If you feel that the insurance sector is set to outperform the rest of the stock market, there are a number of ways to profit from your prediction. While concentrating all of your investments in a single sector can be quite risky, placing a small bet on the growth prospects of the insurance sector can be a wise move.
Instructions
1. Contact the insurance company you do business with and ask for their investor relations department. Ask if the company is publicly traded, and if so, what its ticker symbol is. Also request a copy of the most recent annual report for the firm. Also request information from other insurance companies doing business in your area. While there is no guarantee that the insurance company that gives you great rates will also be a good investment, this strategy gives you a starting point and allows you to review the financial health of several different companies.
2. Review the financial information contained in each annual report carefully. Look at how much profit the company made on its normal operations, and how much its earnings grew compared with a year ago. Determine whether or not you want to make a bet on the future of the insurance company by purchasing its stock.
3. Contact several low cost mutual fund companies and ask for prospectuses on their insurance company sector funds. Many mutual fund companies provide these sector funds to investors who wish to concentrate their money in one segment of the market.
4. Review each prospectus carefully to determine how each fund has done in both the short term and the long term. Compare the performance of each sector mutual fund with the performance of the insurance sector as a whole. This information will be included in the fund's prospectus.
You can also choose to invest in exchange traded funds, or ETFs, which track the performance of the insurance market. Contact your broker or mutual fund company for further information on these insurance ETFs and access them. An ETF has one important advantage over a mutual fund--it can be purchased and sold in real time throughout the trading day, unlike a mutual fund, which is priced at the end of each trading day.
5. Complete the application for the insurance sector mutual fund that works best for you, then submit it, along with your initial investment, to the address listed on the form. You might want to set up an automatic investment into the insurance company fund as well. This allows you to accumulate more shares when insurance companies fall out of favor, helping you profit even more when the market turns back up. You can also choose to invest in ETFs and mutual funds through your brokerage account. Choosing a low-cost online broker allows you to keep your costs low, which gives you more money to invest.
