Six technologies of the future to invest in TODAY to make your children rich, by money expert HOLLY MEAD

Forward-thinking young investors with an appetite for groundbreaking opportunities can potentially secure extraordinary returns by venturing into nascent technological sectors. Investing in cutting-edge technologies and innovations poised to revolutionize the future carries the promise of substantial rewards. However, this path is inherently laden with significant risks, as the success and eventual profitability of these ventures remain uncertain. Nevertheless, allocating a portion of children’s savings to these futuristic investment avenues might be surprisingly prudent. Younger investors, with their extended investment horizons spanning decades, possess ample time to navigate the inevitable market fluctuations.

In the UK, families can invest up to £9,000 annually per child through a Junior Individual Savings Account (ISA). These funds are locked until the child reaches 18 years old, providing a long-term investment vehicle. While cash savings are an option, they limit the potential for exponential growth that innovative investments can offer.

Hamish Maxwell of the Scottish Mortgage Investment Trust, a firm focused on identifying companies shaping future trends, notes, ‘Few companies can genuinely claim to be altering the trajectory of human progress, yet some are actively challenging established norms and pioneering entirely new industries from the ground up.’

‘This strategy inherently entails risk, and some ventures will falter. However, a long-term investment perspective is crucial. Our focus extends to envisioning the world in 2030 and beyond,’ Maxwell adds.

Investing in Future Mobility: Flying Taxis

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Joby Aviation recently announced a collaboration with Virgin Atlantic.

Electric vertical take-off and landing (eVTOL) aircraft, once confined to science fiction, are becoming a tangible reality. Joby Aviation is at the forefront, developing electric air taxis with the ambitious goal of saving commuters globally a billion hours daily.

Resembling a hybrid of a drone and a small airplane, these aircraft utilize six propellers for vertical lift and boast speeds up to 200 mph.

Powered by electricity, eliminating reliance on fossil fuels, each aircraft can accommodate a pilot and four passengers.

Dubai is slated to be the first city to launch public operations this year, with Joby Aviation projecting travel time between the airport and Palm Jumeirah island to shrink from 45 minutes by car to a mere 12 minutes. A recent partnership with Richard Branson’s Virgin Atlantic signals intentions to introduce the service to the UK, initially connecting passengers to Virgin hubs at Heathrow and Manchester airports.

‘We anticipate that initial hesitation will transition to excitement and strong demand as people experience the safety and cost-effectiveness of this mode of transport,’ Maxwell states. Joby Aviation debuted on the New York Stock Exchange in August 2021 with shares priced around $5; current trading value is approximately $6. Although not yet profitable, the company holds a substantial market capitalization of $4.75 billion (£3.6 billion).

‘Looking ahead ten years, an air taxi journey with Joby could become as commonplace as ordering an Uber today,’ Maxwell predicts.

Exploring Voice AI Investment Opportunities

Most individuals have interacted with voice assistants like Siri or Alexa, often encountering frustrating misunderstandings. However, the next generation of voice-based Artificial Intelligence (AI) promises seamless, almost human-like conversational capabilities, according to Storm Uru, co-manager of the Liontrust Global Innovation Fund, which has yielded a 57 percent return over the past five years. ‘We consider voice AI the next major advancement in the digital AI revolution,’ Uru explains.

‘While current chatbots like ChatGPT are text-based, voice-activated options are the logical progression, enabling natural communication with our devices, mirroring human dialogue,’ he adds. SoundHound AI is a key player in this sector, as highlighted by Uru. Their technology integrates with a range of devices, including vehicles, smartphones, and smart home systems.

‘Imagine driving and simply instructing your car to close the window, activate the air conditioning, place a Starbucks order, and then navigate to the closest store for pickup,’ Uru illustrates.

Automakers such as Hyundai, Mercedes-Benz, and Stellantis brands are already integrating SoundHound’s technology. Fast-food chains are also piloting it to manage orders at drive-throughs.

SoundHound’s shares, listed on Nasdaq in April 2022, have since increased by 25 percent to approximately $8.

Autonomous Vehicles: Investing in Driverless Technology

Envision summoning a taxi and being transported to your destination without a driver present. In select US cities, this is already a reality.

Waymo, an autonomous vehicle subsidiary of Alphabet (Google’s parent company), operates a ride-hailing service through a mobile app. Having launched a driverless taxi service in 2022, Waymo utilizes sophisticated sensors to navigate urban environments. Currently operational in Phoenix, Los Angeles, and San Francisco, users can order and utilize these autonomous taxis via the Waymo app.

‘I experienced it firsthand; initially unnerving, but acclimation is surprisingly swift,’ Uru recounts. ‘Safety concerns are common, but if anything, the system errs on the side of excessive caution – occasionally pausing at intersections more than a human driver might.’

Michael Seidenberg of Allianz Technology Trust cautions about business challenges: production costs remain high, and anecdotal reports suggest performance limitations in adverse weather like snow or dense fog.

‘Despite these hurdles, general sentiment towards Waymo is positive,’ Seidenberg notes. ‘Traditional ride-sharing apps like Uber might face disruption as autonomous services evolve.’

While Waymo’s potential IPO is speculated, no official timeline has been announced.

Tesla, already publicly traded on Nasdaq, intends to launch its own ‘Robotaxi’ service within the next year. This driverless electric vehicle, designed for two passengers, will lack a steering wheel or pedals.

Drone Delivery Investments: Revolutionizing Logistics

A decade prior, same-day delivery for groceries and a vast array of goods seemed improbable. However, rapid advancements by supermarkets and e-commerce giants like Amazon have transformed this concept into everyday convenience.

Maxwell suggests the next pivotal advancement in logistics involves removing human involvement entirely, with autonomous drones delivering directly to consumers’ doorsteps.

He highlights Zipline, a company originating in Africa, utilizing drones for medical supply delivery and now expanding into diverse sectors and geographies.

Zipline reports its electric drones have flown over 102 million miles, delivering more than 15 million items to date.

‘Their operations are swift, dependable, scalable, and environmentally conscious,’ Maxwell emphasizes. ‘This technology holds the potential to transform global supply chains and offer critical support to remote and underserved communities.’

Maxwell anticipates drone technology’s widespread adoption for household deliveries of essential goods. Recent developments support this, with Zipline partnering with US retailer Walmart to initiate home deliveries from a Texas store this month.

‘Drones now possess the navigational capabilities to traverse streets, skies, and sidewalks in ways previously unattainable,’ Uru observes. ‘They are already conducting deliveries in China, and during a US meeting last year, I witnessed them delivering pizzas across a corporate campus.’

Zipline, currently privately held, is a portfolio company within the Scottish Mortgage Trust.

The company’s valuation is estimated at $4.2 billion (£3.2 billion).

Investing in Robotics: The Rise of Robot Butlers

Many households already utilize robotic vacuum cleaners or lawnmowers. Robotics are also commonplace in manufacturing, automating repetitive tasks with efficiency and consistency.

Uru foresees broader applications for robots within domestic settings, potentially with humanoid designs, resembling human physical characteristics.

Unitree Robotics, a Chinese startup, has developed a robot capable of running at two miles per hour and performing intricate tasks, even opening a Coca-Cola bottle.

Figure AI, a US-based early-stage company, has created Helix, humanoid robots that can unpack grocery items, intelligently organizing storage.

‘While likely several years away and initially expensive, robot integration into homes is probable by the decade’s end,’ Uru predicts.

Exposure to robotics companies can be gained through low-cost tracker funds. The iShares Automation & Robotics Exchange-Traded Fund (ETF) tracks firms within the sector, including Intuitive Surgical, Rockwell Automation, and Nvidia, achieving a 70 percent return over five years.

For actively managed investment, the Pictet Robotics fund offers a focused portfolio in the sector, including Infineon Technologies (German semi-conductor manufacturer) and Baidu (Chinese AI firm). It has generated an 88 percent return over five years, with a 1.09 percent management fee.

Space Exploration Investments: Moving to Mars

SpaceX, Elon Musk’s private space company, generates substantial revenue through its Starlink internet service. However, its future aspirations are captivating younger generations, as SpaceX significantly reduces space launch costs and increases launch frequency.

Future capabilities include launching larger payloads, potentially enabling space travel for aspiring young adventurers.

‘While seemingly far-fetched, these advancements are crucial steps toward establishing Martian colonies,’Maxwell asserts.

SpaceX, the world’s most valuable private enterprise, boasts an estimated valuation of £275 billion, surpassing companies like Coca-Cola, McDonald’s, and Walt Disney.

Continued growth is anticipated due to its near-monopoly market position, strong government and corporate partnerships which provide pricing leverage, and relentless innovation hindering market entry.

As SpaceX remains privately held, investment access is primarily through funds holding SpaceX shares.

Scottish Mortgage, with a 45 percent return over five years, allocates approximately 3 percent of its £12 billion assets to SpaceX. For dedicated space sector investments, the Seraphim Space Investment Trust focuses on diverse space-related companies, although its share price is down 53 percent over three years.

Strategic Approaches to Investing in Transformative Technologies

Investing in companies shaping future industries carries inherent high risk. Failure is a possibility, potentially resulting in significant or total capital loss.

Even with successful ventures, investor enthusiasm can inflate share prices to unsustainable levels, followed by subsequent market corrections.

Consequently, fund investments, rather than individual stock selection, are generally considered a more prudent approach. Fund managers possess expertise to identify promising opportunities and may gain early insights.

The Polar Capital Technology Trust is recognized for providing exposure to tech trends, with top holdings including Cloudflare (cybersecurity), Broadcom (chipmaker), and Shopify (e-commerce), achieving a 69 percent return over five years.

Low-cost tracker funds also offer diversified exposure to specific thematic areas.

The L&G Artificial Intelligence ETF tracks 54 companies within the Robo Global Artificial Intelligence index, including Tempus AI (healthcare tech) and Samsara (safety software provider).

Whether choosing funds or individual stocks, investments in these futuristic themes should constitute a limited portion of an overall investment portfolio, even for young investors with long timeframes.