What is My Accreditation Status and Why Does it Matter?
Why Is Knowing Your Investor Accreditation Status Important?
So, you've decided you want to start investing, take control of your financial future and plant seeds of equity with your own hands? Imagine, you’ve saved up your seed capital, found a fruitful investment opportunity and are ready to plant your money tree. Congratulations! You’ve taken the first step into a world of opportunities but unfortunately some of it may be off limits. Before you can start salivating over the profits you will harvest -wait! You must first verify if you’re qualified for that particular investment opportunity. In order to do this, you must know your accreditation status.
What Is an Investor Accreditation Status?
Accreditation status is an investor designation set forth by the SEC. The SEC? Who are they? Simply put, the SEC, Securities and Exchange Commission, is a federal body tasked with regulating the investing world in order to protect investors. They help to prevent the common investor from being taken advantage of by unscrupulous operators or phony investments. Anyone offering an investment opportunity is mandated to register the opportunity, referred to as a security, with the SEC or file an exemption from registration. How the security is registered, or the exemption is filed determines what status of investors may participate in the investment.
What Are They Types Of Investor Accreditation Status?
In the eyes of the SEC you are either Accredited or Non-Accredited. Furthermore, you are only legally allowed to invest in securities that align with your accreditation status.
What Is The Definition and Who Qualifies As An Accredited Investor?
An Accredited investor is someone that meets the following criteria:
Earned income that exceeded $200,000 (or $300,000 together with a spouse) in each of the prior two years, and reasonably expects the same for the current year, OR
Net worth over $1 million, either alone o