{"id":113254,"date":"2025-02-27T11:57:41","date_gmt":"2025-02-27T11:57:41","guid":{"rendered":"https:\/\/peraltafinancing.com\/business\/investing\/how-to-invest-in-technology-stocks-and-diversify-your-portfolio\/"},"modified":"2025-02-27T11:57:41","modified_gmt":"2025-02-27T11:57:41","slug":"how-to-invest-in-technology-stocks-and-diversify-your-portfolio","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=113254","title":{"rendered":"How To Invest In Technology Stocks And Diversify Your Portfolio"},"content":{"rendered":"


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The coronavirus-induced stock market crash\u00a0has created unprecedented opportunities. Since equities fell off a cliff in mid March 2020, many sectors have fully recovered. In\u00a0 particular, the information technology sector has been on a tear. Should you invest in tech?<\/span><\/p>\n<\/div>\n

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YTD, the S&P 500 Information Technology Sector ($SRIT) is up +24.26%.\u00a0Since the rapid rise and recovery of this sector, talks of a tech bubble have been incessant. Tech valuations have been deemed too high and the recovery\u00a0too swift. According to many “experts”, this has created a perfect bubble ready to pop. So, is the technology sector a great place to park your money?\u00a0We present our perspective.<\/p>\n<\/div>\n

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S&P 500 Information Technology Sector Performance.<\/span><\/strong><\/p>\n

According to Money Morning<\/a>, the technology sector’s performance over the years been nothing short of extraordinary.<\/p>\n

YTD: +24.26%<\/p>\n

1-Year: +45.62%<\/p>\n

3-Year: +104.30%<\/p>\n

5-Year: +182.54%<\/p>\n

10-Year: +510.15%<\/p>\n

Information current as of 08\/05\/2020. The question remains: how reliable is tech?<\/p>\n<\/div>\n

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Tech is indestructible!<\/span><\/strong><\/p>\n

Technology controls our lives.\u00a0Technology\u00a0commends inordinate influence on both the S&P 500\u00a0(~25%)\u00a0and the Nasdaq composite index (~50%). This era’s technology sector is vastly different from\u00a0that of the 90’s and\u00a000’s. Tech companies nowadays are highly profitable. Last week, the large tech giants crushed their earnings expectations<\/a>. To be able to post such solid numbers and be so resilient in the face of\u00a0an ongoing pandemic is remarkable. The so-called experts and bubble-maniacs had been\u00a0expecting\u00a0lackluster numbers. They continue to be proven wrong time and time again. If\u00a0you had heeded their dire warnings of a tech bubble during the early signs of this\u00a0recovery, withdrawn\u00a0your money, and sat on the sidelines, you would have\u00a0missed out on\u00a0some serious gains. We believe investing in tech is a wise move.\u00a0<\/p>\n<\/div>\n

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How to play the tech game.<\/span><\/strong><\/span><\/p>\n

There are many ways to jump on the tech bandwagon. You can invest in individual technology stocks<\/a> or buy a\u00a0technology exchange-traded fund<\/a>\u00a0(ETF) or mutual fund<\/a>. With the technology sector being so vast and stock-picking\u00a0labor-intensive, we believe the best way to cash in on the explosive technology sector is through a low-cost technology ETF. A low-cost technology EFT gives you access to the\u00a0big technology giants (Apple, Facebook, Amazon, Google, Microsoft, Netflix) and other fast-growing smaller companies. There is no shortage of tech ETFs. We outline\u00a05 tech ETFs in the table below that are worthy of your cash: the\u00a0Technology Select Sector SPDR Fund (XLK), Fidelity MSCI Information Technology EFT (FTEC), Invesco QQQ ETF (QQQ), iShares Expanded Tech Sector EFT (IGM), and the Vanguard Information Technology ETF (VGT). Data is current as of the article publication date.\u00a0<\/p>\n<\/div>\n

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Ticker<\/strong><\/td>\nPrice ($)<\/strong><\/td>\nER\u00a0(%)<\/strong><\/td>\nYTD\u00a0(%)<\/strong><\/strong><\/td>\n1-YR\u00a0(%)<\/strong><\/strong><\/td>\n5-YR\u00a0(%)<\/strong><\/strong><\/td>\n10-YR\u00a0(%)<\/strong><\/strong><\/td>\n<\/tr>\n
XLK<\/a><\/td>\n113.86<\/td>\n0.05<\/td>\n24.21<\/td>\n50.31<\/td>\n167.84<\/td>\n409.67<\/td>\n<\/tr>\n
FTEC<\/a><\/td>\n90.00<\/td>\n0.08<\/td>\n24.17<\/td>\n49.03<\/td>\n175.63<\/td>\nN\/A<\/td>\n<\/tr>\n
QQQ<\/a><\/td>\n271.05<\/td>\n0.20<\/td>\n27.49<\/td>\n49.98<\/td>\n141.47<\/td>\n481.20<\/td>\n<\/tr>\n
IGM<\/a><\/td>\n304.92<\/td>\n0.46<\/td>\n25.92<\/td>\n45.85<\/td>\n181.92<\/td>\n475.10<\/td>\n<\/tr>\n
VGT<\/a><\/td>\n304.50<\/td>\n0.10<\/td>\n24.36<\/td>\n48.94<\/td>\n180.98<\/td>\n464.61<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n
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Tech is great, but don’t be stupid. Diversify!<\/span><\/strong><\/p>\n

The stock market is inherently volatile. The coronavirus pandemic is not making things any better. Your unrealized gains can be wiped out as swiftly as they are accumulated. Tech gains are no different.\u00a0There are many ways to protect your gains, including selling and taking profits, placing stop-loss or limit orders or diversification. For the long-term buy-and-hold investor, we recommend diversification. Diversification<\/a> is the simple process of putting your money in different asset classes<\/a> or sectors to minimize financial loss. You should\u00a0create a portfolio\u00a0that meets your investment objective,\u00a0risk tolerance and goals. Here’s how we\u00a0provide defense to our technology ETF gains:<\/p>\n