You may have heard that technology thrives on the market since we’ve all been in a lockdown for most of the year due to the pandemic. Technology continued to develop in every field, not just on the internet, and it’s no wonder tech stocks are all the hype. We mean by these stocks are shares of companies working in the technology industry, like Apple or SpaceX. This article will focus on leading stocks you should focus on if you are interested in investing since tech stocks hit their all-time high this year. You can check VectorVest to know more about stock investment.
You can also invest in tech stocks using traditional ways, but they again go with trends and have apps, so there is not much difference. If you are not sure whether you should opt for tech stocks, you may consult investment research companies like Kailash Concepts that offer excellent investment advice.
What’s the catch?
Tech stocks may be riskier than others, but seeing how much they rose this year, you can only imagine how much it will change for the better in the upcoming years. For starters, top five technology companies on the S&P 500 list are Apple, Facebook, Amazon, Microsoft and Google (Alphabet). It is essential to mention these five best stocks made around 20% of the whole S&P 500 capitalization when this year started.Over the entire pandemic time, the tech sector has profited the most. That is why investors are more and more interested in different tech stocks, and they even look at what to expect further so they can be ready to invest. Looking at it now, it’s utterly logical technology thrived so much, since we have to stay connected with our family members thanks to apps and social media, buy food and things online and use what technology can offer more than ever.
Types of tech stocks
There are many sub-sectors in the technology department, but we will focus on the main ones here.
Softwares can include Microsoft, Adobe, Oracle and many apps, where adobe rose for almost 50% between 2020 and last year. Telecom, as the name implies, deals with everything from telephone networks to TV. Semiconductors include companies that make the semiconductors and other internal hardware used by various computing devices. These companies include Micron Technology, Qualcomm, etc. Tech Hardware contains companies that make computers, any smart device and digital hardware. You can easily guess this includes Apple, Sony, Samsung, etc.
FAANG
You will often hear this term if you decide to dive deeper into tech stocks since this is a group of tech stocks considered “elite” by experts. It includes Facebook, Amazon, Apple, Netflix and Google, but you can easily add Microsoft and Nvidia to that. These companies have very stable financial performances, and they are favourites among investors. They also have strong growth, including the stock price, and have the potential to grow even more.
How to invest in tech stocks
Option number one for any investor is buying individual tech stocks. This is a good option because you can do that through many investment platforms (Robinhood, Acorns, for example). You can also invest in tech stocks using traditional ways, but they again go with trends and have apps, so there is not much difference.
Option number two would be to invest in the tech stock of your choice using ETF (exchange-traded fund), or mutual fund. These funds invest in hundreds of various stocks, so they can give you a more significant variety of what the tech sector has to offer. They also can reduce the risk (because it’s much higher if you invest in only one company), and you need only minimum investment.
Cons of investing in tech stocks
Many experts consider tech stocks high-risk since shares are most commonly priced based on what they can earn in future. If the promise doesn’t come true – stocks can go down fast. It’s famous for its volatility, as well. This is mostly due to its highs and lows back in the nineties and 00s, but it’s not as dangerous to invest nowadays. The difference is that tech companies now have revenue, which wasn’t the case back in the day.
