What is an Accredited Investor and Does it Really Matter for Your Investments?

Have you come across the term “accredited investor” and wondered what its significance is when it comes to your investment journey? While Roers Companies offers opportunities on an institutional scale to the everyday investor, we do require individuals to be accredited. Accredited investors belong to a distinguished group with specific financial credentials. Please also see the U.S. Securities and Exchange Commission (SEC) Accredited Investor page here for more information.

Who qualifies as an accredited investor?

An accredited investor is an individual or entity recognized for their financial expertise and resources, making them eligible to partake in exclusive investment opportunities. The SEC sets the standards for accreditation with the overall intention of safeguarding investors. Accredited investors are those who meet specific financial criteria, granting them access to investment options not available to the general public. Accreditation is commonly associated with private placements, hedge funds, venture capital, and other sophisticated investment vehicles.

Factors that Determine Accreditation

Income

To qualify as an accredited investor, an individual must have demonstrated income of at least $200,000 individually (or $300,000 for joint income with a spouse or spousal equivalent) in the last two years, with a reasonable expectation of maintaining that level in the current year. This requirement ensures that accredited investors have the financial stability and capability to engage in specialized investment opportunities.

Net Worth

Individuals with a net worth exceeding $1 million,  whether accumulated individually or jointly with a spouse or spousal equivalent, excluding the value of their primary residence, are also considered accredited. This requirement underscores the importance of having a significant financial safety net to navigate the complexities and uncertainties of investment landscapes.

Entity Accreditation

Entities can also qualify as accredited investors based on their financial structure and total assets. A partnership with total assets or investments, so long as hte entity was not established solely for the purpose of acquiring the offered securities, including: (a) corporations, limited liability companies, partnerships, trusts and tax-exempt charitable organizations with total assets exceeding $5 million; and (b) entities owning investments in excess of $5 million. 

Professional Certifications

An individual with specialized professional certifications in good standing — such as a Series 7, Series 65, or Series 82 license — issued by the Financial Industry Regulatory Authority (FINRA), may also qualify as an accredited investor. These certifications not only exhibit a deep understanding of financial markets but also demonstrate a high level of expertise in navigating complex investments. These certifications show a dedication to staying informed and making strategic investment decisions.

Note: this list is not exhaustive; please refer to applicable laws and guidance for all factors that determine accreditation, including the SEC page linked above.

Benefits of Accreditation

1. Access to Exclusive Opportunities

Accredited investors gain access to investment opportunities that are not available to the general public. This exclusivity often includes private equity investments, venture capital funds, and private placements in real estate developments.

2. Diversification and Risk Management

Accredited investors can diversify their portfolios by participating in alternative investments. This diversification can be crucial for managing risk and achieving a balanced investment strategy.

3. Potential for Higher Returns

Private investments often offer higher potential returns compared to traditional investments. Accredited investors may benefit from the growth potential of early-stage companies or real estate projects that are not accessible to non-accredited individuals.

Becoming an accredited investor marks a significant achievement, unlocking an array of exclusive investment possibilities. Yet, it’s vital to approach these opportunities with a deep understanding of the risks and intricacies involved. At Roers Cos. accreditation is verified in accordance with SEC requirements. It’s crucial to remember that accreditation does not guarantee investment success. Every venture carries inherent risks, so thorough due diligence is essential before making any financial decisions. This article is for informational purposes only and should not be considered financial advice.

NO OFFER OF SECURITIES; DISCLOSURE OF INTERESTS: Under no circumstances should any material or information contained herein be used or considered as an offer to sell or a solicitation of any offer to buy an interest in any investment. Any such offer or solicitation will be made only by means of the  confidential Private Placement Memorandum relating to the particular investment. Access to information about investments with projects undertaken by Roers Companies LLC, Roers Companies Project Holdings LLC, or any of their respective affiliates is limited to investors who either qualify as accredited investors within the meaning of the Securities Act of 1933, as amended, or those investors who are generally are sophisticated in financial matters, such that they are capable of evaluating the merits and risks of prospective investments.

Investment outcomes vary. Past success does not guarantee future results.

NOT TAX OR LEGAL ADVICE: This material is for general information and educational purposes only. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor.