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Dec 17, 2021

Explaining the 11 Sectors of the Economy

By Stash Team

The economy can be broken down into industries, such as real estate and consumer staples.

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The economy is made up of 11 sectors.

These sectors are broad classifications of business activity that can include multiple industries. Each sector of the economy has its function. The consumer staples sector, for example, produces everyday products people need no matter the economic cycle, such as food and toothpaste. In contrast,  the consumer discretionary sector includes products that aren’t technically necessary, but that people may use when the economy is flush with cash, for example travel and hotel stays, as well as new cars or bicycles. The real estate sector facilitates the construction and sale of the homes and buildings where people work and live. 

As an investor, it’s important to know about the sectors of the economy, because they can help you diversify your portfolio. Diversification means using your money to invest in many different types of holdings that are not all subject to the same market risks. One way you can diversify is by investing in different sectors of the economy, which might not all react to market changes in the same way, which can protect you from volatility.

Here’s Stash’s guide to the sectors of the economy*:

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Stash Team

*Note: Technology consists of both the communications services sector and the information technology (IT) sector.
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