If you want to retire with a million, you’ll need to invest your money the best way to grow your funds at the fastest rate. But where should you invest?
There are thousands of companies out there, but it’s improbable that most of them will still be around when you retire.
However, some companies are built for the long term and today, I’m looking at just one of these businesses that I think could help you retire with a million.
Built for the long term
HICL Infrastructure Company Ltd (LSE: HICL) describes itself as a long-term investor in public infrastructure. Its current portfolio includes projects such as roads, hospitals and utility businesses.
There are two main reasons why I think these assets deserve a place in your retirement portfolio. First of all, they’re set up to deliver reliable, long term cash flows. And secondly, cash flows tend to rise with inflation, which means your wealth will be protected over the next few decades.
Indeed, since 2013, HICL’s dividends have risen by an average of 2.4% per annum and investors buying the stock today can look forward to a 4.9% dividend yield. Meanwhile, shares in this infrastructure investment giant are currently trading at just above book value.
Slow and steady
This is a slow and steady income play. It’s unlikely this company will ever feature on the leaderboards of the best-performing stocks.
However, when it comes to investing for retirement, long-term stability is more important than short-term capital gains, and as long as you stick with HICL and don’t overtrade, my figures suggest that you can make a million with this investment trust.
According to my research, HICL has produced a total return for investors of 9.4% per annum over the past decade, that’s including both income and capital growth. In comparison, the FTSE 100 has produced an average annual total return of between 7% and 8% over the same timeframe.
At this rate of return, if you’d invested £1,000 in HICL 10 years ago, today that investment would be worth £2,500. To put it another way, investors in HICL have more than doubled their money since the beginning of 2009.
Buy and hold
Due to the nature of the assets HICL owns, I think the group can continue to churn out a high single-digit annual return for investors for the foreseeable future. If the company can continue to produce an annual return 9.4% for investors for the next four decades, according to my calculations, an investment of £200 a month in the business would grow to be worth more than £1m by 2059.
So HICL might not appear to be the market’s most exciting investment, but, as my figures above show, the investment trust’s slow and steady returns from its long-term infrastructure assets could indeed help you retire a millionaire.
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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.