How Billionaires Keep Beating The Market - And How You Can Too
Billionaires’ Strategies
Billionaires have long been known to outpace the market in their investments, consistently achieving returns that far surpass what the average investor can expect from traditional stock market strategies. One of their most effective tools? Private equity. This asset class, which involves investments in private companies or the buyout of public companies to delist them, has proven to be a powerful avenue for wealth generation. While often perceived as the exclusive domain of the ultra-wealthy, private equity is increasingly becoming accessible to everyday investors through innovations like crowdfunding platforms and specialized funds. This shift represents a significant opportunity for those looking to maximize returns.
Private equity stands out because it offers some of the highest average returns of any investment type available to the common man. Historically, private equity has delivered annualized returns of over 13% according to the Cambridge Associates U.S. Private Equity Index, compared to the approximate 8.5% achieved by the Russell 3000 Index over a 25-year period. The reason for these outsized gains lies in the unique nature of private equity investments. By focusing on undervalued or high-potential private companies, investors can unlock value through strategic management and operational improvements that are simply not available in public markets. These investments, though riskier and less liquid, can be a game-changer for those willing to take a long-term approach.
Our Take
For everyday investors, tapping into private equity can seem daunting. However, with the rise of new investment platforms and funds aimed at democratizing access, the barriers are steadily coming down. Whether through direct investments in private businesses or diversified private equity funds, individuals now have the opportunity to participate in this lucrative asset class. While it requires a greater appetite for risk and a willingness to lock up capital for extended periods, private equity remains an unparalleled option for achieving the highest average returns. For those seeking to emulate the strategies of billionaires, this may be the best-kept secret in investment success.
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Bigger Pockets – Billionaires Beat The Market December 27, 2024