What Are Private Investments and Are They Right For You?

By Chris L. Meacham, CPA

Private Investments in Rancho Santa FeInvesting is a fine balance of diversification, professional guidance and long-term planning. When it comes to strategy, many investors look to private investments – also known as “alternative” and “non-traditional” investing – to strengthen their portfolios.Although once reserved for the ultra-wealthy, private investments have become accessible to more investors in recent years. More and more mutual funds that are accessible to the general public offer access to alternative investments.  They promise a lot: robust financial returns and a tough exterior to withstand even the roughest stock market conditions. So it comes as no surprise that many investors are intrigued – and eager to jump on board.In arecent articleat the New York Times , we learn that alternative investing can be an ideal way to navigate the stock market while making it out on top. But author Tara Siegel Bernard cautions readers over concern that alternative investing can be confusing and, at times, misleading.“It’s easy to understand why the average investor might be intrigued,” she noted. “Alternatives offer a way to further diversify a portfolio, adding in another layer of protection against market volatility.” But Bernard later cautioned readers, explaining, “Some experts still question whether these strategies are truly importable into mutual fund format.”Alternative investing is a strong way to add diversification to a portfolio. But is it the best approach for all investors? Not necessarily. Personal goals and your comfort level when it comes to assumed risk are each important factors to consider when choosing private investments. They are not right for everyone – but many investors do in fact benefit.Some examples of alternative investing include:

  • Real Estate
  • Hedge Funds
  • Trust Deeds
  • Private Equity
  • Commodities
  • Managed Futures

At Cornerstone, we’ve invested in private deals since inception of the company.  We believe in their strength, but we understand there are many problematic offers out there.  Finding the good ones is an intricate process.Alternative investments are complex and choosing deals without professional advice can be dangerous.  Our certified public accountants (CPAs) and attorneys make recommendations on alternative investments only after conducting substantial reviews of each deal.It is not clear yet whether the public approach to alternative investments can effectively mimic private results.  But there is hope. And now that alternative investing is becoming increasingly mainstream, it just may be the right product for your portfolio.Download this guidepublished by Vanguard for more information including types of products, common financial scenarios and important questions to ask before choosing alternative investments.

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