Remember when investing used to mean picking a handful of stocks or parking money in a mutual fund and hoping for the best? Those days feel almost quaint now.
Something massive has been happening behind the scenes for the last few years, and 2025 feels like the year the dam finally breaks. Everyday investors—teachers, engineers, small-business owners—are pouring billions into assets that, until very recently, were strictly reserved for endowments, pension funds, and the ultra-wealthy.
Private equity. Private credit. Venture capital. Real estate syndications. Infrastructure. Even fractions of pre-IPO tech unicorns. What used to require a $5 million or $10 million check is suddenly showing up in 401(k) menus, brokerage accounts, and even some robo-advisors.
I’ve been watching this shift accelerate for the better part of three years, and honestly? It both excites me and keeps me up at night. Because while the upside looks incredible on paper, the fine print on liquidity and risk is written in a font size most people need reading glasses to see.
Why the Public Market Is Quietly Shrinking
Let’s start with a stat that still shocks people when they hear it for the first time: the United States has roughly half the number of publicly listed companies it did in 1996.
Think about that. The economy is three times larger, yet the menu of stocks the average person can buy has literally been cut in half. Companies stay private longer—sometimes forever—because being public became a regulatory headache and a short-term-performance circus.
The result? Most of the real wealth creation in tech, healthcare, and consumer brands now happens out of sight of the ticker tape. If you only own public stocks and bonds, you’re systematically missing the best-performing part of the economy.
Wall Street noticed. Pension funds and university endowments started allocating 30%, 40%, even 50% of their portfolios to alternatives decades ago. And the results speak for themselves—top-quartile private equity has beaten public equities by 300-500 basis points a year for extended periods.
Now the industry is racing to bring those same returns downstream to regular investors. The question is whether we can do it without blowing people up.
The Blurring Line Between Public and Private Investing
One of the more fascinating things I heard recently came from a growth-equity legend who spends his days bouncing between seed-stage startups and trillion-dollar public tech giants.
“If you don’t deeply understand what Oracle, Google, and Microsoft are doing with AI right now, you simply cannot make intelligent private investments in the space. Period.”
He’s right. The old wall between public and private has crumbled. The giants dominate the picks-and-shovels layer of AI—cloud, chips, models—and everything built on top is downstream. Ignore the public incumbents at your peril.
At the same time, the mindset required is completely different. Public markets obsess over whether growth is “already priced in.” Private markets reward patience and active ownership. One investor I know says he sometimes wishes he only played in one arena because the mental whiplash is real.
The Broken IPO Market and the Rise of “Forever Private”
Twenty-five years ago we had waves of 50-80 IPOs a quarter. In some quarters this year the number was literally zero.
That’s not normal. And it’s not great for retail investors who used to get their first bite of tomorrow’s giants on listing day.
Some of the sharpest minds in the business believe the traditional IPO model is effectively dead. The future, they argue, lies in tokenization—turning private shares into tradable digital assets. In that world every company becomes public in a way, whether it files an S-1 or not.
Others are more optimistic. They point out that high-quality companies were lined up to go public in late 2025 before political chaos hit the pause button. They expect a robust pipeline in 2026 once certainty returns.
Either way, the trend is clear: great businesses are spending more of their life cycle in private hands. If retail investors want exposure, they have to meet the market where it lives.
Why Alternatives Actually Belong in Retail Portfolios
Let’s be blunt—most people still think alternatives are “risky.” And they’re not entirely wrong. But the bigger risk at this point might be not owning any.
Traditional 60/40 portfolios have been on life support for a decade. Ten-year Treasuries still pay peanuts, and the S&P 500 is more concentrated than at any time since the 1960s. Diversification isn’t a luxury anymore; it’s survival.
- Private equity has historically delivered 3-5% higher annualized returns than public equities
- Private credit currently yields 10-14% in many segments with lower volatility than high-yield bonds
- Infrastructure and real estate can provide genuine inflation protection
- Venture, when sized correctly, is the only asset class that consistently produces 10x-plus outcomes
Even a modest 10-20% allocation can transform risk-adjusted returns for decades. The top wealth managers in the country are now saying out loud what they used to whisper: there should be no such thing as a public-markets-only portfolio anymore.
The Liquidity Trap Nobody Wants to Talk About
Here’s where things get tricky.
Private investments are, by definition, illiquid. Lockups of 5, 7, 10 years or more used to be the norm. Retail investors have been trained for generations to freak out when they can’t sell instantly.
And that’s exactly when they make their worst mistakes—panic-selling the stuff they can sell (public stocks) instead of the stuff they should sell (if anything).
The industry’s answer? New wrapper vehicles that offer limited redemptions—quarterly, semi-annually, or within preset gates. Evergreen funds, interval funds, tender-offer funds, business-development companies. Names that sound boring but are quietly revolutionary.
“We’re literally structuring bad behavior out of the retail investor.”
— Co-founder of a $150 billion alternative credit manager
By forcing you to commit capital for longer, these vehicles actually help you capture the full cycle upside instead of bailing at the bottom.
Think of it like a gym membership with a cancellation fee. Annoying in the moment, but it keeps you from quitting in February.
How Much Should the Average Investor Allocate?
There’s no one-size-fits-all answer, but here’s a reasonable starting framework I’ve seen work for seven- and eight-figure families alike:
| Investor Type | Suggested Alternatives Sleeve |
| Conservative (near retirement) | 10-15% |
| Balanced (10-20 years to retirement) | 20-30% |
| Aggressive (20+ years or high earner) | 30-50% |
Within that sleeve, diversification still matters:
- 40-50% private credit (yield + downside protection)
- 20-30% private equity/secondaries (growth engine)
- 10-20% real assets (inflation hedge)
- 5-15% venture (lottery tickets, sized small)
The key is matching the liquidity profile of the vehicle to your actual time horizon. If you might need the money in three years, don’t tie it up for ten—no matter how juicy the projected IRR looks.
The Education Gap That Still Worries Me
Here’s my biggest concern right now: speed.
The money is moving faster than the understanding. Platforms are making it push-button easy to drop $10,000 into a private credit fund yielding 12%. One click and you’re in.
But one click is rarely enough when you’re giving up daily liquidity and taking manager risk, leverage risk, and valuation risk.
The smartest firms are investing heavily in advisor education and client onboarding that actually forces you to acknowledge the downsides. Because the first time redemptions get gated in a downturn, the headlines are going to be brutal if people feel blindsided.
My advice? Treat alternatives like any other major financial decision. Read the offering memo (yes, the whole thing). Ask your advisor the uncomfortable questions. Understand the fee stack—because a 2-and-20 on a semi-liquid fund stings more than on a ten-year locked vehicle.
Where This Is All Heading
We’re still in the early innings, but the trajectory feels inevitable.
New regulations are opening 401(k)s to private funds. “Invest America” accounts for children could follow. Tokenization experiments are moving from sandbox to real money. The walls that once protected (or excluded) retail investors are crumbling fast.
In ten years the idea of a portfolio without private assets might feel as archaic as a portfolio without international stocks did in the 1980s.
But revolutions are messy. Some investors will get hurt chasing yield without understanding liquidity. Others will compound quietly for decades and wonder why everyone doesn’t do this.
The difference, as always, will come down to education, discipline, and choosing partners who actually put client outcomes ahead of asset gathering.
Welcome to the new world of investing. It’s bigger, more complex, and potentially far more rewarding than anything we’ve seen before.
Just make sure you know how to swim before you jump in the deep end.
