You don’t have to be a Wall Street pro to know that technology companies are huge right now. Corporations like Facebook ($FB), Amazon ($AMZN), Netflix ($NFLX), and Google ($GOOG), or the “FANG” stocks, are the most popular and fastest-growing stocks on the market. Each of these companies are up by at least 27% since the beginning of 2017, outpacing the S&P 500 market average by a decent amount. This means that if you invested, say, $1,000 in Google at the start of the year, your investment would now be worth $270 more.
Yet investing in tech companies can get pretty pricey. Facebook’s stock, the cheapest of the four, goes for $153.63 per share as of this writing. Amazon, the most expensive of the “FANG” stocks, is currently worth $1011 per share. Buying a single share would let you invest in the company, but it won’t help you increase your potential earnings, as these stocks are already highly valued.
So, what are you to do if you want to invest in a fast-growing tech stock? Why, invest in all of them, of course!
The Technology Select Sector lets you invest in every major tech stock for one low share price.
This exchange-traded fund, trading under $XLK, invests in technology companies listed on the S&P 500 index. These companies range from IT brands, semiconductor makers, wireless companies, and overall some of the largest tech companies on the planet. By buying a single share of $XLK at its current price of $57.24, you will own percentages of Apple ($AAPL), Microsoft ($MSFT), Facebook, Google, Amazon, and dozens of other tech giants.
$XLK lets you spread out your investments in case one company tanks.
Amazon, Google, and the gang might be making crazy money right now, but that won’t always be the case. As has happened before, more than one of these tech giants will go through a bit of a rough patch due to competition, increased cost of doing business, and possibly even poor business decisions. If you only owned stock in one of these companies, your portfolio’s value would decrease as this company’s value decreases. By buying a fund like $XLK, your loss would be minimal, thanks to spreading the investment out across multiple companies.
Remember: diversifying your portfolio is important, and exchange-traded funds like XLK let you do that from the get-go.
Should you invest in $XLK?
The $XLK fund is up 18.35% since the start of the year. This is better than the market average. It’s not as impressive as investing in Google directly, but paying $57 per share sure beats paying close to $1000 — especially when you invest in 70-plus companies.
If you want to invest in the tech sector but don’t want to break the bank, you should consider $XLK over individual stocks due to its lower risk and lower price. It’s also a particularly promising idea if you want to invest in more than one company. Just make sure you do your research before you invest. If the tech business isn’t for you, you could always consider other options.