The Not-So-Secret Society of Accredited Investors


I first heard the term “accredited investor” over coffee with a friend who happened to be a financial advisor. He was excited about a real estate deal he was involved in. My interest piqued, I asked him how he finds access to these deals. He said he’d be happy to introduce me to the operators, but I needed to be an accredited investor first.

I had no idea what that meant, other than it sounded like a secret society–the kind where you need a password to even get past the man at the door. So, naturally I asked him, “what’s an accredited investor?” He basically told me that it’s a designation that gives you access to a whole new level of investment opportunities.

As soon as I could, I went home and found out how I could qualify for this secret club. As it turns out . . . it’s not all that secret. In fact, a simple Google search provided me with a definition straight from the SEC. To be “accredited,” you must:

*Have a net worth of at least $1 million, not including the value of a primary residence; or

*Have an annual income of at least $200,000 for an individual, or $300,000 for a married couple. The income bar must have been reached in each of the past two years, and there must be a reasonable expectation that it will continue to be met in the coming year.

Accredited investors can be an individual or entities (company, trusts, banks, etc.), but for the purposes of this post, I’m going to assume most of my audience is classified as an individual. To cut right to it, accredited investors have access to some investments that non-accredited investors do not.

At the time when I learned about this term, I had just finished my training and absolutely did not meet the criteria.


Why Does Accreditation Exist?

The Securities and Exchange Commission (SEC) created this distinction to refer to individuals who are considered “sophisticated investors.” These types of investor may not necessarily require the same protection that smaller or novice investors may need when investing in a project.

It was created as a protective measurement to protect the novice investors from getting into riskier projects, especially because they may not have the fund reserves to handle a loss.

In fact, the SEC uses this label to regulate companies against advertising to or soliciting investments from non-accredited investors. So if you’re a non-accredited investor, you actually shouldn’t even know about some of these offerings. In a sense, this does create a secret society of sorts. For accredited investors, deals get passed around that could be riskier, but they also provide greater opportunities.

Advantages of Being Accredited

In short, the advantage of being an accredited investor is that you have the opportunity to hear about more deals, get access to them, and ultimately invest in those deals. I’ve mentioned several of these in previous posts, but a few of these unique opportunities may include:

Now, some will argue that this whole “accredited investor” thing is just another way for the rich to get richer. The government may have actually agreed with that, and so in 2016, they passed Title III of the Jobs Act. This opened up some of the investments to non-accredited investors–under certain conditions. Sites like Fundrise and Rich Uncles are great examples of this.

Becoming an Accredited Investor

Once I finally met the criteria a few years later, I remember wondering if I would be sent a special ID card with the words “Accredited Investor” in big, bold letters across the front. This card would get me into all of the exclusive opportunities.

Actually, it’s a lot less involved than that. In fact, some places only require self-qualification. You check a box that certifies that you are one (and understand the implications behind it), and you’re in. In other cases, they require you to submit a letter of verification from your CPA, while others may ask you to produce your tax returns. In any case, please only say that you’re an accredited investor if, you know, you actually are one. If you falsely claim that you are, it could cause some legal ramifications down the road for you and the company you invest with.


Ultimately, it is true that being an accredited investor gets you special access to certain deals. Some deals are a little more out in the open (like crowdfunding) in the sense that you can find them online versus over investor dinners and meetings or passed along at country clubs. However, if you’re actively looking for deals and talking to people in that space, it’s likely that they’ll only talk to you if you’re an accredited investor. That’s not because they don’t like you, it’s because they must keep in compliance with regulations.

So if you do meet the requirement, great! Know that there’s a vast number of opportunities available to you as a result. Some are riskier, but honestly, a lot of good deals are only open to you. If you’re not, don’t worry. There are still tons of opportunities available for everyone.

How do you feel about there being a separate class of investors who have access to different deals – fair / not fair? Have you heard of this before? What deals have you had access to because of being an accredited investor?




  1. Being an accredited investor is an unfair advantage for the rich. That’s just the way it is. Most physicians qualify as accredited investors through income criteria alone (but most docs I speak with don’t realize it or care too much). The offerings are not usually registered with the SEC so the investor needs to do their own due diligence. Regardless, I think it’s a good financial goal to reach that level of AI and have more options available to you. I personally invest in real estate syndication and crowdfunding.

    • I’ve also noticed that most docs don’t care because all they plan on doing is contributing to their hospital retirement plan. When I ask them what they expect or need to be there when they’re ready to retire, they have no idea. Knowing what options are available to you as an AI at least gets you thinking about goals and how to get there.

    • I’m not convinced being an accredited investor is an unfair advantage for the rich. It *sounds* like an unfair advantage but many of these investment opportunities have minimums that only accredited investors could take advantage of – $25,000, $50,000, etc.

      A lot of the real estate crowdfunding platforms, with lower minimums, have lowered the bar but none of these investments are sure-fire winners. It’s probably better for most people, accredited or otherwise, to pass them anyway. 🙂

      • I personally agree with the intent of the designation – you don’t want an investor putting their last few cents into an investment because it’s marketed well. That being said, non-accredited investors do miss out on some good opportunities, like certain real estate crowdfunding deals in my opinion. You’re right, crowdfunding is not without risk, but an investment based on an asset-backed security with conservative guidelines is something I’m comfortable allocating a portion of my portfolio to.

  2. The AI definition seems arbitrary to me. I know plenty of people that are NOT AI but have a much better ability to analyze the risk/reward of investments than some that do qualify as accredited. As well, I don’t think investments open to AI’s are by definition riskier as some are actually quite conservative. But alas, we don’t make up the rules. I do agree that it is a good opportunity if you do qualify as it just gives you that many more options so I encourage anyone that qualifies to be more proactive about seeing what might be available to them to invest in.

    • Yes, I think there are definitely people on either extreme – uninformed investors with lots of money, and quite informed investors with little money. I get why they make the designation though, especially in cases like angel investing.

  3. I think if the purpose is to identify “sophisticated” investors, then the net worth criteria is much more important than the income criteria. If you’ve made over $300000 for the past several years and your net worth is not at least a million, then you are probably not that financially sophisticated. If someone has a net worth of 10 million but an income of 50k, they can take plenty of risk. The doctor with an income of 400k but a net worth of 500k really can’t (unfortunately I think there are way more of these than there should be).

  4. Honestly none of the actual offerings you gain access to as AI really seem all that appealing to me. I might make a small exception for real estate crowd funding (though even then I’m not sure). But the jobs act really made it so if you aren’t AI and want to dabble you still can. So really your just missing out on hedge funds, angel investing and the like which honestly are too risky for most people regardless of assets/income. Then again even if I had hundreds of millions I’d still be in index funds.

    • Yes the distinction makes no difference to the person who only invests in index funds. Unfortunately to reach the point of hundreds of millions, you wouldn’t have gotten there by investing only in index funds. You’d likely be invested in some sort of business (or businesses). So my money is on the fact that when you get there you’ll be diversified into other assets.

  5. how about a couple where one spouse makes >200k;with other stay at home. Does the spouse with >200k qualify as accredited investor?

      • hmm not so sure…”a natural person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year”

        • I find that wording a little bit confusing myself.

          It seems a case could be made for the situation that you describe. If you are an individual who makes greater than $200k, even if you are married, you are still “a natural person with income exceeding $200,000.”

          Could an argument be presented in which the married individual who makes $200,000 by themselves claims that they are an individual investor and their spouse is not involved in the deal?

          I’m guessing the point of putting a different threshold on married individuals is that married individuals have higher living expenses than an individual would, but it doesn’t explicitly state that.

          It’d be interesting to see an attorney or CPA chime in on this.

  6. I was not aware of this classification. I was aware of the restrictions on Hedge Funds, but not this special accreditation. It seems fair based on the minimums to invest in many of these investments. They seem complicated, so it is probably better that these restrictions are in place.

    • Access to these deals has definitely been positively impacted by crowdfunding. You’ll see on most of these platforms that if you want to sign up, you have to check the box that self-certifies you. Some are complicated, but I also find a lot of normal investment products like whole life insurance are quite hard to understand. Yet, they’re marketed pretty heavily to the average investor. In any case, educating yourself before getting into anything seems to be the key regardless of your “status.” Thanks for stopping by!

  7. whenever you enter into a business agreement (as a customer, client, whatever) ask yourself how the other party makes money off of the relationship. i.e. a bank will make money on deposits and (hopefully for them) fees. a broker of these accredited investor deals maybe commission. to me accredited investor is like a limit of 2 per caller on the magic weight loss pills you hear about on the radio. but i’m a natural skeptic.

  8. I agree with Jim Wang.

    I felt pretty cool when I realized I was an accredited investor, but everything I’ve seen so far has looked just at risky or riskier than what’s available to “the rest of us.”.

    Being an accredited investor means I have more sophisticated ways to lose my money!
    At least I can feel privileged while doing it.

    Don’t fall for the hype.

    At the end of the day, vanguard index funds and buy and hold real estate beats anything I’ve ever seen.

  9. I don’t understand why they exclude home equity. Seems to penalize people who live in HCOL states and make under 200k. I’ve been a millionaire for 5 years but have only been an accredited investor since early 2020 when I cashed out of the condo I owned in San Francisco and moved to Texas and rented. If I subsequently decide to buy a home that requires a large down payment to get the mortgage, I could lose the accredited status again. Seems odd.

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