increased due to high e-commerce demand.
Another trend in the real estate industry to watch out for is sustainable and smart buildings. Green buildings are becoming increasingly popular as consumers become more environmentally conscious, and regulations are put in place to promote sustainable practices. Smart buildings that use technology to optimize energy consumption and reduce waste are also gaining in popularity.
Conclusion: Diversifying Your Portfolio with Industry Investing
Investing in the stock market requires careful consideration and strategy. While investing in individual stocks can be lucrative, it can also be risky. Industry investing offers a way to diversify your portfolio, reduce your risk, and potentially increase your returns.
The top industries to invest in for 2021 and beyond include technology, healthcare, energy, consumer goods, finance, and real estate. These industries offer growth potential, upcoming trends, and other factors that make them appealing investment options.
When considering industry investing, it’s essential to do your research and understand the risks and challenges involved. Investing in any industry requires a long-term strategy, and it’s important to have a diversified portfolio.
In summary, industry investing offers a way to benefit from the long-term growth of an industry rather than relying on the success of individual companies. By investing in a diverse range of industries, you can maximize the potential return on your investment while reducing your risk.