A common guideline is to keep any single private investment to a small share of investable assets, so that a total loss would hurt but not change your life. Your advisers can help you set a number.
Hidden concentration
- Do you already own rental properties or a home in the same market?
- Is your job tied to local real estate or the same economy?
- Are you investing with the same sponsor across several deals?
Diversification across asset types (public stocks and bonds, cash, real estate) and across managers reduces the chance that one event damages everything at once.
Your journey
More on this stage: Deep Dive: How 506(c) Accreditation Verification Works · Deep Dive: Calculating Net Worth Without Your Home · Deep Dive: Talking It Through as a Household
Start the next stage: Phase 2: Now you think you are an investor