The stock market is the primary place of investment for most people. It is viewed by some as the forum where big money can be earned and to not invest in the stock market would be ridiculous.

Stock markets are places where people can buy shares in publicly listed companies. This represents a small portion of companies you are able to invest in. Investment in unlisted companies is known as Private Equity Investing. This is an area where investment returns may be high, though with that comes big risks.

As a private investor your money can directly go into a business that requires capital. In return you will receive part-ownership in the company. Even modest sums of investment can give you large returns in this form of investment. As an example, venture capitalists are private equity investors on a massive scale. The money they placed  into internet start-ups in early 2000 was a prime example of private equity investment.

The return made on the investment is normally realized when the business is sold or listed. As long-term returns are often superior to stock investing, big money investors are very attracted to private equity investing. As a regular investor you too can be a part of this.

If you choose to invest money in a local business that is doing really well but needs more money to expand that is a prime example of private equity investment. The main issue is this kind of investment is illiquid and to properly diversify your portfolio you would need to make many such investments to ensure you are not stuck with one bad investment.

A good option would be to invest in a Private Equity Fund. This is a mutual fund that specifically invests in unlisted companies. This way you get good diversification and still be able to reap the potential rewards of a venture capitalist.

Information is for educational  purposes only and is not be interpreted as financial advice. This does not represent a recommendation to buy, sell, or hold any security. Consult your financial advisor.