4 Basic Tips for Investing in Cybersecurity Stocks

If you’re looking for the best investing tips, here’s one you can take to the bank: cybersecurity stocks.

Why is investing in cybersecurity such a good idea right now? Consider this — in 2020 alone, the FBI received reports over of 790,000 cyber scams. Altogether, these scams cost individuals and companies over $4.1 billion.

The world of cybersecurity will continue to grow in response to these threats, making cybersecurity stocks one of your safest investments for the future. If you’re new to the world of cybersecurity investments, though, you may wonder how to get started.

Here’s our “investing for beginners” 101 crash course. 

1. Educate Yourself

If you’re just beginning your stock market investing journey, start by studying how the system works. For example, does it make more sense to invest in larger, established companies? Or could you get in early and make a killing with a promising startup?

Next, consider using an exchange-traded fund such as ETFMG Prime Cybersecurity ETF or First Trust NASDAQ Cybersecurity ETF> Each of these platforms offers passive exposure to the cybersecurity industry for a small annual fee. Another option is to partner with a company like Option3Ventures to ensure you get off on the right foot.

2. Long-Term vs Short-Term Investments

How much time do you have to let your investment grow? Are you looking for a quick ROI, or can you afford to wait for years while your investment grows with a new company?

Sometimes you get lucky and you’re in the right place at the right time. For example, if you’d invested $1,000 in Nextflix stock in 2009, it’d be worth over $60,000 today.

Getting in early on a promising startup sounds like a terrific investment, and it can be — if you’re willing and able to wait it out. Of course, there’s also no guarantee the company will take off. Before you invest in any company (large or small), consider our next point.

3. The Company’s Momentum

Savvy investors look for companies that are doing more than just adding new customers. This is certainly important, but they also need to be building relationships with their existing clientele.

If the company is growing at a slower pace than the current average (around 12% annually), is there a good reason for the slower pace? If not, it’s best to pass and consider a company with more upward momentum. Look for a company whose revenue growth is clearly outpacing its operating expenses.

4. Innovation & Research

Just because a cybersecurity company has a great idea doesn’t mean there’s a huge market for it. Rivals vying for customers is a good sign that the company is on the right track.

At the same time, every cybersecurity company needs to keep pace with the fast-changing times. Are they investing in research and development to ensure their products stay relevant? Are they succeeding, or are they falling behind their competitors?

Ready to Start Investing in Cybersecurity Stocks?

Cybersecurity investments are a solid choice for your hard-earned funds, but you need to understand where, when, and how to go about it. Use the investing tips listed above to choose the best companies to invest in!

While you’re browsing for cybersecurity companies, take a look at our other articles as well. We have great advice on business, finance, tech, and much more.