Many investors take risks in non-traditional investments, including startup businesses. They don’t realize that most startups fail, and that such businesses are time-consuming. Running a business can’t be a hobby that you dabble with in your spare time.
However, if you have a portfolio that consists largely of stocks and bonds, you might include other types of investments. Among those alternatives, so-called “private equity” is one possibility.
That is, you might buy part ownership of a privately held company. (Private equity investments may include venture capital, which backs startups or near-startups.) Private equity investments tend to be riskier than investments in publicly traded stocks, but also may have greater returns.
You shouldn’t invest all of your money–or even half of your money–in a private business, no matter how certain you are of its success. If the business fails, you might not be able to recover the loss.
However, if you have most of your portfolio in professionally chosen stocks, bonds, and mutual funds, you might put some capital into a business venture with attractive prospects. Even if the business goes under, you’ll still have the rest of your investment portfolio. And, if the business succeeds, it may turn out to be very profitable.