Author Topic: Private Equity - Legit, or Not Legit?  (Read 309 times)

Maturin

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Private Equity - Legit, or Not Legit?
« on: April 16, 2021, 03:03:04 PM »
Hello, all:

I searched the forum, but did not find much about private equity. The only thread I did find was mostly hot takes from people who did not have experience with it. So, I am posting this.

What does everyone think of private equity investments? Hot takes are welcome, but Iím especially interested if anyone has actually invested in any private equity funds and what their experiences were.

Is it just a scam that profits salesman at Morgan Stanley/Goldman/etc.? Will the taxes on top of the fees rip your eyeballs out? Or have I finally stumbled across the secret that rich people use to get richer? Something in between?

I have the opportunity to invest in a private equity fund using a (currently) low interest rate loan tied to LIBOR. Begins paying off after 3 years, you get your money back after 5-6, and everything after is profit. They claim theyíve hit 16% and higher returns on past funds.

I understand how they work generally, but thereís obviously lots going on behind the scenes that Iím not privy to.

EDIT: I should add, I could invest with my own cash and not use margin, but Iíd use the loan unless interest rates jacked up and in that case Iíd pay it off. 
« Last Edit: April 16, 2021, 03:12:41 PM by Maturin »

waltworks

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Re: Private Equity - Legit, or Not Legit?
« Reply #1 on: April 16, 2021, 05:16:25 PM »
I'm doing my best to be nice here, but really...

-You are asking anonymous strangers on a forum dedicated to frugality and early retirement about investment vehicles used by *very wealthy* people. There is zero overlap of the Venn diagram here. People here get a million or two bucks in investments and quit giving a shit about money and go surfing.

-You didn't even post to the investing forum for some reason.

-Inexplicably, this "private equity" investment requires you to take out a loan instead of investing your actual money, which is not at all how private equity usually works. Why would they need or want you if they're looking to borrow money from someone else? Why don't they want your actual money? You're a useless middleman in this transaction at best.

So, nothing about your question makes sense to me and you're asking it in the wrong subforum of the wrong forum. Good luck.

-W

PDXTabs

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Re: Private Equity - Legit, or Not Legit?
« Reply #2 on: April 16, 2021, 05:23:11 PM »
Short of using it to get a golden visa in a foreign country (this is an option for Portugal) I would personally skip it.

Maturin

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Re: Private Equity - Legit, or Not Legit?
« Reply #3 on: April 16, 2021, 07:28:48 PM »
I'm doing my best to be nice here, but really...

-You are asking anonymous strangers on a forum dedicated to frugality and early retirement about investment vehicles used by *very wealthy* people. There is zero overlap of the Venn diagram here. People here get a million or two bucks in investments and quit giving a shit about money and go surfing.

-You didn't even post to the investing forum for some reason.

-Inexplicably, this "private equity" investment requires you to take out a loan instead of investing your actual money, which is not at all how private equity usually works. Why would they need or want you if they're looking to borrow money from someone else? Why don't they want your actual money? You're a useless middleman in this transaction at best.

So, nothing about your question makes sense to me and you're asking it in the wrong subforum of the wrong forum. Good luck.

-W

Iím sorry it didnít make sense to you, thatís my fault. I can get the loan through the private banking group thatís part of the same mega bank where the salesman (who call themselves ďfinancial advisorsĒ) who sell the private equity investments are located. I have access to it because I happen to also bank there. I donít have to take out the loan, that would be a separate transaction. Like I said, I could just invest with my own cash and not do it with borrowed money. But since the interest rates are super low, it would be worth considering.

I also didnít realize there was an investments forum, so Iíll take this to them. Hopefully theyíll be less hostile. Thanks for pointing me in the right direction, W.