Private equity and investment banking are two related, but separate, industries. Private equity firms invest money from their own coffers, or from investors, in companies they believe have potential for growth. Investment banks, on the other hand, are in the business of raising money from investors and then lending it out to companies or governments. They also help companies raise money by underwriting and selling securities. The modern private equity industry can be traced back to the early 1970s, when a group of investors, including the Rockefeller family, pooled their money to buy a company called Allied Crude Vegetable Oil. The industry really took off in the 1980s, when a number of firms, such as Kohlberg Kravis Roberts (KKR) and Blackstone, were formed. These firms raised money by selling shares to investors. In the 1990s, the industry began to focus on leveraged buyouts, or deals in which a private equity firm borrows money to buy a company. The goal is to improve the company's performance and then sell it or take it public.
There is no definitive answer to this question as it depends on the individual's goals and preferences. Private equity typically offers more flexibility and a higher potential return, while investment banking can be more secure but may have less upside potential.