Difference between Infrastructure Investment and Mutual Fund Investment
by Mark Long Article WriterAt this time there are many
investment experts who have come to the conclusion that infrastructure is a
very profitable area for investment.
This theory applies not only in America and other developed countries,
but in the presently still developing countries too.
Here's a brief example for you. The number of individuals who own a car in
China is expected to rise substantially as the country moves closer toward
industrialization and wages increase.
Naturally, automobile manufacturers are delighted by this news, but for
many private individuals and institutions, the real investment opportunity is
presented by the infrastructure that comes with this incredible wave of mobilization
to the delight of every infrastructure
investment company. Railways,
streets, power stations and waste disposal are absolutely necessary to maintain
the economic momentum in developing countries.
Below are listed some of the differences between infrastructure
investment and mutual fund investment to
help you decide which way you should go:
Developing
and Developed World
In both America and Europe, the
older infrastructure is becoming rundown, and in some instances downright
dilapidated, necessitating repair and replacement. This leads to billions of dollars being spent
on upgrading and maintaining this infrastructure. What this boils down to is that both the developed
and the developing countries will be finding it necessary to extend or revamp
their infrastructures. This will end up
costing vast sums of money.
Since it's virtually impossible for
the public sector to finance this alone, it must have investors -- and a whole
lot of them too. What makes this type of
investing so attractive to investors is that the earnings are relatively
independent of short-term stock market trends and are also calculable. Infrastructure
investment companies are getting ready for a run on their services.
Mutual
Fund Investment
Put simply, a mutual fund is
basically a collection of stocks and/or bonds.
It's like a company that brings together a group of people and invests
their money in stocks, bonds, and other securities. That's mutual
fund investment. Each investor owns
shares, which represent a portion of the holdings of the fund.
There are three ways in which you
can make money from a mutual fund:
1. Income
is earned from dividends on stocks and interest on bonds. A fund pays out nearly all of the income it
receives over the year to fund owners in what is called a distribution.
2. If
the fund sells securities that a have seen a rise in price, the fund has a
capital gain. Most funds also pass on
these gains to investors in a distribution.
3. If
fund holdings increase in price but are not sold by the fund manager, the
fund's shares increase in price you can then sell your mutual fund shares for a
profit.
Advantages
of Mutual Funds
Professional Management -- The main
advantage of funds is the professional management of your money. Investors buy these funds because they do not
have the time or the expertise to manage their own portfolios.
Diversification -- By owning shares
in a mutual fund instead of owning individual stocks or bonds, your risk is
spread out. The whole concept of
diversification is to invest in a large number of assets so that a loss in any
particular investment is minimized by gains in others.
Biography: Jake
Hyet is considered an expert on investment and the stock market. He has written many articles on mutual fund
investment, and infrastructure investment companies.
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Created on Dec 31st 1969 18:00. Viewed 0 times.