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Finance: What is an Accredited Investor? 9 Views

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What is an Accredited Investor? An accredited investor, according to the SEC, is an individual with income of $200,000 or more and $300,000 and above jointly for more than two consecutive years. Other investors with “accredited” status are: institutions, High Net Worth investors, trusts, financial companies, and banks. The assumption is that in order to accumulate sufficient liquidity and earnings to invest substantively in the market, the investor of record has developed a level of sophistication that qualifies that investor for private placements and other riskier and less regulated investments.

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Transcript

00:00
Finance a la Shmoop. What is an accredited investor. Well the difference
00:07
between an accredited college and an unaccredited college, can be like you
00:13
know the difference between Princeton, and the school of Feel Good Energy, that
00:17
your great Aunt Bertha, set up in her garage last year. Yeah different kind of [woman dancing in garage with disco ball]
00:22
college. Well accredited investors work on a

00:24
similar idea. A bunch of someone's have come along and agreed that accredited
00:29
investors, have a bunch of qualifications. In other words they're legit. So
00:34
accredited investors are simply investors, who qualify to do a certain
00:39
investment. Usually accredited means, that they have credit, or assets, or wampum, or
00:45
knowledge, like intellectual capital, instead of financial capital, or along with
00:49
both. Which means that they're big boys and big girls, who are able to invest a
00:53
large amount of money, in a risky venture. Officially they're investors who have an
00:57
income of at least $200,000 for the past two years, three hundred thousand for [checklist for investors on chalkboard]
01:03
joint accredited investors, like married people or partners, or have a net worth
01:07
of at least a million bucks individually, or jointly, or our executives, partners, or
01:12
directors of the entity issuing those securities. Meaning raising the dough
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itself. Institutional investors, such as mutual funds, hedge funds, and pension
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funds, also fit the bill. Additionally entities can be considered
01:26
accredited, but their threshold is 5 million bucks in assets. By the way if [man talking on lawn]
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all the owners of an entity, like a law firm or something like that, are
01:35
accredited, well then the entity is considered accredited
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as well. So yeah they're accredited investors. Not to be confused with a
01:44
credited investor, who is really excited to have a small part in a movie. [guy in movie theater]
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