Difference between Infrastructure Investment and Mutual Fund Investment

by Mark Long Article Writer

At 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.

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