Those who generate a high amount of revenue or who are an institutional investor usually will invest in private equity. This is because the returns on private equity are much higher than your typical investment return. Private equity is looked at as an alternative asset. With private equity, investors will raise funds or they will seek funds from other financial sources. This is done to ensure that the private equity companies gain equity ownership for smaller companies who are growing at a high rate. The reason some think that private equity is only for the wealthy is because a minimum investment usually starts at $250K. There is a greater risk with investing in private equity, so if you’re an investor with a low net worth, the you may not be able to involved in private equity investments.
Private equity investments have become popular over the years. Even those who may not be able to afford the $250K minimum investment can usually figure out other ways to obtain these funds. One option is through stocks that are traded publicly with private equity companies. This can be a useful option for those who do not have deep pockets to invest. Your typical investor though might not be aware of how to resolve the complex tax issues that come with obtaining funds through other outlets. If you’re a wealthy investor, then you could grab some shares from the private equity companies. Some mutual funds might be available via this method and going this route could mean that the minimum investment criteria won’t be as strict. There’s not many companies like this but there are a few and you might be able to find them with investments as low as $50K. Very difficult to locate these type of private equity companies.
Investors who do not have a high net worth only have a few private equity options to work with. Returns are also smaller compared to traditional private equity investments. Whichever type of investor you are, you want to make sure you are able to take a loss before making any type of investments. NMS Capital Advisors LLC. can assist you with your best options.