Possessing accredited investor status gives you access to certain investment opportunities not available to others without this status. These opportunities include private market offerings and alternative investments that have higher potential returns. Knowing how to get accredited investor status is key to opening the door to this whole new world of investing.
What is an Accredited Investor?
Becoming an accredited investor is the entranceway to participating in unregulated investments that do not require registration with the Securities and Exchange Commission (SEC). Accredited investors can be individuals or entities, such as financial institutions or corporations, as long as they meet certain requirements.
In order to obtain accredited investor verification, you must fulfill certain net worth, income, professional credentials, or knowledge requirements.
- Annual income
Under the income requirement, the qualifications for accredited investor status include:
Earning an annual income in excess of$200,000 USD as an individual, or in excess of $300,000 USD with a spouse or spousal equivalent, for two years in a row and from the same source.
The individual or couple must provide evidence that they expect to obtain the same or higher income in the year ahead.
- Net Worth
Under the net worth requirement, individuals can obtain accredited investor status if their net worth meets or exceeds $1 million USD, not including the value of their primary residence.
- Professional Designations
Individuals with certain professional designations and licenses from the Financial Industry Regulatory Authority (FINRA) may qualify for accredited investor status.
The professional licenses that qualify one for accredited investor status include:
- Series 82 – Private Securities Offerings Representative
- Series 65 – Uniform Investment Advisor according to the North American Securities Administrator Association (NASAA)
- Series 7 – General Securities Representative
- Knowledgeable Individuals
Working for a private fund that offers unregistered investments can also qualify you as an accredited investor. Individuals who work for these funds are designated as knowledgeable employees or knowledgeable individuals due to the understanding they possess about various investment opportunities.
Knowing how to get accredited investor status is the first step toward adding greater profit potential to your investment portfolio. So, determine the optimum path to enter this investing arena, obtain accredited investor status, and explore the possibilities.