Investing is an important part of planning for the future. By putting money away today, you can grow your wealth for whatever your goals are – a new home, college, or even retirement!

Stocks, or equities, are one of the most common types of investments. They represent ownership in a company and come in two types: private or public equity investments. There are some key differences between each type.

Keep reading to find out more!

Public Equity Markets

Public equity markets are what most people will think about when they think of stocks. These are publicly traded companies, which are listed on one or more exchanges. Information about the company and its financials is also publicly available.

Investors are easily able to access publicly traded companies through broker services. There’s much more liquidity, so you can buy and sell shares very quickly.

Companies can choose to list themselves on exchanges for the public to buy stocks either through a direct listing or an IPO.

An IPO, or Initial Public Offering, is when the company will issue and sell shares for the first time on an exchange. The money raised from the IPO will be put back into the business and can help fuel further growth and expansion. Investment banks will work with the company to help set the price of the new stock and facilitate the sale to the public.

Direct listings are a little different, and new shares are not issued. Instead, the company will begin trading on an exchange, but only those shares already held by investors, owners and employees exist. This allows current private shareholders to sell their stocks to a public market if they so choose.

Direct listings are low-cost but also won’t raise money for the company itself.

Private Equity Markets

Private equity markets refer to companies that are privately held. Most private companies are either relatively new and starting, or extremely successful and held by a consortium of private investors.

Private equities are not traded on any stock exchange, and their financial information is not available to the public. Investors will get a document, called a private placement memorandum, which provides information about the business.

In some cases, you can also use a third-party service to find information about private companies. For instance, if you were interested in Rightway Funding Group, you could use Pitchbook to learn more about this business.

Private equity investments usually come with additional requirements. In some cases, you must be an accredited investor before you can invest.

This means private equity investing has a higher barrier to entry. Not everyone can access these investments. Some specialized brokers work exclusively with private equity investments.

Learn More About Investing

Now that you know the difference between private and public equity, you can choose the right investment for your needs. Both types of investments carry their pros and cons.

For more information about investing, check out the rest of our blog!