Traditionally, a portfolio of financial assets is comprised of roughly 75-90% liquid assets (Public stocks and Bonds) and 5-25% of illiquid assets (Private stocks and Bonds).
Liquid assets are cash on hand or an asset that can be readily converted to cash. An asset that can readily be converted into cash is similar to cash itself because the asset can be sold with little impact on its value. Illiquid assets are assets that either cannot be easily converted into cash, or if you convert them into cash then you could lose some of the value. With illiquid assets you may be waiting for a liquidity event where you can cash out some of your asset, such as a merger or acquisition, floating on an exchange, or paying of dividends.
For retail investors, illiquid assets typically hovers around 10% of your total investments. If you are an accredited investor, you generally have more bandwidth, and can increase the amount you invest in private companies.
It doesn't matter if you are investing $1,000 or $100,000 the rule of thumb around how many private companies you should own is pretty much the same. Check the outline below to know more about how you can start building your plan.
Check out some investment opportunities on FrontFundr to begin creating your asset allocation plan.