Play It Safe : Buy Some Stock
Long before it became a campaign issue, private equity was known for being a risky but potentially profitable venture. There's a surprisingly safe way for members of the 99 percent club to invest in it. Many private-equity firms use money raised from investors and borrowed from banks to buy struggling, mature companies. In some cases, private-equity firms fire workers or occasionally shutter a business entirely, but they also make many companies more profitable. The easiest and cheapest way to get in is to buy shares in a handful of publicly traded firms, such as Blackstone (BX)
Go for Broke: Buy Into a Fund
Got at least a million bucks handy? Then a private-equity fund might be for you. Your money will be put into a portfolio alongside cash from hedge funds, pension funds and a lot of wealthy individuals. That principal is used to buy up businesses, and you make money when -- or if -- the fund's underlying businesses are sold for a profit. But that doesn't happen on any predictable timetable. This isn't like a stock investment, either: Once you turn your cash over, you can't sell; you get only whatever profits the fund makes. So why take all that risk? From 1993 to 2005, private-equity funds beat the stock market by three to four percentage points a year, on average, according to Steve Kaplan, a professor at the University of Chicago's Booth School of Business. One other consolation: You won't have to pay exorbitant fees if the fund is a dud. Private-equity managers often won't take their full fees unless they make at least an 8 percent annual return.