Man climbing a rope
A private sector investment is the process of investing in a commodity that is not publicly traded. In many cases this refers to a private company with a limited number of shareholders, but the term can also be used to describe many other scenarios. For example, if an investor bought a collection of valuables from someone else, that would also qualify. Another popular area for this type of investment is in the areas of health, regulation, and education to improve the standard of living in a given region.
The type of private sector investment that consumers are most familiar with involves companies looking to expand. If the company is not large enough to go public but needs an influx of cash to remain profitable, you can choose investors who can help meet your needs. Financial institutions are the most reputable companies making these investments, but private lenders are also often used. An example of an industry that thrives almost exclusively on these investors is the Internet; most existing sites wouldn’t be here without it.
Another type of investment comes from a commodity trader. The product can be anything from corn or wheat to diamonds and other valuables; the value of the investment doesn’t really matter. This type deals with buying goods directly from the source and holding them until they can be sold for a profit. As long as the product is purchased for economic purposes, it fits the definition. There are many private sector companies that cater to this type of client.
One of the most important types of private sector investment does not involve any monetary return. Instead, investors look to private companies that are striving to make the world a better place. This would include places like schools, research organizations, medical clinics, and many other entities that provide services that could improve the quality of life in some regions.
For example, this type of investment could include financing a medical center that serves low-income families. Even if the investor did not personally benefit from the transaction, people who use the clinic’s services receive better care because of it. While many consider this act more like a loan or donation, it still qualifies as there are measurable results from it.