Stocks to Watch: Cyber Security

Information is one of our most valuable assets: social security numbers, credit card numbers, birth dates, street addresses – you can’t just lock this data in a metal safe. From the incident at Sony Pictures to the recent cyber breach of the federal government, cyber attacks have become commonplace. Governments, companies and individuals are all at risk of being victims of cybercrime. And these attacks aren’t slowing down. According to an article by pwc.com, “survey respondents in 2014 report that the number of detected (information security) incidents soared to a total of 42.8 million, a 48% leap over 2013.” This caused the total financial loss from cyber security compromises to increase by 34% throughout 2014. 2015 isn’t expected to be much better, with more and more devices connecting to the internet each year.

Silver Linings

While this may leave you (and your personal data) shaking in your boots, it’s also increased the need for cyber security services. In the next four years, the worldwide cyber security market is estimated to grow to over $155.74 billion, over double what is was in 2014. This would mean a compound interest annual growth rate of 10.3%.

While the threat of malicious cyber attacks is on the rise, it’s this same danger that creates such an interesting opportunity for investors. Simply put, there has never been a better time to invest in cyber security companies. Motif Investing, an online broker, lets you invest in portfolios that are centered on a theme (or motif). You can invest in a wide range of portfolios, such as Biotech Breakthroughs, Home Improvement or the Online Gaming World. These portfolios help you gauge the previous success of companies to invest in. Their Cybersecurity Motif has made substantial leaps, gaining 35.4% in the last year alone.

These gains are incredibly impressive, especially considering the slower incline of S&P 500 (shown in green). On average, stock market prices are expected to grow by 6-7% each year, so an annual growth rate of 10.3% could mean the difference of thousands of dollars (depending on how much you’re investing).

The larger cyber security compromises from the past year have had a significant role in the increase in the cyber security market. Take a look at the same graph that’s been overlaid with major cyber attacks.

As the amount of cyber attacks continues to rise, so will the need for cyber security. What’s more, this will provide the opportunity for you to play a part in protecting data from these malicious attacks. Take part in this fight while simultaneously receiving aggressive growth from your investments through cyber security stocks.