Infrastructure Funds: Paving the Way to Your Retirement

Infrastructure funds are those concentrating investments in capital goods, construction and development. On the whole, infrastructure companies are heavily involved in investing in companies with government contracts. This is particularly true in light of federal stimulus programs in the late 2000s. Many fund managers believe government dollars will continue to pour into infrastructure development as it did following the Great Depression. Since infrastructure funds performed extremely well in the closing years of the decade, the buzz word expanded to cover much broader investment opportunities.

What Qualifies as Infrastructure?

Technically, infrastructure developments are defined by their ability to add equity to a company and assets to an economy. The capital devoted to infrastructure is transferred into long-term gains rather than short-term profit. Infrastructure funds can invest in cement companies, telecommunications networks, green technology efforts and many other capital-building projects. Some funds have a much narrower interpretation of infrastructure than others. You can select the fund that shares an interpretation similar to your own. 

How Is this Socially Responsible Investing?

The term "socially responsible investing" is another buzzword that became popular in the 2000s. The term literally means consciously investing in only those companies you feel contribute productively to society. These can be green technology companies, health-care organizations or education groups. The term is the opposite of investing in "sin" funds, which focus on the segments of society such as alcohol, gambling and firearms that tend to be seen as more destructive than productive. Socially responsible investing has taken on a wide range of meanings, however, because it is subject to the individual's definition of social responsibility. In most cases, however, investing in infrastructure, particularly in government-contracted companies, is considered an act of social responsibility because many will benefit from the contributions.

Is It Wise to Invest Retirement Savings in Infrastructure Funds?

Infrastructure companies often have heavy front-end costs. As a result, it is rare for them to post significant profits in the short term. Paying off investors and covering these starting expenses can take years. However, in the long run, the projects are all equity-building. Therefore, they provide a consistent, generous stream of income if completed on time. The goal with any infrastructure company is to continue to earn contracts and profits off an initial investment in the long term. This slow, steady earnings model is considered a great way to invest retirement savings. Of course, the success of these investments still relies on the success of the company.

Where Can I Find an Infrastructure Fund?

If you would like to invest in an infrastructure fund, there is no shortage to choose from. Investors already using a third party adviser can simply ask to direct funds toward an infrastructure investment. You may also consider purchasing shares in an infrastructure exchange-traded fund (ETF). Often, this is a more accessible initial investment since the minimum investment is lower for an ETF than for most mutual funds. If you would like to independently locate a private infrastructure fund, check out fund information in a market journal such as the "Wall Street Journal."

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