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Accredited Investor

November 30, 2021 • 2 min read

Under Federal Legislation regulated by the U.S. Securities and Exchange Commission (SEC), an accredited investor is classified as an individual or business entity that can legally trade in securities.

Regulators have strict guidelines on who can be considered an accredited investor. Under new legislation passed in late 2020 by the SEC, individuals can now qualify as an accredited investor “based on measures of professional knowledge, experience or certifications in addition to the existing tests for income or net worth.”

Who is considered an accredited investor?

To be considered an accredited investor, individuals will need to provide substantial proof that personal net worth exceeds the $1 million threshold. Additionally, accredited investors can also be people who are legally married and have a joint net worth that meets SEC standards. Total net worth should include all current assets that exceed the greater of $1 million. And these assets exclude the primary residence and the value thereof.

What are the benefits of becoming an accredited investor?

Private companies can offer securities for investment that are not available to the general public.

These securities products can include:

Venture Capital Funds (VC)
Angel Investing
Hedge Funds
Private Equity Opportunities
Equity Crowdfunding

There are also additional private investment securities that can be accessed by accredited investors.

How do you become an accredited investor?

Meet all regulations and standards outlined by the SEC.
Ensure a combined or individual net worth exceeds $1 million.
Primary residence value may not be included in overall net worth.
Exceed the minimum income requirement of $200,000 per year during the last two calendar years.
For spouses, the combined minimum income is $300,000 per year.

Get more details about becoming an accredited investor.

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² Represents an average net realized internal rate of return (IRR) with respect to all matured investments in your portfolio, utilizing the effective dates and amounts to and from the investments and net of management fees and all other expenses charged to the investments. Past performance is not a reliable indicator of future results and should not be relied upon as the basis for making an investment decision. All securities involve risk and may result in significant losses, including the loss of principal invested.[read more]

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