People invest for a number of reasons. Some want to put their money to good use, instead of simply spending it or having it sit in a low-interest bank account. Others want to preserve their capital with the aim of having a comfortable income over time.
However, if you look at some of the history of investing, and your goal is to incur substantial growth with your investments, then perhaps another approach should be considered. Specifically, private investing offers the type of substantial return that one won’t necessarily find with more conventional forms of public investing, such as your typical stocks, bonds, etc.
A custom-made approach
So, why is private investing a potentially more lucrative option for investors willing to take some manageable risks with their capital? The simple answer is that, although private investing takes more time and research, the information gained from such efforts allows the private investor to know his or her investment opportunities better and, as a result, focus on those opportunities that are seen as being more rewarding long-term.
To use a real-world example, private equity is similar to making a custom-built high-end product, versus something that is bought off the assembly line. Think about it for a moment. If you want, let’s say, the best racing car in the world, would you buy one of thousands made in a factory, or one custom-built in a custom shop by a custom designer presiding over a custom-picked staff and personnel?
The answers seems pretty easy, doesn’t it. If you want the best, you get the best custom solution, even if it initially costs a little more, and you have to wait for it a bit longer. In the end, you’ll get rewarded with quality, and get your money’s worth, too.
Well, the same holds true with the potential of private investing, versus traditional public equity. With private investing, you, or experts working on your behalf, take the time to learn what the best private investments are, which generally aren’t available to the public, and experience the rewards of such custom-made investment strategies. It only makes sense, doesn’t it?
A history of success
And, if you look who historically has benefited most in terms of investing history, private investors, using a strategy of private investing, have fared rather well. Warren Buffett has made a fortune investing in private companies. As have other forward-looking investors who took the time to seek higher-yield investment opportunities, versus some of the cookie-cutter options available to everyone on the stock market.
In addition, private investing can also add something else to an investor’s portfolio: diversification. For example, even though Warren Buffett certainly made much of his fortune in private companies, he’s also been a disciple of investing in the stock market. Of course, what such a diversified approach and portfolio provide an investor is protection from performance failure in once class of investments versus the other.
Therefore, when considering your options as an investor willing to take on some risk to achieve capital growth, private investing is something that has a track record of success, while at the same time providing that always sought-after diversity that is a component of many cherished investment portfolios.
ASCEND GRP is an asset-management firm, with offices in Toronto, Richmond Hill, and New York, that services clients seeking investment opportunities worldwide.