Public and private markets can provide different pathways to wealth accumulation.
What are the differences between public and private markets? One of the defining features of public markets is their accessibility. Public markets are where most stocks and bonds trade. They are highly inclusive and can open up investment opportunities to a wide spectrum of investors. Private markets, on the other hand, are a way of describing a broad set of alternatives to a traditional portfolio of publicly traded stocks and bonds. Private market investments include things like private equity, private credit, real assets, real estate investment trusts, or REITs, and commodities. Private market investments have traditionally been the domain of institutional and high net worth investors. That said, the market for private investments is expanding, and a growing number of strategies are becoming available for individual investors.
Public and private markets differ in the level of regulatory oversight they are subject to. Publicly traded companies must meet robust disclosure requirements to keep investors well-informed about their financial health, while private companies operate with a higher degree of flexibility and reduced regulatory oversight.
Public markets are synonymous with liquidity. The ease with which assets can be bought or sold in public markets provides investors with flexibility and the ability to respond swiftly to market changes. In contrast, selling a stake in a private investment might take some time and effort, like finding an unmarked trail back to the main road. Private markets can offer unique investment opportunities for individual investors. Investors should work with their financial advisors to determine the suitability of private market investments in their portfolios.