Think of an accredited investor as someone the government trusts to take bigger risks with their money.
Most investments are regulated heavily because the average person could get wiped out. But if you have enough money or enough income, the SEC says — you’re on your own. You can invest in things regular people can’t touch. Private placements, hedge funds, venture capital deals. The high risk, high reward stuff.
The idea is simple. If you can afford to lose it, you’re allowed to play.
The Exam Definition
An accredited investor is an individual with a net worth of over $1 million excluding their primary residence, OR income of $200,000 per year individually — or $300,000 combined with a spouse — in each of the last two years, with the expectation of the same this year.
- Net worth over $1 million — NOT counting your primary home
- Income $200,000 individually or $300,000 with spouse
- Must have met that income threshold for the last two years
- Institutions can also qualify as accredited investors
- This term shows up on both the SIE and Series 7