What Makes an Accredited Investor?
Being an accredited investor allows you access to investments that you might normally be restricted from. Rather than sticking with registered securities, (equity, debt, hybrids) you can use your status to invest in assets that aren't available to the general public, such as private equity funds, crowdfunding ventures, or private placement programs.
As an accredited investor, you have the financial cushion and expertise to handle complex and potentially risky investment transactions. Generally accredited investors include high net worth individuals, banks, and other large corporations.
Think Shark Tank.
A reality television series focused on entrepreneurs who present a sales pitch to a panel of investors (or “sharks”) seeking an investment in their company. In turn, the sharks are offered a percentage of equity in the business should they choose to invest.
Some relatable examples of accredited investors include:
Ashton Kutcher investing in the investment app, Acorns
Madonna investing is Vita Coco Coconut Water
Oprah Winfrey investing in Weight Watchers
What’s It Take?
In order to be considered an accredited investor, you must meet one of the following criteria:
A high enough income: If you have made $200,000 as an individual (or $300,000 as a married couple) for the past two years, and you expect to make as much in the current year, you can be considered an accredited investor.
A net worth exceeding $1 million: Seems like a no-brainer. Your net worth when used as a qualifier, whether married or not, must not include the value of your primary residence.
Registered Brokers and Investment Advisors: If you can prove that you have enough job experience or professional knowledge in dealing with unregistered securities, you can be considered an accredited investor.
Remember that, as an accredited investor, you are taking on more risk and responsibility. Carefully consider where you put your money to work and make sure it's suitable for your portfolio and your financial situation.