Executive Summary
This white paper examines the projected performance of a $100,000 401(k) investment over a 20-year horizon, comparing two strategies:
1. A 100% allocation to Art.
2. A 100% allocation to the Platinum Ridge Private Equity Fund.
The findings highlight that art offers unique diversification and cultural value. However, private equity’s higher target internal rate of return (IRR) creates far greater financial outcomes over the long term.
Investment Assumptions
– Initial Investment: $100,000
– Time Horizon: 20 years
– Art Average Annual Return: 5.5%
– Platinum Ridge PE Fund Expected Annual Return: 15% (target IRR within fund design)
Results
Art Investment:
Using a 5.5% compound annual growth rate:
Final Value after 20 years: $291,776
Platinum Ridge PE Fund Investment:
Using a 15% compound annual growth rate:
Final Value after 20 years: $1,636,654
Comparative Analysis
Cumulative Growth:
– Art: 2.92x initial investment
– Platinum Ridge PE Fund: 16.4x initial investment
Wealth Gap:
After 20 years, the private equity allocation produces an additional $1.34 million in value compared to the Art strategy.
Implications for Retirement Planning:
– Art Exposure: Provides cultural value and tangible assets. There is potential upside in rare collectibles, but it is illiquid and volatile.
– Private Equity Allocation (Platinum Ridge): Offers enhanced compounding effects, higher return potential, and significant portfolio diversification.
20-Year Growth Projection
Conclusion
The analysis suggests that art can serve as a niche, alternative asset in retirement planning. However, its financial performance is overshadowed by the compounding strength of private equity. Art can be a niche, alternative asset in retirement planning. However, its financial performance is limited. The compounding strength of private equity overshadows it. Private equity provides a more reliable and scalable avenue for long-term wealth creation.
Key Insight: A $100,000 401(k) allocation to Platinum Ridge PE Fund could yield nearly $1.64 million after 20 years versus $292,000 in Art.
