Rinchi
TechInAfrica – Artificial Intelligence (AI) has currently become a trend among many worldwide organizations as it’s proven to bring profits and efficiency. With the great impact brought by AI, many individuals and investors are now turning their attention to this trend.
If you are interested in the industry, you should gather as much as information you can until you really understand what it is and how you can invest in it properly without having to suffer failing.
First of all, AI is growing rapidly and predicted to keep growing in the upcoming years. It’s even predicted to generate revenues of 54.4% of a compound annual growth rate (CAGR) in the next five year. The number is doubled higher than the growth rate of other growth tech sub-sectors. This means that AI has great potential for investors.
Now, the real question is: what you should do if you are planning on investing in Artificial Intelligence?
Here are what you should do if you are interested to invest in AI:
- Invest in exchange-traded funds for AI
The first thing to consider if you want to invest in AI, you can start with exchange-traded funds for AI. They can track an index, a commodity, and a basket of assets. ETFs own shares in companies that focus on AI. So, if you invest in the ETF, you will indirectly own these companies partially which can help you diversify your portfolio.
However, one thing you must remember is that if you invest in AI ETF, it means that you highly depend on this one industry. If someday AI industry goes down entirely, your investment value will also reduce. The risk can be avoided if you consider an ETF that invests in companies that running technology behind AI.
- Buy AI stock
Another good option if you are interested to invest in AI, you can consider buying stocks in related companies. By saying related companies mean that the companies with a long-term competitive advantage in AI with access to a large amount of proprietary data like Alphabet, Amazon, Google, Facebook, and Microsoft.
However, what you should know is that you should not invest in individual shares as it’s a risky approach. You would depend a lot on the performance of these companies. A better way to avoid this risk is by taking part in broad-based collective funds across the technology sectors. Collective funds minimize the risk as the investments spread among several different companies.
- Invest in individual companies
Instead of investing in specific companies, you should consider specific investment in companies that are part of a broader diversified strategy. This helps you to reduce the risk of getting burned.
It’s not difficult to find websites that offer options for stocks as there are many of them. The challenge would be deciding which companies you should invest in. It requires you to understand the company in terms of their value and potential before you can invest in. If you find the difficulty in knowing all these aspects, you can ask a professional for help.
