Private Credit in Your IRA: Why Risk Matters More Than Yield

Private credit has become one of the fastest-growing areas in alternative investing, but investors often focus on the wrong question. 

Instead of asking, "How much yield can I earn?" a better question is: 

"What risks am I taking to earn that yield?"

That was the central theme of a discussion between Evan Deussing of Alto IRA and Chris Carsley, Chief Investment Officer of Kirkland Capital Group. 

For many investors, the appeal of private credit is simple: the opportunity to earn more income than they may receive from traditional fixed income.

As a result, much of the conversation around private credit focuses on performance, income, and growth. While those factors matter, Chris argued that investors should start somewhere else: understanding risk. 

Private credit is not a single investment strategy. Different managers pursue different opportunities, use different structures, and operate with different levels of discipline. As a result, two investments with similar projected returns can carry very different risk profiles. 

One area that deserves particular attention is liquidity. Investors should understand whether the liquidity offered by an investment aligns with the underlying assets being held. When those two things become disconnected, periods of market stress can create challenges that have little to do with the quality of the underlying loans. 

The discussion also emphasized that effective due diligence goes beyond reviewing performance figures. Investors should seek to understand how a manager underwrites investments, manages risk, values collateral, and oversees fund operations. Operational weaknesses often cause more damage than a flawed investment thesis. 

The goal is not to eliminate risk. Every investment involves risk. The goal is to understand the risks being taken and determine whether the expected return is appropriate compensation for accepting them. 

Watch the Full Discussion

This highlighted one of the core themes from the webinar, but the full discussion below explores private credit, due diligence, portfolio construction, manager selection, and risk management in greater depth. 

The most important takeaway is simple: 

The experienced investors do not start by asking how much they can make. They start by understanding how they could lose money.

Is Private Credit Right for Your Portfolio? 

Before evaluating any private credit investment, it's important to determine whether the asset class aligns with your goals, risk tolerance, liquidity needs, and investment horizon. 

Our Private Credit Suitability Assessment helps investors evaluate whether private credit may be an appropriate addition to their portfolio before considering any specific investment opportunity. 

Next Steps

If you’d like to explore how private credit may fit within your broader investment strategy:

• Schedule a call with Chris Carsley to discuss how Kirkland Capital Group approaches private credit investing.

• Or download our term sheet below, which provides an overview of our investment strategy, performance approach, team, and fund highlights.

We believe informed investors make better decisions—and we’re always happy to continue the conversation.