Investing in tech can help you take steps towards your financial independence.
From bitcoin and non-fungible tokens (NFTs), to more traditional financial products like stocks and shares, investing into the right technology company today can help you take steps towards your financial independence.
Why invest in tech?
Tech investments have a long history of making investors lots of money.
From early investors into companies like Amazon, where an initial investment of $1000 in 1997 would today be worth over $2 million, to the earliest fans of bitcoin, whose profits could well be in the tens of thousands; when it comes to tech, even a modest investment can quickly turn into a profit.
In 2021, the UK tech sector saw its highest ever level of investment, with over £29.4 billion being invested into tech companies. As a result, the UK’s technology sector one of the most attractive in Europe.
But although technology is a clearly popular sector to invest in, this doesn’t mean every investment is a guaranteed success. So what is the best way to invest in technology and is it the right option for you?
Why is technology so popular?
In an incredibly short period of time, technology has changed the world we live in. From challenger and start-up banks to keeping in touch with friends and family across the world, technology is changing everyone’s lives.
At the same time, both the companies and the producers of technology themselves have become extremely profitable.
From initial public offerings (IPOs) of sometimes only a few US dollars, companies like Amazon, Facebook and Apple have enjoyed meteoric rises in value, making their investors thousands or millions.
Moreover, many hardware and software companies that produce the all-important chips that make much technology work have also boomed in value. If you had invested $10,000 in Intel in 1971, you would today have profits of just under $28.2 million.
Whether you’re looking to invest in companies whose products are internet-based, or ones that produce the hardware that makes tech work, this industry is famous for taking small investments and turning them into multi-million-pound profits.
What are the best up-and-coming tech investments?
It’s no secret that young people aren’t connecting with traditional investment routes. From buying bonds to trading on the stock market, young people – rightly or wrongly – no longer feel that this way of investing appeals to them.
However, when it comes to assets like NFTs and cryptocurrency, it’s a different story.
Thanks to innovations in blockchain technology – which is a digitally secure way of recording transactions – younger investors have taken to these two digital asset classes with plenty of interest. But are they safe and profitable investments?
There’s no simple answer. While some early investors in Bitcoin have managed to make thousands, many others have spent a lot of money and lost their investments. As with any investment, nobody knows whether the value is going to go up or down, but cryptocurrencies are certainly one of the most volatile investments around.
If you are thinking about investing in cryptocurrencies, make sure you’re taking on the right financial advice and only investing amounts that you can afford to lose.
The same can be said with NFTs – unique digital artworks that are bought and sold securely with cryptocurrencies. While some people have managed to create, sell and buy digital artworks in a secure and fair way, it is extremely easy to save, download and replicate other people’s artworks.
In practice, this means that if you were looking to sell an NFT, it’s possible that somebody could buy it from you for a fair price. But it’s equally likely someone could download or save your artwork without paying.
As always, make sure you’re taking on the right financial advice in order to keep yourself safe when investing.
How can you invest in technology?
There are a number of different ways to invest in the technology industry:
- Stocks and shares: If you think you’ve spotted the next, up-and-coming technology giant, you could choose to invest in it by buying stocks or shares. If your investment goes well and the company performs well, you could earn a share of the future profits. If it goes badly, you risk losing money.
- Mutual funds: Investing in a mutual fund means pooling your money with other investors and letting a fund manage which stocks, shares and securities your money is invested into. These funds are often managed by industry experts.
- Exchange traded fund (ETF): These funds are similar to mutual funds, however instead of just investing in stocks, shares and securities, ETFs invest in all types of asset classes. They can be bought and sold throughout the day on the stock market and often invest their pool of money in a particular sector.
- Crowdfund: Becoming an investor in small tech start-up doesn’t have to be just stocks and shares – crowdfunding has become increasingly popular with tech companies looking to jumpstart their businesses. If you help fund a new company that turns out to be successful, you could also earn some generous profits.
Investing into tech companies is big business. While there’s never any guarantee your investment will turn a profit further down the line, invest in the right company today and you’ll be taking big steps towards your financial independence.
To make sure you’re investing safely though, speak to a financial adviser who can help you achieve your money goals through investing.