More People Can Now Invest in Private Investments Like the Ultrawealthy—Should You?

A major move is underway to enable far wider access to private investments. As platforms like EquityZen and Forge Global make it easier to invest in these vehicles, providers of traditional exchange-traded funds (ETF) are offering retail investors additional and indirect ways to access them.

Stoy Hall, a certified financial planner, CEO of Black Mammoth, and a member of Investopedia’s advisor council, advised caution if you’re considering any of these. More investors should “absolutely be seeking private investments,” Hall said, but he noted, “It is very difficult even for us professionals who vet opportunities constantly.” Below, we take you through the advice Hall and other experts have if you’re looking to dip into these alternative investments.

What Are Private Investments?

When you put money into companies or assets not traded on public exchanges like the New York Stock Exchange, you’re engaging in private investments—just as you’re making a private investment when you buy some real estate. But unlike mutual funds or stocks and bonds that you can buy on public exchanges with a few clicks, private investments traditionally required large minimum commitments and were available only to institutional investors and high-net-worth individuals.

There are reasons why investors might wish to go the private investment route. “The private market returns are not correlated and can be higher and less risky than even the traditional market,” Hall said. However, these investments typically lock up your money for extended periods, often five to 10 years.

They also come with significantly less regulatory oversight and transparency than publicly traded investments.

Who Qualifies as an Accredited Investor?

The SEC limits many private investments to “accredited investors” who meet specific financial or professional criteria, including annual income exceeding $200,000 ($300,000 for joint income), net worth over $1 million (excluding your primary residence), or certain investment professionals.

Hall is critical of these restrictions, saying they were “designed to limit the ability of those less fortunate to have the opportunity to invest like the ‘ultra-wealthy.'” While that is a debatable opinion, the SEC has claimed its focus is on protecting retail investors from potential fraud and abuse in private equity markets, which are often opaque. However, the SEC and some lawmakers have now expressed a willingness to loosen the restrictions during President Donald Trump’s second term.

How To Invest in Private Markets

While the barriers to entry in private investments have come down, Hall and other experts are emphatic that the average investor needs help. “If you are attempting to do it alone, don’t,” Hall said. “Have a financial planner to guide you through this situation.”

Whether with an advisor or not, here are the steps Hall recommends:

1. Build your foundation first: “Investors should first establish a solid portfolio that is made up of ‘traditional’ investments (stocks, bonds, ETFs, etc.),” he said.
2. Set allocation limits: “Every portfolio should have 5% to 20% allocated to ‘alternative investments'” for diversification, Hall said. “Don’t put all your eggs in one basket and truly understand your entire portfolio picture.”
3. Only invest what you can afford to lose: “The easiest [safeguard] is to only invest money that you have that is investable,” Hall said.
4. Perform the due diligence: If reviewing prospects yourself, Hall suggests you vet the founder, CEO, or portfolio managers involved and speak to other investors. Anything not quite right? Move on quickly—even if you’re wrong, there are plenty of solid investments out there. “Do you like what the investment stands for, are you willing to lose all your money for this cause, do you truly understand their vision and purpose?” Hall said. “Follow your gut.”
5. Compare the risk and returns with other alternative asset classes: These might include cryptocurrencies, private companies, and precious metals.
6. Understand the fee structure: Private investment managers charge management fees of 1% to 2% plus performance fees of 12% to 20% of profits. EquityZen has a minimum investment of $10,000, and a one-time sales fee scaled from 3% to 5%. If you’re investing via an ETF, the fees will be lower: the SPDR SSGA Apollo IG Public & Private Credit ETF (PRIV) has an expense ratio of 0.70%.
7. Plan to be without your funds: Most private investments lock up your capital for five to 10 years. Never invest money you might need soon.

The Bottom Line

Private markets offer potential benefits but require significantly more research, professional guidance, and patience than public investments. While platforms advertise lower minimum investments, many still require accreditation status and substantial commitments that should only be made as part of a comprehensive financial plan.

As Hall emphasized, these investments can enhance your portfolio, but going it alone is a recipe for disaster.