From vintage wine to fine art, investment opportunities have never been so varied – or as potentially profitable.
Of course, recommendations are never guaranteed to be successful. But some markets objectively offer a better chance of producing a profitable investment than others.
Again, there are no guarantees, and things can change at the drop of a hat.
However, there are certain seasoned performers that are worth exploring if you’re in it for the long game.
Long-term investments
Exploring these sectors is particularly important if you’re looking to make long-term investments. There are many ways to invest in your future. Property is often regarded as a long-term investment because you're buying something that's going to be around for decades.
Another option is an Individual Savings Account (ISA). Although these accounts have annual limits, the way to maximise ISA investments is to hold them for a decent amount of time.
However, while property and ISAs are great, the financial product that's most suited to long-term investments is a self-invested pension plan. Buying shares via a SIPP Pension is a long-term proposition because you can only start withdrawing money when you’re 55. But, before you can start withdrawing, there are benefits to investing via a SIPP.
Investments are sheltered from capital gains tax i.e. you won't pay capital gains on the profits you make. Additionally, you get tax relief. In simple terms, the government adds the money you would theoretically pay in tax to your contribution. For example, if your tax rate is 20% and you invest £100, the government will give you 20% tax relief i.e. pay an extra £20 into your SIPP.
These things mean that you can make investments in a tax efficient way with a SIPP. Therefore, you need to make savvy long-term investments because you can only fully realise these benefits of a SIPP when you’re 55. So, with that being the case, it’s worth exploring the sectors that tend to produce solid opportunities. The following industries have been identified by Aswath Damodaran, a professor of corporate finance and valuation at the Stern School of Business at New York University, as ones that have a proven track record.
Entertainment Software
This category primarily includes video games. However, as technology evolves and new products come to market, particularly virtual reality (VR), it has the power to expand. But, even if we focus on video games as an entertainment software product, the market is rife with opportunities.
For example, Take-Two Interactive, which owns games developer Rockstar, has seen its share price increase from $118 to over $151 in the last five years.
That may not sound like a meteoric rise, but it’s a steady increase over a sustained period of time. When you combine this with the fact the entertainment software industry made a net revenue of $3.4 billion, a growth of 9% from the previous year it’s an area worth exploring.
Pharmaceuticals
The need for drug research and treatment will never wane. As such, pharmaceutical companies are always a potentially positive long-term bet. You might not ever turn a small investment into a hefty return over a short period of time, but steady growth is certainly possible.
Indeed, in 2021, the pharmaceutical industry (i.e. all the major companies) achieved a gross profit of £471 billion.
Semiconductors
One industry that many new investors may not even be aware of is semiconductors. Vital for the production of cars, semiconductors could be one of the best-overlooked investment opportunities right now.
Why? Because the world is becoming increasingly digital which, in turn, means we need more electronic devices that rely on semiconductors.
Add to this the growing influence of electric cars and demand will almost certainly increase over the next few decades.
In fact, we reached a point in 2021 where car production almost ground to a halt because of a semiconductor shortage.
Therefore, companies dealing in these components, such as Intel and Taiwan Semiconductor Manufacturing Co, could also be profitable long-term investments.
