Investing in cybersecurity stocks
What to know before investing in this young but rapidly growing industry that protects against cybercrimes.
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Data breaches and hacks can impact the sensitive information of businesses, organizations and individual people. Cybersecurity helps prevent these cyberattacks, and the demand for cybersecurity is expected to soar in the coming years. In light of this trend, Australian investors are increasingly looking to invest in cybersecurity stocks — here's how you can get started.
What are cybersecurity stocks?
Cybersecurity stocks include companies that offer cybersecurity consultation for businesses and organizations. It also covers cyber recovery solutions if you’ve been a victim of a cyberattack.
Cybersecurity is the art of defending networks, systems and data from digital attacks. These cyberattacks attempt to access information without authorization. They are designed to steal or destroy data, extort money or for other criminal use.
Why invest in cybersecurity stocks?
Cybercrime costs global economies about $US 600 billion every year, according to the Center for Strategic and International Studies. That’s an increase from the estimated worldwide losses of $US 445 billion in 2014 and isn’t predicted to decline.
The rise of cyberattacks has prompted public and private organizations to look for solutions to protect themselves from these dangerous and costly breaches. The global cybersecurity market is predicted to grow from $US 149 billion to $US 208 billion by 2023, according to a Cybersecurity Global Market Report.
With the growth of cybercrime, firms and governments will turn to cybersecurity companies for help. And since more than half the world is now online and the demand for cybersecurity is more pressing than ever, it might be a good time to invest in cybersecurity stocks.
Risks of investing in cybersecurity
Cybersecurity is a newer industry that got its start with antivirus software and firewalls in the late 80s. Unfortunately, many cybersecurity stocks are based on private companies that are fairly new. And since tech moves fast in the cyber world, smaller, newer companies may struggle to keep up or incur a lot of debt.
Australian investors may also have trouble gauging winners in the cybersecurity space because the industry is based on hindsight. For example, it is only after a cyber attack that you can definitively evaluate companies and how effective they were in preventing the attack.
The cybersecurity sphere can be volatile as investors and companies are finding their footing.
Investing in the cybersecurity industry
Cybersecurity stocks cover companies that bolster cyber defenses through various services, including hardware and cloud-based software.
On the other hand, exchange-traded funds (ETFs) allow you to invest in a spectrum of cybersecurity stocks.
- Betashares Global Cybersecurity ETF (HACK)
Compare trading platforms
Take a look at a few trading platforms in Australia to invest in this fast-evolving industry.
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
Important: Share trading can be financially risky and the value of your investment can go down as well as up. Standard brokerage is the cost to purchase $1,000 or less of equities without any qualifications or special eligibility. Where both CHESS sponsored and custodian shares are offered, we display the cheapest option.
There are risks associated with investing in cybersecurity stocks. But since the demand for these services isn’t going anywhere, cybersecurity might be a profitable long-term investment.
You’ll need a brokerage account to get started — compare a few trading platforms to invest in data protection.
Frequently asked questions
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