With so many fields to choose from, it’s a pretty mammoth task deciding where to put your money as an investor. While there’s no single industry or sector that’ll guarantee a positive result, there are several that are popular among long-term investors. Here are a few of them.

Why we’ve picked these industries

For this article, we’ve selected a mix of sectors and industries that have the potential to offer different benefits to different investors.

Some might be in emerging fields, making them appealing to investors looking for high growth. Others are your more traditional domains that, historically, tend to weather economic downturns reasonably well. Others still are a combination of both expansion and resilience – like tech.

We’ve categorised these by stock market sector given the immense diversity of industries that exists. But you’ll find a quick guide to some of the most popular industries (right now or historically) within each one.

Before we begin, it's important to note that past performance doesn't indicate future returns. Just because these industries have shown promise doesn't mean they'll continue to do so. That's why you should always assess your risk tolerance before you invest and talk to a financial adviser.

With that's said, let's dive in!

While there's no such thing as the best industries to invest in, these ones are popular in Australia

Tech

There’s no denying tech’s overwhelming dominance over the past few decades – and it’s a trend that doesn’t look to be slowing anytime soon. If anything, tech’s growth is accelerating.

There are numerous reasons tech is a compelling choice for investors, but a big one is its growth potential. Tech has the capacity for major development thanks to constantly evolving innovation, and its ability to change entire industries thanks to that innovation.

Take AI and robotics, for example, which are some of the fastest-growing industries. These emerging fields are infiltrating countless other industries, and are set to become even more prevalent in the future.

On the other hand, several tech sub-industries can also be somewhat resilient. The information technology companies that tend to withstand even the toughest economic climates are those that are necessary for everyday functioning. Think essential software services like cloud computing, cybersecurity, and communications tools.

Remember that tech is a diverse sector. Some of the more speculative industries also have the possibility for huge amounts of risk, given they’re often dealing with new technologies.

Prominent industries within the tech sector include:

• AI and machine learning
• Robotics
• Cloud computing
• Cybersecurity
• Communications software
• Consumer electronics
• E-commerce
• Internet of Things (IoT)
• 5G
• Networking hardware
• Electric and autonomous vehicles
• Tech crossovers – like fintech, medtech, biotech, proptech and so on

Healthcare

Depending on the sub-industry you invest in, healthcare also has the potential for both stability and growth.

Much like tech, healthcare plays a crucial role even in the most challenging of market conditions. This is because developed societies still needs pharmaceutical products, still depend on healthcare provider, and still rely on medical devices.

As such, healthcare giants like pharmaceutical companies, healthcare providers, health insurers, and medical device manufacturers are often considered fairly defensive investments. However, there are also more speculative ones within the healthcare sector. These exist where the intersection of tech and health is concerned – like medtech and telehealth.

Changing consumer trends impact healthcare, too, creating new companies that aim to capitalise on them. The ageing population is a good example, as more aged care providers and health services set up shop.

Something to note with investing in healthcare industries is that they’re typically highly regulated and at risk of litigation issues – like if a medication causes adverse effects. These can impact an investment’s value.

Popular industries in healthcare include:

• Pharmaceuticals
• Healthcare providers
• Health insurance companies
• Medical device manufacturers
• Biotech and medtech
• Telehealth
• Aged care
  

Consumer goods

Many investors gravitate towards consumer goods because it’s an incredibly defensive sector. After all, when does the need for food, drinks, and other day-to-day products ever really go away?

The consumer goods category also encompasses necessities such as toiletries and cleaning products, all of which consumers generally continue purchasing during economic downturns.

One thing to note with defensive industries is that they don’t usually have the same capacity for growth as more progressive industries like tech. (Unless we’re talking about pandemic-era toilet paper sales.)

This can absolutely be a good thing if you want to build stability into your portfolio, but something worth considering if you’re looking for high returns.

Industries in the sector that are in demand among investors include:

• Food and beverage
• Personal care and hygiene products
• Household products
• Cars
• Consumer electronics
• Pet products and services

Finance

Finance is a staple of investing – especially in Australia. Banks, credit card providers, and insurance companies have been around for eons and continue to dominate the top indexes around the world. And in Australia, what would the ASX 200 be without the likes of CommBank, NAB and ANZ?

One major drawcard for finance industry shares is that they often pay decent dividends. This makes them particularly lucrative for long-term investors focused on building a passive income source .

Plus, there are newer (and sometimes riskier) advancements in finance that are gaining traction as the fintech industry grows: digital payment providers, peer-to-peer lending platforms and, obviously, crypto .

But there are risks with financial investments, too. Finance companies are often subject to massive amounts of regulation, which can impact their profitability. They’re also at the mercy of economic downturns, interest rate drops and black swan events – like the GFC and the pandemic. And newer advancements like crypto can be highly volatile.

Popular finance fields include:

• Banking
• Insurance
• Consumer finance (credit cards and loans)
• Fintech
• Digital payments
• Crypto

Sustainability

The sustainability sector is gaining traction as challenges like climate change impact the planet.

It’s an attractive field for several reasons. Firstly, it has the potential for big innovations, which can potentially drive significant growth. There’s also increasing consumer demand for things like renewables and electric vehicles (EVs), along with regulatory support from governments the world over.

Given the global shift towards sustainability, the sector may continue to be a popular (and possibly lucrative) industry. On the flip side, some parts of it can be pretty volatile – like experimental renewable energy sources. And because the industry is still relatively new, there is the chance that some innovations could fail.

The sustainability sector includes:

• Green technology
• Renewable energy
• EVs
• Waste and recycling
• Sustainable consumer goods

Utilities

Utilities are another essential, making them a favoured defensive asset. Services like water, electricity and gas never go out of need, even in a troubled economy.

Off the back of those services, you’ve got big energy and water management companies – all of which have long been popular with investors for their dependability. They also benefit from regulatory support, meaning revenue is almost a given. For investors, this could result in stable earnings and solid dividends .

Despite their appeal among investors, utilities aren’t without their risks. Firstly, they’re heavily regulated, and regulation changes can impact their profitability. They’re also impacted by severe weather events, fluctuating interest rates, and operational issues (because they’re so reliant on infrastructure).

Utilities are also facing big changes thanks to the influx of renewable energy providers, which are disrupting the market.

Leading industries in the utilities sector include:

• Energy providers
• Solar and battery storage
• Water management
• Renewable energy

Telecommunications

Telecommunications is a broad sector that can offer both stability and growth.

Mobile and internet providers are two examples of historically popular investments. They’re both non-negotiables because they underpin practically many aspects of modern society. As far as investing goes, this can make the industry a fairly stable bet against economic downturns.

In terms of growth, several companies are focused on boosting connectivity in underserved areas or are developing some pretty neat innovations in wireless technology.

However, those disruptors are why many traditional telecommunications companies are possibly at risk of falling behind. It pays to do your research to find out which companies are continually innovating to keep up. In Australia, there have also been a few highly publicised stories of challenger telecoms companies failing – which is a risk companies in any industry can face.

Telecommunications providers are also highly regulated. Some aren’t quite as good at weathering economic downturns as others, too – think non-essential services like gaming, as well as expensive smart phones.

Telecommunications industries worth considering include:

• Internet service providers
• Mobile phone providers
• 5G technology
• Communications services in emerging markets
• Cybersecurity for telecommunications
• Satellite communications
• Cloud communications
• Telecom equipment and infrastructure

The truth? Like we said, there really is no “best” industry to invest in

Ultimately, every sector – and the sub-industries within it – has its pros and cons. They're all at the mercy of influences that can make them lucrative or lacklustre investments at any given time.

What really makes something a worthy investment is whether it suits your financial goals , risk tolerance , and current financial situation. Because what one investor considers the “best” industry to invest in simply might not work for you.

Use this guide as food for thought on the different industries and trends you could look out for, not advice on what to invest in. And chat to a licensed financial adviser if you’re ever stuck.

Happy investing!