After several years of the hardworking experience, you decided to invest in something valuable. Despite the fact you had a great year and earned a considerable amount of money, you might find out that not all projects are accessible to you. What makes you eligible? There are government rules in place that regulate and distinguish accredited and nonaccredited investors from each other.
An accredited investor does not mean you get a certificate or a government-issued document. It is just a term indicating you are qualified enough to invest in a scaled project.
How to know if you are an accredited investor?
To get the status of an accredited investor, you must qualify at least one of two conditions:
1. You Must have an annual income that surpasses $200(k) or have a $300(k) joint income with your spouse – You must qualify the mentioned requirement for the last two years. At the same time, you must show the ability to earn the same amount or more by the end of the ongoing year.
2. Your net worth must be surpassing $1 million – excluding the costs of your primary residence.
The mentioned rules are valid for individual investors. But what about entities? The entity is qualified as an” accredited investor” if its net worth exceeds $5 million. At the same time, the organization is qualified if each member is an accredited investor individually.
How do regulations defend young/newbie investors from failure?
The division between accredited and nonaccredited investors might seem unfair to many people. But it has a relatively adequate explanation. First, not all projects require certified investors. Contrary, the majority of them are free from these restrictions. Second, scaled projects are challenging to implement. They need years of experience to fulfill the objectives. Without regulation, newbie individuals or companies might take on too many obligations. The probability of failure is high. Therefore, they should avoid large-scale projects, and restrictions certainly help them stay on the safe side.
Being an accredited investor is advantageous. It helps identify you as one who is eligible for certain types of projects, while simultaneously protecting newbies or less sophisticated investors.
Invest Confidently with Shannon Robnett
By reading this blog you’ve began the first step in aligning your investment strategy with your personal financial goals. At Shannon Robnett Industries, we bring decades of experience structuring both types of opportunities, with a proven track record of helping investors build wealth through carefully vetted, tax-advantaged real estate projects.
Whether you’re seeking steady income through debt or long-term growth through equity, our team is here to help you make the right move.