do both types of organizations just take other peoples money and put it somewhere else to have that money make more money? I get investments but i do not understand the point I suppose, nor do I understand the *need* for the difference. Is there really a difference????
In: Economics
First, equity essentially means ownership.
It is contrasted with debt, which is a borrowing and repayment agreement.
We have this concept of public equity, which are stocks trade on public markets which any person with a brokerage account can purchase and own. So stocks are equity. But so is a private person’s ownership in their own business.
So having stock just means owning a company. But some companies are public, trading on stock exchanges, and some companies are private and do not trade on any exchange.
Whenever someone buys or sells an ownership interest in a private business that is a private equity transaction.
Whenever someone buys or sells an ownership interest, in a public(ly traded) business that is a non-private equity transaction.
Hedge funds, businesses which use their cash and others to engage in public equity transactions, only trade in public markets. Private equity funds, businesses which use their cash and others to engage in private equity transactions, trade in private markets with private transactions.
Both private equity funds and hedge funds offer services to accredited investors to manage and invest their money in their respective markets generally with targeted investment strategies and focuses.
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