In essence, if you earn $200,000 per year as an individual or $300,000 per year as a married couple, or if your net worth is more than $1 million (not including the value of your primary residence), you have become an accredited investor. This gives you a status allowing you to participate in certain investments not accessible to non-accredited investors.
Some of the types of investment opportunities available to accredited investors are explained below:
The JOBS Act made it possible to invest in private companies and obtain part ownership in exchange for the investment. Many different platforms allow private companies and startups to raise capital in this manner. Many platforms will enable you to select individual companies or managed venture capital funds in which to invest. The investment minimums with these options are lower than those traditionally available. You can now become an equity crowdfunding investor with a $15,000-$25,000 investment, instead of the previous larger minimums, such as $100,000.
Crowdfunded Real Estate Investments
You can now own a partial stake in commercial real estate deals. Or, you can invest in a real estate fund that involves commercial deals. Marketing and participating in these investments can be done efficiently and successfully through various platforms that evaluate, organize, and provide investors with important information about various jointly funded real estate deals.
Hedge funds are another type of investment you can access after you become an accredited investor. User professionally managed funds such as mutual funds or ETFs. They are subject to less regulation regarding how capital is invested. Although these funds’ fees can be more expensive than mutual funds and ETFs, they enable you to invest in a fund or money manager of your choice according to your preferred investment theme or category.
Venture Capital and Private Equity Funds
By investing in private equity and venture capital funds, accredited investors can achieve returns by helping them grow their valuation. The investor often makes money when the company goes public with an IPO or is sold.
Specialty Investment Funds
There are various alternative funds available to accredited investors that involve investments in alternative assets or that involve investments outside the definition of private equity, venture capital, or hedge funds. One example includes the ability to invest in various crypto assets and cryptocurrencies.
If you have become an accredited investor and wish to pursue one or more of these investments, it is essential to understanding the types of investments available and how they can build wealth, in addition to the risks and benefits involved.