Infrastructure investment

Every modern society needs safe, reliable, up-to-date infrastructure, and Australia is no exception. But in order to build and maintain this infrastructure – from transport links to digital communications – a large amount of investment and support is needed.

Is there risk in investing in infrastructure?

All investments contain some level of risk balanced out by their potential for growth and returns. Infrastructure is a broad and diverse sector so different types of infrastructure carry different levels of risk. Uniquely, some infrastructure projects enjoy a certain level of guarantee, either through government or industry contracts, lack of competition or their sheer importance. While most major infrastructure is incredibly expensive to build, its planning gives some extra confidence to investors.

For this reason, significant assets such as toll roads, utility networks and ports tend to be lower risk as there is little competition and high demand, although their returns may be slower or lower. Property assets on the other hand tend to carry higher risk but potential returns can also be greater.

The benefits of infrastructure investment

As well as creating valuable and useful assets for Australia, investing in infrastructure has other less obvious benefits. Biggest among these are the vast numbers of people employed in bringing these projects to life – from planners, engineers, accountants, administration staff and design, communications, HR and legal teams, to the people on the ground actually building the project.

Of course, all these people in turn spend their incomes in their communities, further stimulating the local economies. And that’s all before most projects even start being used… employing even more people.

New infrastructure also makes it easier to conduct business and grow the economy. More freight can be moved quickly, communication is more efficient, travel is faster, utilities are cheaper and more reliable, medical services can be expanded, business operations become more cost-effective, and communities and individuals can enjoy a higher standard of living.

From a personal financial perspective though, investing in infrastructure can often be a very sound, long-term holding to include in any diversified investment portfolio – whether it is your own or through your super.

If you’re new to investing, or not familiar with the infrastructure sector, then it’s always wise to seek assistance from a professional financial advisor.