Equity Investing Information

Stocks - Mutual Funds - Private Equity - Real Estate

Private Equity Investing

Private equity refers to the ownership of companies not listed on a public stock exchange. The rights of a private equity investor are roughly similar to those of a public shareholder, in that they are entitled to a share of the company's profits.

The difference, however, is that private equity shares are much harder to sell, due to the lack of a public stock exchange. This makes private equity a much longer term investment, which generally involves a high level of risk, but can also yield unusually high returns. This is especially true of venture capital deals, involving small but innovative "start-up" companies without a proven track record.

Direct investment in private equity isn't an option for the vast majority of investors, due to extremely high minimums, and the exclusive nature of the world of high finance.

It is possible to invest in these opportunities through private mutual funds, where a number of investors pool their resources together to take advantage of large-scale investment opportunities. Even these funds, however, are quite risky and usually have minimums that are upwards of $100,000, making them inaccessible to smaller and risk-averse investors.