So... Privately held = don't take your friends word for it. BUT rather, dig in and actually get financial information, what markets they are in. What sectors are they supporting, what is their....
You get the point. There are a LOT, and I do mean a LOT of questions you need to ask when investing in a private anything. Don't take a "They did well for me" explanation, cause well.. Wework worked out well for a lot of early investors many of whom.... got out. The rest of em, well, didn't do so well.
So my advice, look into that private company and determine a whole lot of info about it before even looking at what you could invest. It could be an Apple, or a Wework or... I suppose there a lot of companies out there you'll never hear about whom either fail or do ok for their investors (ie investors aren't losing money but not really making it either). I suspect your not looking for that type of risk.
A LOT of companies make great money for investors...for awhile.
Some of them are pyramid scams (see just about every MLM that makes a lot of people a lot of money at the expense of the majority of "investors"), but some are just businesses with terrible financial strategies.
In the market where I own a rental property, the market conditions were, in fact, fucking amazing for making money, but by nature, they were temporary, and you needed to actually understand the local market to make sense of *why* the numbers were the way they were.
When an investment opportunity looks really good, there are only three reasons:
1: it's temporary and the market conditions will change in response
2: it's has significant barriers/risks that require expertise to navigate
3: both
Where I bought, the conditions were AMAZING to make money, but boots-on-the-ground local expertise was critical, and the conditions changed so rapidly that by the time I closed on my first property, the conditions weren't favourable enough to be worth the risks/hassles.
Property prices were rising too fast, and because of this, all of the slumlords took the opportunity to offload their trash properties.
Anyone who bought a bunch of units around the time that I did could make themselves look like an investing genius, and then attract investors into a market that was no longer worth buying in, but could easily look good on paper for a solid year or two after before the wheels started falling off.
We also can't lock in mortgage rates here, so all of those "good" numbers will fall apart very soon as the mortgages come up for renewal.
Whenever an investment looks really good, you need to understand
why to ever understand the real risk.
As index investors, we understand the fundamentals of "why" our index funds are producing the returns, on average, that they do.
But when we get into investing in individual companies, the "why" becomes quite opaque, often even inside those companies. Very few people can actually see the deck of cards that prop up a lot of companies' numbers.
My experience as a business consultant is that shady/poorly planned practices are more the norm than the exception, so I'm extremely wary of putting faith in individual companies.
I've been privy to the inside operations of enough "highly respected" companies in my time and seen absolute train wrecks to have much faith in reputation as an indicator of best practices, lol.
