By Linqto Team, Updated: May 16, 2025
Investing in private and public markets offers different opportunities and challenges,
depending on an individual’s financial goals. While public market investing is widely
known , private markets are a fast-growing sector that includes venture-backed startups
and private equity-backed enterprises. As the PitchBook Private Markets Guide highlights,
“If you’re overlooking it, you’re missing a major, fast-growing sector of the economy.”1 This
guide examines the key aspects of private and public markets to guide informed
investment decisions.
Private markets involve investments not traded on public exchanges, such as private
equity, venture capital, private debt, and hedge funds. Investors can gain exposure directly by purchasing shares in private companies or indirectly through private equity funds.
Private markets offer several advantages:
• Higher Return Potential: Studies vary; however, certain data may show private equity has delivered robust returns over time.2 3 4
• Diversification: Private equity may add additional diversification to a personal investment portfolio. 2 3
• Lower Volatility: With long-term commitments, private investments are less impacted by the daily movements in markets. 2 3
Despite the benefits, private markets pose challenges:
Public markets consist of companies listed on stock exchanges, enabling individuals and institutions to trade shares. These markets are known for their accessibility and liquidity.
Public markets have some advantages over private markets:
However, there are some disadvantages to public markets.
Here are five major differences between private and public markets:
Both private and public markets play crucial roles in supporting economic growth and shaping investment strategies. Choosing between them depends on individual financial goals, risk tolerance, and time horizons. A diversified approach that includes both markets can enhance portfolio performance and resilience, helping investors achieve long-term success.
Important Information: This material is for informational purposes only and does not constitute investment advice. Consult professional advisors for financial decisions. Past performance is not indicative of future results. Private placement investments are very high risk, charge high fees to investors, are illiquid, and an investor can lose part or all their invested capital. We strongly encourage investors to take complete their own independent due diligence before investing.
Disclaimer
This material, provided by Linqto, is for informational purposes only and is not intended as investment advice or any form of professional guidance. Before making any investment decision, especially in the dynamic field of private markets, it is recommended that you seek advice from professional advisors. The information contained herein does not imply endorsement of any third parties or investment opportunities mentioned. Market views and insights are subject to change and may not always reflect the most current developments. Investing in private markets involves unique risks, including the potential for loss.
Investing in private company securities may not be suitable for all investors. Investments in private company securities are highly speculative and should only be considered a long-term investment. You must be prepared for the possibility to withstand a total loss of your investment. Private company securities are also highly illiquid, and there is no guarantee that a market will develop for such securities. Each investment also carries its own specific risks, and you should conduct your own independent due diligence regarding the investment. Accordingly, investing in private company securities is appropriate only for those investors who can tolerate a high degree of risk and do not require a liquid investment. There is no guarantee made that a company will undergo or experience an IPO or any liquidity event. Past performance is not indicative of future results.