One of the best ways to set your portfolio up for long-term success is to evaluate the megatrends that will become the next big thing in investing. While you can’t time the market, there are some longer-term growth runways it makes sense to get on board. There are several ways to benefit from megatrends, from investing in the companies benefiting directly from them to choosing funds covering a whole basket of securities that touch a particular trend.
Over the past decade, technological innovation has been a driving force behind the stock market. From e-commerce to social media, technology has been one of the biggest growth drivers for years. That’s likely to continue in the year ahead as technological developments continue to reshape the way we do business. We could see some economic volatility in the years ahead, so businesses are likely to be working to do more with less. Technology will be key in doing just that, so it’s a sector of the market worth keeping an eye on.
Climate change is also likely to remain a hot topic and could be a driving force behind the next big thing in investing. It’s an issue that continues to be widely debated. But regardless of which side you’re on, it’s undeniably an investing megatrend worth watching. A stunning 97% of the world’s executives said their businesses have been touched by climate change, so it’s only natural to assume there will be action in the years ahead.
Finally, it’s worth considering how the global demographics will change moving forward for some insight into potential investing trends. The population is getting older and sicker, a trend that will influence the types of goods and services gaining popularity in the years ahead. From healthcare to a huge wealth transfer, there’s plenty to unpack regarding how the global population changes over the long term.
Next Big Thing in Investing: Artificial Intelligence
The tech space is always worth watching when it comes to seeking out the next big thing in investing. Right now it seems that artificial intelligence (AI) is driving that bus and will be for the foreseeable future. AI has the potential to change how we do everything — from the way we shop to how businesses are run. In fact, it seems the impact of AI will touch every industry.
For investors looking to jump on board this trend, there is plenty to think about. The obvious choices are the companies responsible for the technology itself. From smaller, pure-plays to large, diversified mega-caps, there’s a wide range of stocks to choose from in the AI realm. Zooming out a step further, you can look down the supply chain for inspiration. Components makers like semiconductor stocks are another good way to make the AI trend work for you. Finally, investors may want to consider looking to the companies that already started to integrate AI into their business. These companies could have a competitive advantage moving forward as first-movers reap the rewards of tying AI into their model.
The Aging Population
Investors looking for the next big thing in investing understand how the world around will change over the next decade. One of the largest shifts will be the demographics of our population. In six years, one in six people will be over 60. By 2050, the number of people over 80 will have tripled from where it was in 2020. That will come with massive societal shifts, which, from an investment point of view, offers some enticing growth potential.
The goods and services that will be in demand with a much larger slice of the population now in the later years will change significantly. Healthcare will be a priority for this group, and in the lead-up to their retirement, this group is also likely to take advantage of preventative care. That means companies offering things like vitamins and pain relief will be in a good position. Companies preparing to deal with the unique accessibility challenges that older generations face will also benefit.
Decarbonization
Climate change is increasingly important to the world’s leaders, making it another good pick as the next big thing in investing. Most companies acknowledge that their business will feel the impact of climate change and are on board with working to prevent rapid temperature increases. More importantly, many politicians are keen to protect against climate change. That will lead to increased regulation for activities considered harmful and a greater level of support for those who help reverse the course.
There are plenty of ways to play this trend. Renewables are probably the most commonly known in the energy sector, but hydrogen and nuclear will see impressive growth as the world shifts away from fossil fuels. Sustainable building is also a key trend, with concrete being one of the most harmful substances to create. Companies working to clean up building materials like concrete will see demand skyrocket if they’re able to create a viable alternative.
On the date of publication, Marie Brodbeck did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
