Investing in stocks is a great way to grow your wealth over the long term. Not all stocks are created equal, however. Some sectors or industries have a greater potential for high returns than others.
If you are looking for stocks that have the potential to deliver 20%+ annualised returns, then there are particular sectors that could deliver just that, according to Peter Garnry, head of equity strategy at Saxo Markets.
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Which sectors can deliver 20%+ returns?
Peter Garnry has identified the sectors he expects to deliver an annualised return of 20%+. These sectors, as he explains, have equities that bet on the future, innovation and productivity growth, and, as a result, have a lot of long-term potential.
So which sectors is he talking about? Here’s the full list:
- Carbon capture
- Semiconductors
- Sports fashion
- Fuel cells
- Gene editing
- E-commerce in Asia
- Cloud computing
- Energy-efficient pressurizer pumps
- Social media
- Copper mines
- Cure for hearing loss
- Shipping
- Plant-based plastic
- Electronic trading platforms
- 3D printing
- Gaming
- Enterprise software applications
- Robotics
- Fertility
While these sectors offer much promise, they also present a degree of risk. That’s why they only make up 30% of Garnry’s overall portfolio.
The remainder of Garnry’s portfolio is a diversified basket of less risky assets. More specifically, it contains assets with returns that are designed to match the general market average return of about 6.5%.
That brings the long-term return expectation of Garnry’s entire portfolio to about 10.6%, which is quite a good return by most investing experts’ standards.
Though investors can undoubtedly learn a lot from Garnry’s strategy, he doesn’t want them copying him blindly. His advice is for investors to analyse their own circumstances and split their portfolios using proportions that matches their personal risk tolerance.
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What else do investors need to know?
Though there are sectors that offer much promise and potential, keep in mind that investing is inherently risky. There are no guarantees of positive returns. Your investments can go up and down and there is always a risk that you could end up with less than you put in.
That is why you should always do your own research and stick to an investment strategy that matches your goals, preferences and risk tolerance.
Although past performance does not necessarily predict future results, history has consistently shown that investors are far more likely to earn the best returns over long periods of time. Those investors who stay the course more often than not tend to be handsomely rewarded.
While investing in some of the sectors recommended by Garnry, you may want to consider using a stocks and shares ISA. If you are not familiar with a stocks and shares ISA, it basically provides a tax-efficient way to invest your money. When you invest through this ISA, you don’t pay income tax or capital gains tax on the interest or returns that your money makes.
If you are interested in knowing more, check out our comparison of some of the top-rated providers of stocks and shares ISAs in the UK.
Meanwhile, if you are completely new to the world of investing, our investing guide has all the information you need to get started.
Please note that tax treatment depends on your individual circumstances and may be subject to change in the future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.
