The private vs. the public market: What investors should know
For many individual investors, publicly traded securities make up a vast majority (or even all) of their portfolios. In the past, the proverbial “60/40” portfolio — comprised of 60% stocks and 40% bonds — was a common asset allocation for investors seeking diversification and long-term capital appreciation.1 This allocation makes sense in theory, as stocks were seen as the growth engine for portfolios, while bonds aimed to provide income and downside protection during times when equities performed poorly.
While a 60/40 allocation is not as popular for retirement savers today as in the past,2 publicly traded assets — including individual stocks, mutual funds, and exchange-traded funds (ETFs) — still dominate many portfolios. But there’s a world beyond traditional stocks and bonds. In recent years, many individual investor portfolios have evolved to include alternative investments, ranging from hedge funds to private real estate holdings. These assets had historically been limited to large institutional investors such as pension plans and university endowments but are increasingly available to more individual investors, provided they meet the SEC’s accreditation standards.
While there are many flavors of alternative investments, the one thing they have in common is that they are almost always traded in the private market. Before explaining the potential benefits of private investments, it is worth a deeper dive into the world of publicly traded securities, which still comprise the majority of individual investor assets.
Public market dominate global assets
Why the public market anchors most investor portfolios
Publicly traded assets likely form the cornerstone of most investor portfolios who are saving for retirement or to meet other long-term goals like paying for their children’s college expenses. As one might expect, public securities comprise the vast majority of all invested assets, as the U.S. equity market represented more than $62 trillion, while U.S. fixed income assets surpassed $58 trillion as of July 2025.3
How many Americans own stocks today
According to Gallup Research, 62% of Americans owned stocks in 2025, either directly, in a mutual fund, or through a self-directed retirement account.4 As of 2024 (the most recent year data is available), U.S. households held nearly $58 trillion in stocks, an increase of approximately 250% from $23.3 trillion in 2015.5
Liquidity: A key advantage of publicly traded securities
A major advantage of publicly traded stocks is that tend to be highly liquid. According to Nasdaq data, investors buy and sell more than $360 billion in U.S. stocks each trading day.6 This level of trading volume means that investors can see potential trading prices nearly instantly, and transactions generally do not affect share prices.
Long-term returns and the volatility investors face
Historically, publicly traded U.S. stocks have delivered long-term gains, though past performance is not indicative of future results. On an annualized basis, the S&P 500 Total Return Index has returned 14.8% over the last 10 years, as of December 31, 2025.7 While those returns may seem impressive, the overall performance masks some outsized drawdowns. For instance, in 2022 the S&P 500 returned -18.1%,8 while the Bloomberg US Aggregate Bond Index — a proxy for the investment-grade U.S. bond market — returned -13%.9 For investors with a 60/40 portfolio, their experience in 2022 may have left them worried and searching for other assets for their “diversified” portfolio. Luckily, they have options.
The rise of alternatives and the private market
Private market assets investments have grown significantly in recent years, with the potential to increase even further. As of 2023, private market assets under management reached nearly $12 trillion, with that total estimated to reach $18 trillion by 2027.10 In addition, the opportunity set for unicorns — private companies with valuations above $1 billion — continues to increase, with estimates that the combined market cap of private technology companies with unicorn status has reached nearly $5 trillion.11
Expanding access to private market investments
Significantly more U.S. investors are now eligible to purchase private market assets than in the past. As of 2023 (the most recent year that data is available), the SEC estimated that 18.5% of U.S. households qualified as accredited investors, compared to 1.8% in 1983.12 In addition, President Trump signed an executive order in August 2025 allowing private assets to be held in retirement portfolios like 401(k)s, though questions remain on how the proposed changes will be implemented.13
Benefits and risks of private market investments
Many private market investments, including private equity funds, VC funds, and pre-IPO companies, seek to offer three major benefits:14
- The potential for higher returns than publicly traded securities
- The potential to invest earlier in the lifecycle of a company
- The potential for diversification with returns that may differ from those of public stocks
Key risks in public vs private market investing
At the same time, private market investments also offer potentially more risks than their publicly traded counterparts:
- Potentially little or no liquidity, often with long lockup periods and no definite exit
- Far less transparency in terms of financial reporting than public companies
- Often no clear pricing and challenges determining an appropriate price
Because of the increased complexity and potential risks, not everyone is eligible to invest in private market investments. Only institutional investors with assets above $5 million and individuals who meet SEC guidelines for accredited investors have the ability to purchase most types of private assets.
Like all prospective investments, investors need to balance the potential benefits and risks of private market investments. However, for accredited investors interested in pre-IPO companies, there are opportunities to invest in rapidly growing companies that are not yet accessible to a broad investor base.
Potential opportunities in the private market
So far in 2025, the “Magnificent 7” stocks — including Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla — have continued to propel the S&P 500 to new heights. However, in certain areas of the market like AI, publicly traded companies are far from the only game in town. The private Magnificent 7 — comprised of SpaceX, OpenAI, Stripe, Databricks, Fanatics, Scale AI, and Rippling — contains some of the largest and most innovative private companies.15 For investors looking to add pure-play AI names to their portfolios, the private market contains significant players, including powerhouses like Anthropic, xAI, and Perplexity, among many others. While publicly traded AI-focused companies continue to dominate headlines, some investors are exploring the private market to gain exposure to emerging AI companies, though it is important to remember that private investments are less liquid and less transparent than publicly traded stocks.
How to buy shares of private companies on Forge
How can investors buy equity in these pre-IPO companies? Unlike when purchasing a publicly traded security, investors cannot simply log on to their traditional online brokerage account and click a button or two to execute a trade. Instead, they may look to marketplaces that aim to match buyers and sellers of shares of private companies. For individuals interested in learning how to purchase pre-IPO shares of a specific company on Forge, this guide provides a detailed explanation of the purchase steps.
Take the next step
If you’re interested in learning how to purchase shares of a pre-IPO company, we recommend reading "How to buy private shares on Forge: A complete guide", which offers a step-by-step overview of the process. And if you’re ready to dive into the world of private market investing, you can sign up for Forge today to gain access to data including Forge Price™, trading history and other resources.
FAQs about the private market
What is the difference between a public market and a private market?
In investing, there are major differences between public and private markets. Public markets, encompassing stocks, bonds, and exchange-traded products like ETFs, make up the vast majority of global assets. They tend to offer significant liquidity and price transparency and usually provide easy tradability on online brokerages and other platforms without any special accreditation status.
The private market includes assets that cannot be traded publicly, such as private equity funds, private credit funds, venture capital funds, private real estate, private infrastructure, and farmland. At Forge, the private market specifically refers to late-stage venture-backed companies that have not yet completed an IPO or other exit event.
Compared with public market investments, private market assets offer limited or no liquidity, feature less price transparency, and usually cannot be traded on traditional online brokerages. At the same time, private market assets may offer the potential for higher returns than publicly traded securities, though they may include higher risks. Private market investments are generally only available to investors who meet the SEC’s accreditation standards .
What is an example of a private market?
While there are other types of private market investments, late-stage venture-backed companies are a popular and growing area of the private market. Private companies with valuations exceeding $1 billion that have not yet completed an IPO or other exit event are often called “unicorns.”
Is it safe to invest in the private market?
Like other investments, purchasing pre-IPO shares carries both general and specific risks. Compared with publicly traded securities, shares of private companies are often far less liquid and may not be tradable until a company completes an exit. Other risks include lower pricing and valuation transparency compared with public securities, as well as the potential loss of principal, among other considerations.
What are the benefits and risks of investing in the private market?
Private market investing offers the potential for investors to gain access to non-publicly traded companies that otherwise may not be available. As many of the most innovative companies are staying private for longer, investors may find compelling opportunities in the private market.
Private market investing carries numerous risks, including but not limited to the potential for loss of value, limited liquidity for exiting positions, less transparency into financials and other data compared with publicly traded stocks, and other general risks entailed in any type of investment.
How do you invest in the private market?
Before looking to invest in the private market by purchasing shares of a private company, we encourage investors to conduct research and due diligence on the company using a private market platform such as Forge. On the Forge platform, investors can see real-time data on private companies, as well as evaluate historical valuation, pricing, and trading activity, among other private market data points.
Marketplaces like Forge offer a platform to match buyers and sellers of private company shares. Individual pre-IPO stocks cannot be traded on traditional online brokerages or apps.
