Are You an SEC Accredited Investor?

Jan 19, 2021

 

Qualifying as an SEC accredited investor opens up even more avenues for wealth creation and portfolio diversification.

 

Let’s discover the newest 2021 prerequisites that define an Accredited Investor according to Rule 501, Regulation D, of the Securities and Exchange Commission (SEC).

Plus, we will find out how many accredited investors there are in the US!

 

How do I qualify as an SEC Accredited Investor?

There are 5 main prerequisites:

  1. Individual net worth (without any exclusions), or joint net worth together with spouse in excess of $1,000,000.
  2. Individual income in excess of $200,000 in each of the past two years, or joint income with spouse in excess of $300,000 in each of the past two years, with expected income in excess of that amount in the current year.
  3. Qualifying via professional accolades. (see below)
  4. Being a “knowledgeable employee” of a private fund. (see below)
  5. “Family offices” and/ or limited liability companies with over $5 million in assets. (see below)

>>>> full details here

 

Newest Changes to Rule 501, Regulation D

Broadly speaking, 4 new categories were set in motion by the Securities and Exchange Commission Aug 20, 2020, for individuals and entities possessing specific professional characteristics.

1. Qualifying via professional accolades

From SEC:

Natural persons will now be able to qualify as accredited investors based on professional certifications, designations, or credentials from an accredited educational institution that the SEC designates.

Three new qualifying designations:

  1. Licensed General Securities Representative (Series 7)
  2. Licensed Investment Adviser Representative (Series 65)
  3. Licensed Private Securities Offerings Representative (Series 82)

 

2. Being a “knowledgeable employee” of a private fund

Quote from SEC:

This includes as accredited investors, with respect to investments in a private fund, natural persons who are “knowledgeable employees” of the fund.

 

3. “Family offices” and family clients with over $5 million in assets

From SEC:

A family office will qualify as an accredited investor if:

1. It has in excess of $5 million in assets under management,

2. It was not formed for the specific purpose of acquiring the securities offered,

3. Its prospective investment is directed by a person capable of evaluating the merits and risks of the prospective investment. Family clients of a family office that meets these requirements will also qualify as accredited investors.

 

4. Any limited liability or rural business investment companies (RBICs), with over $5 million in assets.

Quote from SEC:

Rule 2a51-1(b) under the Investment Company Act:

All existing entity forms not included in the existing definition, such as Native American tribes and governmental bodies, as well as those entity types that may be created in the future.

>>> So, on top of the fore-mentioned income and assets thresholds, they are 4 new ways to qualify as an Accredited Investor, according to the Harvard Law School Forum on Corporate Governance.

 

The 3 KEY advantages of being an SEC Accredited Investor

  1. Access to unique investment opportunities
  2. High Returns
  3. Portfolio Diversification

 

How can I leverage my accredited status to diversify my portfolio?

Investments opportunities available to accredited investors include:

  • Private Equity Funds
  • Hedge Funds
  • Angel Investments
  • Venture Capital Firms

*** Our exclusive Private Equity Real Estate Fund: Archer Place. ***

Invitation for Your Limited Opportunity at Archer Place

 

How many SEC accredited investors are there in the USA?

According to DQYDJ:

“In 2020 there were 13,665,475 accredited investor households in America. Roughly 10.6% of all American households were accredited in 2020.

Further, accredited investor households controlled roughly $73.3 trillion in wealth in 2020. They controlled around 76.3% of all private wealth in America measured by the 2019 SCF.”

 

Today’s Takeaways

  1. Accredited investors are high wealth or uniquely skilled individuals privy to the widest range of investment opportunities.
  2. Wealth diversification is possible via exclusive opportunities only available to accredited investors.
  3. As wealthy individuals with balanced portfolios, accredited investors can afford to take advantage of the long term investment cycles common in private equity funds and the like.

 

BAI Capital offers accredited investors like you the opportunity to diversify in Private Equity Real Estate Funds. Funds located in booming Florida, where the housing market continues to impress.

 

feature photo courtesy of Jeremy Beadle on Unsplash.

 

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