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As mentioned in my previous posts, when investing for the long term, the most efficient instrument to use is low-cost index funds. They offer diversification and allow you to capture market growth. However, as you become more involved in investing, you may want to include some stocks in your portfolio, though at a lower percentage of your net worth compared to funds. This approach is beneficial in two ways: first, it satisfies your desire to take educated risks as your experience and knowledge grow (you will want to spice things up), and second, it demonstrates the difficulty of picking good stocks, so increasing your appreciation of the index fund strategy.

When picking stocks, you might be tempted to follow the hype and buy technology stocks. After all, why not? They have generated enormous savings over the years, and these companies are unlikely to go bankrupt anytime soon. People love and use their products in daily life and will continue to do so in the short term. Additionally, the AI and Robotics industries may change our lives sooner than we think, making it sensible to invest in them. This stock-picking approach is quite common.

In this post, I will explore a less common path and ask the question differently. What do you think are the biggest problems in the world? Which ones are more urgent to solve? Which industries and companies might provide solutions? These questions push you to think outside the box and adopt a more long-term perspective in finding answers.

To stimulate your thinking, I’ll share my thoughts. These are not recommendations, nor does it mean that I have invested in all these industries yet. They are just my ideas, which may or may not become profitable in the future (how I wish I had a crystal ball).

Climate Change

It is obvious, right? It is in the headlines, and we are experiencing it almost daily. It is arguably the biggest threat facing humanity at the moment. It causes global warming, extreme weather events, pollution, loss of biodiversity, and more. Due to the severe outcomes of climate change, many industries are striving to mitigate its impacts, if not eliminate them entirely. Renewable Energy companies are leading the transition to clean energy. Electric Vehicle (EV) companies are accelerating the adoption and development of EVs globally. Environmental Technology companies are focusing on innovative solutions to address sustainability challenges. Energy Storage companies are working to meet growing energy demands, especially considering the future consumption needs of power-hungry AI models.

Healthcare

When the coronavirus pandemic hit, many investors started buying pharmaceutical and biotechnology stocks, as the first to develop a medicine would see a significant profit jump. However, investing in pharma is a good idea not only for this reason but also for other issues. Antibiotic Resistance is a growing threat, making bacterial infections harder to treat, leading to higher medical costs and increased mortality. Related companies are developing strategies to improve infection prevention and create new antibiotics. Obesity is a major public health issue, affecting millions and being linked to numerous chronic diseases, including diabetes. Medical companies offer treatments such as weight-loss drugs. Gene Editing and Personalized Medicine research are also advancing rapidly to find unique solutions to serious diseases. Lack of access to quality healthcare is a critical issue, mainly impacting low- and middle-income families and countries. Telehealth companies are addressing this issue, making healthcare more accessible.

Poverty and Inequality

The gap between the rich and poor continues to widen, limiting opportunities and creating social unrest. While I think no industry or company can fully tackle inequality, Financial Inclusion companies are promising. They help people access banking services and facilitate easier money transfers (e.g., digital banking). Therefore, I focus more on poverty and consider how people can better cope and get more nutrition. Hunger and malnutrition primarily affect low-income countries, coupled with limited access to clean drinking water. Agriculture Technology companies focus on enhancing productivity and sustainability, aiming to increase harvests from the same amount of crops and lower prices. Water and Desalination technology companies are addressing global water scarcity and improving water management.

You may ask why I haven’t shared any company names. It’s because I want to encourage you to do your own research. To assist you in this journey, next week’s post will cover how to research funds and stocks online and which metrics to check.