The 'Millionaires Only' Club With Yields Up To 18.9%
It's an idea the richest and most powerful people in the world almost never say out loud.
But takeover king Wilbur Ross knows it. So does Herb Allen, the most exclusive banker in the world. And you can bet your boots that billionaire Warren Buffett knows what I'm about to tell you. In fact, he's often said these are the types of deals he wants to pursue...
Here's Wall Street's dirty little secret: The best investments in the world -- those with the biggest returns and some of the highest yields -- are not listed on any stock market.
They're privately held...
According to a study by professors at Duke and Ohio State covering a period from 1984 through 2010, private market investors earned 18% more than the S&P 500.
It's proof that when it comes to investing, the rich really are different -- they invest in better companies.
But exactly how do they do this?
Well, rather than buying shares on the stock exchange, savvy big hitters write a very large check to a very special kind of firm. To be eligible to invest like this, federal law stipulates that an investor needs to have at least $200,000 a year in annual income ($300,000 for a couple) and more than $1 million in net worth, excluding a primary residence.
That is a very high bar. Those rules block 94% of investors.
The official name for these highly exclusive firms is "private equity."
A private-equity firm has more than a pile of investor cash to offer. It also provides executive mentoring and business advice -- often from some of the biggest names in corporate America.
I like private equity because a lot of private-equity firms do the exact same thing I try to do with my newsletter, Game-Changing Stocks ...
They try to find "The Next Big Thing," and they seek to invest in it before anyone else realizes that they've found the golden ticket. For example, Amazon founder Jeff Bezos invested $250,000 in Google in 1998... years before it even thought about going public.
Here's the good news. Private equity doesn't have to be our competitor. It can be our partner. In fact, you and I can put private equity and its consultants to work for us the same way the billionaires do.
You see, private equity has historically been a "millionaires only" club, and it's no wonder this special club has only been reserved for America's elite... it's made countless fortunes over the years.
However, you couldn't invest directly in private equity unless you were either an elite institution or you ranked among the richest 6% of all Americans.
Fortunately for us, that slowly began to change starting back in 2007 when one of the largest players in this notoriously secretive industry made a surprising decision. It decided to list its shares on the New York Stock Exchange.
Thanks to these somewhat recent developments, you can now invest directly in a handful of the world's biggest and most lucrative private equity firms. And with each and every deal they make, you can reap the same rewards that the ultra-wealthy have been enjoying for decades.
Not to mention, you could enjoy the sky-high dividend yields many of these private equity firms pay out each year...
Just look at the yields of these four private equity firms available to buy on the public market:
You won't become a multi-millionaire overnight by investing in private equity, but you'll have a chance to bank a tidy profit from some of America's fastest-growing private companies. And of course, you should do a little homework on each of these companies before piling your money into them. But most importantly, you'll tap directly into the private market -- a market that's cheaper and more lucrative than regular, ho-hum common stocks.
Few investors know about the power of private equity. That's because, until only recently, they've been for "millionaires only." Regular investors like you and I were not invited to the party.
That's quickly changing. I've been a big fan of private equity for years. And finally, this growing, dynamic area of the market is gaining the attention of regular investors. More and more of these "millionaires only" companies are going public each year. That's why I predict 2016 will mark the year when more investors will be able to access these types of companies more than ever before, allowing the little guy a chance to play with the big boys.
In my recent annual predictions report, " 10 Shockingly Profitable Predictions for 2016 ," I've outlined the best way to start making money in this "millionaires only" private market. I've identified a handful of my favorite companies that invest in fast-growing businesses and reward shareholders with sky-high yields. These are the same kinds of companies that have delivered gains of 41%, 46% and 76% to my readers in less than a year. To learn how you can invest alongside the world's wealthiest with as little as a few hundred dollars, go here .
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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