Innovation Equals Profit

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Idea Equals Money


Innovation Equals Profit

Daniel Cross Mar 04, 2016

A technological boom has been taking place for over half a century now, and it’s only picking up steam. What began with visionaries such as Steve Jobs and Bill Gates has now led to others like Elon Musk and Richard Branson. Leading-edge fields such as IoT (Internet of Things) and big data are reshaping not only how businesses will perform in the future but the day-to-day life of consumers as well.

How Technology Is Changing

The latest data show that the number of electric cars on the road actually doubled in 2014-2015 to more than 1 million. In fact, with the addition of 200,000 new electric vehicles in China, the number rises to 1.3 million globally. According to Bloomberg New Energy Finance, sales of electric vehicles will climb to 41 million by 2040, constituting around 35% of all light vehicle sales.

The Centre for Solar Energy and Hydrogen Research Baden-Württemberg (ZSW) showed that the U.S. is currently the global leader in this new technology with over 400,000 such vehicles on the road. Oddly enough, while known for myriad solar energy power plants, Germany is trailing the rest of the world in electric cars with only 55,250. Still, overall almost every developed country is investing more into sustainable living.

By the mid-2020s, the cost of electric vehicles is expected to be cheaper than gasoline- and diesel-powered vehicles, despite the fact that internal combustion engines are improving MPGs at a rate of 3.5% per year. Within a year and a half, the launch of long range electric vehicles, those that can travel 200 miles or more, are expected to hit the market.

Investing in Innovation

The most recognized name in electric vehicles right now is Elon Musk’s Tesla Motors (TSLA). But investors interested in innovation have other options in the form of mutual funds and ETFs.

The Berkshire Focus Fund (BFOCX) invests primarily in electronic technologies and counts companies like Tesla and Palo Alto Networks among its top 10 holdings. Another pick in the innovation area is the aptly named Guinness Atkinson Global Innovators Fund (IWIRX). This fund specifically targets companies that are expected to grow due to advancement in technology, communications, globalism or innovative management. It also has global reach, making it a diversified pick for investors seeking worldwide innovative companies.

The Bottom Line

Technological innovation leads to more advancements. Just take a look at how the cell phone has evolved in the past 15 years – it’s virtually unrecognizable from its 2001 counterpart. Global interconnectivity is a huge opportunity for investors and it’s opening doors to new technologies at an astonishing rate.

The development of new technology leads to increased cybersecurity measures and the need for more advanced microchips and supportable infrastructure. The field of technology is just getting more and more expansive. Musk and Branson may be on the forefront of untested technologies, but with ideas of commercial spaceflight and things like Musk’s hyperloop program, it may not be that farfetched to imagine publicly traded companies engaged in space technologies in the next decade or so.

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