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3 Types of Internet of Things Investors -- Which One Are You?

Source: Cisco.

There are plenty of ways for personal investors to tap into the Internet of Things (IoT). Investors have their choice of chipmakers, hardware makers, platform companies, and software companies. But what if you're looking to base your investment decision not on whether a company makes microcontrollers or analytics software, but rather on the level of risk you're willing to accept?

I understand the dilemma. The Internet of Things offers us some very promising prospects , and yet there are plenty of reasons for investors to be a bit bearish as well.

Whether you're all-in with the Internet of Things, are looking to take a balanced approach, or are very cautious about the IoT's potential, here are three different angles you can take to invest in this growing tech trend.

Pure play all the way

For investors who are looking for exposure to the Internet of Things and little else, take a look at Sierra Wireless . The company makes wireless embedded modules for machine-to-machine devices (M2M), wireless gateways, and software to manage Internet of Things connections. ABI Research says Sierra is the top M2M company by revenue for three years running.

You can find the company's technology in everything from Tesla 's high-end electric cars, to smart city lights in London, to Nespresso's coffee makers. Sierra makes about 85% of its revenue from its OEM Solutions business, which includes wireless modules that connect devices and things to a carrier's cellular networks.

In 2014, GE made just $1.4 billion from its Industrial Internet software, but the CEO Jeffrey Immelt says that should rise to $5 billion by 2017. For a company whose revenue was $148.6 billion in 2014, that's not a lot of IoT revenue, but the company is committed to the Internet of Things, and it may be one of the best bets for investors who want in on IoT without being over exposed to it.

GE's Predix software analyzes industrial equipment. Source: GE.

In 2014, GE made just $1.4 billion from its Industrial Internet software, but the CEO Jeffrey Immelt says that should rise to $5 billion by 2017. For a company whose revenue was $148.6 billion in 2014, that's not a lot of IoT revenue, but the company is committed to the Internet of Things, and it may be one of the best bets for investors who want in on IoT without being over exposed to it.

Which investor are you?

I tried to pick three different companies here, each with a different level of exposure to the Internet of Things, but obviously there are plenty more. Of course, at the end of the day the best IoT stock for you is going to be one that fits into your own personal risk level and has great long term potential.

One great aspect about the Internet of Things is that it touches on so many industries and has the potential to generate nearly $19 trillion in cost savings and revenue over the next decade, according to Cisco . No matter what type of investor you are, that's a hard proposition to pass up.

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The article 3 Types of Internet of Things Investors -- Which One Are You? originally appeared on Fool.com.

Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends Apple, Cisco Systems, Sierra Wireless, and Tesla Motors. The Motley Fool owns shares of Apple, General Electric Company, Qualcomm, Skyworks Solutions, and Tesla Motors. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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