Tech stocks represent partial ownership in companies that produce, distribute, manufacture, and research new technology. The sector is vast and ever-changing with plenty of exciting opportunities for growth. Some examples of tech companies include:
Computers and software
The internet-of-things (IoT)
Why invest in tech stocks?
The tech sector isn’t as stable as, say, banking. But that’s not always a bad thing. Tech companies, from startups to big corporations, often promise significant growth. And with new technologies moving as fast as they have in the last few decades, that growth could be exponentially large.
Tech stocks can also help you diversify your investment portfolio. Investing in tech companies exposes you to a different sector in the market, helping you capitalize on gains, as well as minimize overall losses when market downturns affect other sectors. One example of diversification in action: tech stocks performed fairly well during the recent pandemic-induced recession, whereas other sectors, such as banking and energy, took a hit.
Finally, with the sheer amount of great Canadian tech companies, you have plenty of choices between value and growth. If you lean more on the conservative side, you can find great value tech stocks. Those who want more risk, on the other hand, can wet their palette with an abundance of growth-focused tech companies.