No, all investing is risky, and that includes private capital. One of the reasons that private capital performs differently than public stocks is that there are very limited resale rights. This is often referred to as a “lack of liquidity”. It’s also one of the key risks.
Unlike stocks that have been qualified by a prospectus, private capital investments cannot typically be resold, and there may or may not be redemption rights. This can mean that your investments are tied up for a period of time. Raintree strives to find a balance of investments that have varying projected hold periods so that investors have options on how long they want to have their capital tied up for. Your Private Wealth Advisor can help explore these risks to help you find the right private capital investments for you.
Fortunately, the lack of liquidity is also one of the reasons why private capital is different and can make for a powerful diversification tool. In our opinion, the success of your private capital investments is based largely on their ability to execute on defined business objectives and profitably. Because private capital isn’t traded on an exchange, their popularity on any given day won’t impact their value. However, they can still be affected by market sentiment to the business or industry in which it operates. Due to timing, a private security may or may not be worth what the public market might suggest its worth. These pricing anomalies and timing differences can have a material diversifying impact on one’s portfolio. In contrast, the value of public investments like stocks can fluctuate daily based on any number of trading responses, often including unrelated market events and predatory large volume trading activities.
In addition to illiquidity, there will always be other risks to investing. Our industry-leading training empowers your Private Wealth Advisor to help you understand both the risks and benefits of each private capital investment that we distribute. We can help you make informed decisions that are right for you and your family, based on a sound assessment of your life circumstances and aspirations for the future.