Many people take the easy path. A friend or someone on TV tells them to open an account and invest in an S&P 500 mutual fund. That’s fine, and over time you’re likely to do well.
But when Tom looked into it, he asked: if private equity outperforms the stock market over just about every time horizon, why isn’t all my money in private equity? You likely need both, and more private equity exposure than you have now.
Key points
- S&P 500 index funds are a reasonable default.
- Private equity tends to outperform over most time horizons.
- Most investors likely need more private equity exposure.
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