Other investment options?

[Cpadave]

Hi, Does anyone know if there are other options other than stock market for people like us? More specifically non-Real Estate private equity that might have 500K or less as minimum for investment? Currently I am 60/40 in stock and fixed income. Stocks are mostly in index ETF and fixed income are CD, muni and some corporate bonds and preferred. I was thinking of maybe allocating up to 5% to other types of investments. Thanks for your input.

 

[Scuba]

Hi, Does anyone know if there are other options other than stock market for people like us? More specifically non-Real Estate private equity that might have 500K or less as minimum for investment? Currently I am 60/40 in stock and fixed income. Stocks are mostly in index ETF and fixed income are CD, muni and some corporate bonds and preferred. I was thinking of maybe allocating up to 5% to other types of investments. Thanks for your input.

Yes there are, but these opportunities are typically accessed through a broker/FA. The only ways I know of to access a PE-like investment directly would be to contact angel investment funds directly and ask if they're open to new accredited investors or participate in crowdfunding for businesses.

If you go through an FA, at least they've vetted the PE firm. I recently attended an innovation presentation at a local university. One of the presenters was an angel investment firm that has been in business 20+ years. Their minimum investment was $100K per year.

 

[VanWinkle]

Hi, Does anyone know if there are other options other than stock market for people like us? More specifically non-Real Estate private equity that might have 500K or less as minimum for investment? Currently I am 60/40 in stock and fixed income. Stocks are mostly in index ETF and fixed income are CD, muni and some corporate bonds and preferred. I was thinking of maybe allocating up to 5% to other types of investments. Thanks for your input.

I get the itch too sometimes, I just try not to scratch it. Probably too late for Bitcoin.

 

[Cpadave]

Thanks. Maybe for now I stick with traditional investments.

 

[VanWinkle]

Thanks. Maybe for now I stick with traditional investments.

I know it is hard to believe, but the more boring the investments, the better the long term return seems to be. Sometimes it is hard not to fiddle with it, but "Don't just do something, Stand there"(John Bogle) is a pretty good rule of thumb in handling the investments you have.

 

[Bruceski44]

StreetShares has their Veterans' Business Bonds which finance veteran-run businesses if that appeals to you. They pay 5%. There are also opportunities to invest directly in the businesses.

These loans are secured by the business assets and a personal guarantee, which may not sound like much, but carries some legal weight. Not enough to overcome a Chapter 7 BK though.

 

[OldShooter]

Thanks. Maybe for now I stick with traditional investments.

Wise decision, IMO. But let me add a bit from my own experience.

I have done maybe ten private deals over the years. Like you, I held them to a small fraction of my portfolio --- not enough to move the needle if they tanked. But the flip side of that is that success would not move the needle much either. So, in hindsight, what I had were amusements, not investments. I enjoyed every amusement ride, including the restaurant deal that ultimately cost me 100%, because that loss wasn't big enough to move the needle.

Logic tells us that good private deals will be hard to come by. If a promoter has a good, big, deal like a a downtown office building why would he screw around selling to retail investors? He will strongly prefer to sell to pension funds, large investors, etc. Less effort, bigger pieces, and he doesn't have to deal with amateurs. If he does offer his deal to retail investors, it is probably because it is too stinky to interest the pros. The promoter is taking too much out for himself, the property or stock purchase looks like it might not have been arms-length, the local real estate market or vacancy rate is not good, the company's patents are under attack, ... Lots of reasons could cause the pros to pass but not be easily detectable by amateurs. So what's left? Small, local deals that do not come with colored brochures, fancy web sites, "mission statements," and salesmen. All of my deals were profitable except the restaurant, and all of them came to me by word of mouth. Initially from a CPA or a lawyer, then later from my being a little bit "plugged in" to the local market.Bottom line: Finding good deals is tough and, in general, deals offered to retail investors can have limited upside or even danger.

Good amusements can be fun but difficult to find and, as @VanWinkle points out, good investments are boring. These days I go for boring but back in the day I had a ball with my amusements.