More on the ease of buying into a Private Equity (or Credit) fund, but difficulty in getting out....
It's the WSJ, so it's behind a paywall.
Bottom Line: Private Credit and Private Equity accept your investment quickly and easily. They might claim high returns, especially when calculated over an entire business cycle. But their fees are high (which eats substantially into the investors' returns), and they give you your money back whenever they please.
Point being: If you need cash at a time inconvenient for them, they don't care one iota about why you need it.
College tuition? Parent's nursing home? Wife's or child's medical bills? Lost your job and you need the cash to stave off foreclosure on your primary residence? Doesn't matter. They allow you to withdraw what they want, when they want, at asset values that they (not the publicly traded financial markets) calculate -- IOW, just figuring what your investment is worth is an exercise far beyond checking the market.
Clinching quote:
"[Institutions for which PE or PC investments might be appropriate] are likely to be perpetual; you won't be. They have many sources of revenue.....you probably don't. They have in-house specialists who analyze alternative investments; you don't. With billions of dollars [to invest], they get access to the world's best alternative investment managers; you aren't likely to."
And the so-described pros still mess it up.
Unless you're both a Chartered Financial Analyst and a professional in alternative investments, just don't invest any more in Private Equity or Private Credit than the amount to which you can afford to lose access and still say, "Well, dang. But I'm having a good time."
It's the WSJ, so it's behind a paywall.
Bottom Line: Private Credit and Private Equity accept your investment quickly and easily. They might claim high returns, especially when calculated over an entire business cycle. But their fees are high (which eats substantially into the investors' returns), and they give you your money back whenever they please.
Point being: If you need cash at a time inconvenient for them, they don't care one iota about why you need it.
College tuition? Parent's nursing home? Wife's or child's medical bills? Lost your job and you need the cash to stave off foreclosure on your primary residence? Doesn't matter. They allow you to withdraw what they want, when they want, at asset values that they (not the publicly traded financial markets) calculate -- IOW, just figuring what your investment is worth is an exercise far beyond checking the market.
Clinching quote:
"[Institutions for which PE or PC investments might be appropriate] are likely to be perpetual; you won't be. They have many sources of revenue.....you probably don't. They have in-house specialists who analyze alternative investments; you don't. With billions of dollars [to invest], they get access to the world's best alternative investment managers; you aren't likely to."
And the so-described pros still mess it up.
Unless you're both a Chartered Financial Analyst and a professional in alternative investments, just don't invest any more in Private Equity or Private Credit than the amount to which you can afford to lose access and still say, "Well, dang. But I'm having a good time."
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