No matter the strength of the economy, all investments carry some amount of risk. You can help secure your investments by distributing your money across entire industries rather than into individual companies. Go a step further by contributing to companies that are safely expected to grow over the long term.
Food is essential to life; thus, the food industry has consistently been one of the safest industries for investment. Several experts predict it to remain that way into the future. Shobhit Seth, a financial writer, recommends in an article for Entrepreneur.com to invest in “businesses associated with food like grains, cereals, beverages, and associated functions like food processing and food packaging.” Seth also points out that uncertainty and investment risk is greatly minimized in the food industry, because most countries have regulations and measures overseeing the purchase, production and supply of food items.
Around 10,000 baby boomers — Americans born between 1946 and 1964 — are retiring every day, and authorities expect the number of people over the age of 65 to double over the course of the next few decades. “While this has huge implications for financial services…a more immediate impact is being felt in a different sector: health care,” says personal finance writer Sarah Max, in a January 2018 article for Time’s Money Magazine. As a result, spending on prescription drugs in the U.S. is expected to climb at more than twice the annual pace of inflation. “Though health care has been among the better-performing sectors of the market in recent years, the full impact of this demographic tailwind is still underappreciated,” Max says.
Fast-moving consumer goods (FMCG)
Fast-moving consumer goods are essential products that consumers use on a daily basis, such as soaps, batteries, paper products, dental hygiene products and cosmetics. “Consumers put less thought into purchasing these…which makes FMCG a safe investment sector,” Seth says. “Profit margins are low for such products due to fierce competition in the sector. However, volume is high which makes up for the low profit margins.” Since FMCG companies also tend to pay regular dividends, investing in this sector can also increase your potential for regular income.
Millennials are finally entering their household-formation years, and they will drive the number of new households being formed to an all-time high. “The coming of age of millennials bodes well for the overall economy, but it’s a particular boon for real estate, which has been gradually healing since the mortgage meltdown and financial crisis. An obvious way to tap into this shift is to bet on homebuilders,” Max says. Industry authorities forecast the creation of between 1.3 and 1.35 million new households annually over the next five years, which represents a 30 percent increase over the average.
For the same reasons as the food industry, the water sector is extremely safe — even more so than food, because food depends on water to grow. This sector includes the transport, treatment and packaging of water, and is both stable and expected to grow over the next few years. “Some pundits even predict that the next major wars will be fought over water,” Seth writes. “Requirements for potable water and for industrial consumption is expected to increase and businesses operating in water treatment, transport, and packaging are expected to benefit.”
Diversifying your investments across several safe industries can go a long way toward growing your wealth, especially if you start early. To get a better idea of how and where to start, consult an expert at your financial institution.