The definition of an accredited investor is relatively straightforward. An individual who has a high net worth or income has the ability to invest in various investment opportunities such as unregistered securities. The government does not restrict these investors from investing money in investments that it will not or cannot regulate. It is important to know how to get accredited investor status and the benefits of that status.
Accredited investors are involved in securities that are not necessarily registered with financial authorities. These investors can be individuals or business entities. In order to qualify as an accredited investor, one or more requirements must be met.
Accredited Investor Definition
An accredited investor is an individual who has an annual gross income of $200,000 (or $300,000 when applying with a spouse) during the previous two years with a reasonable certainty of meeting the same income threshold in the current calendar year; or a net worth of $1 million (not to include the value of primary residence). Trusts, insurance companies, banks, and high net worth entities are all potential accredited investors.
Once you know how to get accredited investor status and use it, you will face fewer restrictions from the government about the types of investments you can choose. Although the investments available could potentially be more profitable, they can be riskier at the same time. However, your status as an accredited investor, having qualified according to the criteria mentioned above, should give you the necessary financial cushion to absorb any failures that could occur with these investments. At the same time, the accredited investor needs to exercise appropriate caution when entering into any available investment opportunity.
Accredited Investor Benefits
Accredited investors are very important in the marketplace. Some of the reasons why someone may want to become an accredited investor include:
• The ability to invest in unregulated securities
• Access to investments the government regulates and only allows for accredited investors
• The ability to create more diversified portfolios
• The opportunity to invest in businesses
Knowing how to get accredited investor status is important. Using that status to invest in business opportunities has many benefits. However, as an accredited investor there are risks that must be taken into account in order to make informed investment decisions.