Billionaire Concepts: Infrastructure

by Minority Fortune

bridgeThe recession has caused a majority of investments to deliver bleak returns. It has investors scrambling to find safe but better returns. The Globe and Mail reports on a little known tactic used by the wealthy: infrastructure investments. They’re now beginning to attract more and more average investors due to their average 7-12% returns.

Targeted Infrastructure Investments

The infrastructure sector has a range of projects that one can look into. The term generally indicates public structures, systems, and services. They can be divided into two different categories: economic and social. The Berkley Group on CEO Forums provides examples:

Economic infrastructure includes highways, water and sewerage facilities, and energy distribution and telecommunication networks whereas social infrastructure encompasses schools, universities, hospitals, public housing and prisons.

Advantages

Infrastructures are becoming more attractive to investors for a number of reasons. They are tied to the government, which makes them more stable. The infrastructure is a social system that is designed to have a long life. Due to the high costs to entry, it’s unlikely that the infrastructure will face any competition. To attract investors, the returns on these investments are competitively higher than equity investments.

Concerns

The major issue is that one has to have a significant amount of money to play with the big boys. Institutional investors and the super rich have been the major players in the market. With Warren Buffet investing an estimated $26 billion into the railroad system, infrastructure is gaining attention now from investors on Main Street. In the meantime, one can dig around for mutual funds that are tied to infrastructure investments.

*Image courtesy of Gary Yeowell.
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