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Investing in cybersecurity stocks

What to know before investing in this young but rapidly growing industry that protects against cybercrimes.

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.

Name Product Price per trade Inactivity fee Asset class International
eToro
Finder AwardExclusive
eToro
$0
US$10 per month if there’s been no log-in for 12 months
ASX shares, Global shares, US shares, ETFs
Yes
Finder exclusive: Get 12 months of investment tracking app Delta PRO for free when you fund your eToro account (T&Cs apply).
CFD service. Capital at risk.
Join the world's biggest social trading network when you trade stocks, commodities and currencies from the one account.
CMC Invest
Finder Award
CMC Invest
$0
$0
ASX shares, Global shares, Options trading, US shares, ETFs
Yes
$0 brokerage on US, UK, Canadian and Japanese markets (FX spreads apply).
Trade over 45,000 shares and ETFs from Australia and 15 major global markets. Plus, buy Aussie shares or ETFs for $0 brokerage up to $1,000 (First buy order of each security, each day - excludes margin loan settled trades).
Moomoo Share Trading
US$0.99
$0
ASX shares, Global shares, US shares, ETFs
Yes
Finder exclusive: Get an additional 30 days on top of the regular brokerage-free period for new accounts. T&Cs apply.
Trade shares on the ASX, the US markets and buy ETFs with Moomoo. Plus join a community over 20 million investors.
Spaceship US Investing
US$0
$0
US shares, ETFs
Yes
Dive into US markets with $0 brokerage, starting with just a $10 investment.
Unlock US stocks and ETFs with minimal entry barriers, offering straightforward, low-cost options for new and seasoned investors.
Tiger Brokers
US$2
$0
ASX shares, Global shares, US shares, ETFs
Yes
Finder exclusive: 10 no-brokerage US or ASX market trades in the first 180 days + 7% p.a. on uninvested cash with first deposit of any amount, plus US$30 TSLA + US$30 NVDA shares with deposits up to AU$2000. T&Cs apply.
Trade Australian, US and Asian stocks with no minimum deposit on Tiger Broker’s feature-packed platform.
Webull
US$0.25
$0
ASX shares, Global shares, Options trading, US shares, ETFs
Yes
Sign up & deposit $200 to get $100 of rewards value, or deposit $1,000 to get $200 worth. Up to $5,450 value available. T&Cs apply.
Trade ASX and US stocks and US options, plus gain access to inbuilt news platforms and educational resources. You can also start trading for less with fractional shares.
Saxo Invested
US$1
$0
ASX shares, Global shares, Options trading, US shares, ETFs
Yes
Access 22,000+ stocks on 50+ exchanges worldwide
Low fees for Australian and global share trading, no inactivity fees, low currency conversion fee and optimised for mobile.
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Important: The standard brokerage fee displayed is the trade cost for new customers to purchase $1,000 of either Australian or US shares. Where a platform charges different fees for both US and Australian shares we show the lower of the two. Where both CHESS sponsored and custodian shares are offered, we display the cheapest option.

Bottom line

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.

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