All this has caused the value of technology companies to increase, and this is expected to continue in the future, so perhaps now is a good time to learn about technology funds and consider investing in them.
While most companies have seen the market value of their shares fall in recent months, the value of companies related to the technology sector has continued to grow .
Amazon or Netflix, among others, have benefited from the “social distancing” tax, making their products now more in demand and therefore more interesting for investors. It seems that this is going to continue like this for a while , so we can conclude that investing in technology funds is a good idea.
Key factors for selecting technology stocks
- Look for funds with attractive multiples adjusted for growth.
- Choose companies with a successful business model or that have the capacity for innovation.
- When working in a constantly changing sector, it is better to opt for companies with a competitive advantage situation that gives them a certain exclusivity in the market or that are in sectors with many entry barriers.
- You have to choose companies that are already in a positive flow and have no losses.
- Always choose large companies , as they are better resistant to crises and can cope with their competition more easily.
Practical example of investment in technology companies
When implementing an investment in technology-related companies, a special characteristic of these organizations must be taken into account. While with other companies the failure of a product does not influence the price too much, with technology companies the opposite occurs.
If a technology company launches a new product on the market and it fails , the markets will punish it harshly and its shares will drop significantly .
This does not mean that you should not invest in the stock market in relatively recent companies or with very innovative products, but that when it comes to putting your money in technology funds you should also diversify it , putting a part in newer companies and another in companies that already have time on the market.
Future profitability of the technology sector
Although the market can become volatile, experts believe that the value of technology companies will continue to grow this year and will also grow at a good pace of 7% in the coming years .
With a sustainable growth rate, it is clear that investing in technology funds today can be a very smart decision. However, if you are not an expert in the market, it is best that you let yourself be advised by specialists to help you select the funds that will allow you to get the most out of your investment.