Accredited Investor

What is an Accredited Investor?

An accredited investor is a person or entity that is allowed to participate in investments not registered with the SEC. Accredited investors are typically high-net-worth individuals or companies.

An individual accredited investor is someone who:

  • Has earned income of more than $200,000 individually or $300,000 jointly in each of the last two years and reasonably expects to earn the same for the current year.
  • Has a net worth over $1million, either individually or together with a spouse excluding the value of a primary residence.

Examples of investments that require accredited investors:

  • Private equity investments
  • Oil and gas investments
  • Certain real estate funds
  • Fee simple options

The reason these investments can only be completed by accredited investors is as follows:

“…to ensure that all participating investors are financially sophisticated and able to fend for themselves or sustain the risk of loss, thus rendering unnecessary the protections that come from a registered offering,”

according to the SEC.