Today on the Finance Flash Go! podcast, I’ll fill you in on what it means to be an accredited investor.
An accredited investor is an individual or a business that is allowed to invest in certain vehicles or opportunities that may not be registered with authorities. They are allowed to do this by satisfying at least one requirement with regards to factors, usually income or net worth.
In the U.S, the definition of an accredited investor is made by SEC in Rule 501 of Regulation D.
How do you become classified as an accredited investor?
To be classified as an accredited investor, a person must have an annual income exceeding $200,000 ($300,000 for joint income) for the last two years. They must also have an expectation of having the same or a higher income in the current year. An individual must have earned income above the thresholds either alone or with a spouse over the last two years.
A person is also considered an accredited investor if they have a net worth of more than $1 million, either individually or jointly with their spouse.
There are other requirements that apply to business entities and such but not to individuals.
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