Investing / Which sectors to invest in?
Oct 08, 2021
Which sectors to invest in?
With all that is going on, which sectors do you think have good promise and return potential more than 1 year from now? I'm thinking to invest in a couple sectors to see how they perform. Thanks.
Replies (2)
Oct 09, 2021
Lots to consider here. It is usually true that if inflation rises, interest rates will as well (but not always). Rising rates and QE will work to reduce inflation and a likely scenario. In inflationary environments, financial services, materials and energy tend to do better than other sectors. In a rising interest rate environment the cost of borrowing rises and that will hit sectors like RE, utilities and industrials. Growth companies and stocks would also be hampered.
Oct 09, 2021
Financial sector. Banks earn a big portion of their revenue from loans and mortgages. When rates are low, there's more borrowing at low rates to fund businesses, investments and capital projects. They thrive! In the situation of tapering and rising rates, higher rates means more businesses and people will pay more for loans but they'll be incentivized to save their $$ for higher interest rates. The sector is also less volatile, viewed as a value play and remember they also pay bigger dividends, so looks promising.