Risk Planning

Quiz!

If you have $10M in public investments and another $20M in private investments, and spend $600k per year. What is your withdrawal rate for risk planning?

1. 6%
2. 2%

Do you Know the Real Value of your Private Investment?

Bluerock Total Income+ Real Estate Fund was a private fund, until going public (symbol BPRE) on 12/16/2025. On that day, shares were traded at a loss of about 38% to the private share price. What happened? Private shares may not have ongoing trading information, so their stated price is not always reliable. In contrast, public investments typically exchange hands multiple times each day, creating the most reliable pricing data – what actual buyers are willing to pay.

This exposes an issue of private investments. Not only could they be locked for years, but their stated price may be flawed. This is not a reason to avoid all private investments at all times. It is a reason to do very careful risk planning around private investments. Examples of risk planning include:

1. Making sure you have enough public investments that you can sell on a dime to buy food and pay your bills whether in retirement, between jobs or during a slowdown of your business.
2. When calculating your withdrawal rate for risk planning, use annual spending divided by liquid investments (excluding private investments). This matches daily spending with investments that can be sold at any point, and at a reliable price.

Once you are able to and choose to sell your private investment, it can be used for spending with a known value and can be added to your risk plan. While this may seem harsh, I witnessed too many surprises with waiting for a liquidity event that failed on timing, value or both.

Quiz Answer:

If you have $10M in public investments and another $20M in private investments, and spend $600k per year. What is your withdrawal rate for risk planning?

1. 6% [The Correct Answer]
2. 2%

Explanation: You can’t reliably sell a private investment at its stated price to cover current expenses. For risk planning, it is safest to ignore it until sold. This means that your withdrawal rate is not $600k/($10M+$20M) = 2%, but $600k/$10M = 6%.