The terms “private investing” and “public investing” might not have much meaning to the lay person, and can even cause some confusion among people that have invested in the past. Although the terms in and of themselves suggest how they differ, it’s important to specify what those differences are, and how they can make a difference to investors.
As the names suggest, in general, public investing is more open and transparent, and is done in large part in open forums, such as stock exchanges, while private investing is done, well, in private. But that doesn’t mean public investing doesn’t contain privacy, or that private investing isn’t done in public. It just means the rules surrounding both are different, and in some important ways.
Traditional versus alternative investing
Public investing usually comes with traditionally stricter reporting and compliance requirements. They often must come with a prospectus, a legally-required document containing all important details of an investment, regular reporting requirements, and other regulations.
Private investing, on the other hand, requires almost none of that, and the rules surrounding disclosure and reporting are much less rigorous. While traditionally, this approach was seen as riskier and perhaps less protective of investors, recent history has changed much of that thinking as the investment industry has shifted towards private investing.
In fact, according to the Wall Street Journal, in 2017, $2.4 trillion was raised via private investing in the United States, while only $2.1 trillion was raised via public investing. A few years ago, many investors would never have seen this trend coming. Now, private investing is an entrenched part of the global investment landscape.
The private-investing advantage
So, what does this really mean to investors? Well, it means, especially for institutional and accredited investors with large amounts of capital to invest, that the power of your investments are in your hands. Private investments often involve small groups of large investors with similar interests that can tailor their investments to their own needs.
It also means that such investors now have more places to go to in order to find experts in the field knowledgeable and experienced enough to find private investment opportunities generally not available on the public markets.
In essence, private investing should be a win-win situation for everyone involved, as long as you’re connected with the right people seeking the right opportunities to achieve higher-than-average investment objectives.
ASCEND GRP is an asset-management firm, with offices in Toronto, Richmond Hill, and New York, that services clients seeking investment opportunities worldwide.