In this version of the alternative investments, I discuss investing in Private Equity. Earlier in this series, I discussed investing in Farmland and Rooftop Solar System as alternative investments. Alternative investments can provide lucrative returns that are unavailable by investing via stocks and bonds.
To start off, lets look at what private equity means. Private equity refers to equity capital that is not quoted on a public exchange. The company that you invest in is a private company. Unfortunately, it is hard to invest directly in private companies, unless you are an institutional investor or know the founders/executives of the private company. Most private equity consists of institutional investors or accredited investors who can commit large sums of money for long periods of time. However, even as a small time private investor, it is not impossible to find opportunities. For e.g., the blogger – Asset-Grinder shares his story of investing in a local brewery. Be sure to check it out here. One other way to own part of a private company would be to work for it, where stock options are provided as compensation packages. This is all too common a method especially in the tech industry, where startups include a stock options plan that are vested over a period of few years for employees.