The goal of every investor is to make investments that work for him or her. In an economy where even a small loss can have profound consequences, it is critical that the investor reaches a position where fluctuations in the market need not translate to a slump in the investor’s fluidity. One of the best ways to ensure that one gets the maximum returns out of investments is to be in a position to invest in some high risk investments.
In the context of the economy today one has to be identified as an accredited investor to get the lion’s share of these high risk investments. Accredited investing has to be the goal of every smart investor as it paves way to a future where returns, market conditions and fluctuations of the economy do not affect the investor.
One must understand that accredited investing is not within the reach of any investor who wants to get there; there are a host of conditions that one must fulfill and well defined criteria that an investor must fit into to qualify for accredited investing. It is important to be aware of the various heads under which one can qualify for accredited investing; this article discusses the salient features of accredited investing and why it needs to be your goal as an investor.
What accredited investing means:
Accredited investing, according to the Securities and Exchange Commission (SEC), means investing in certain filings that are defined as high risk investment and it is open only to certain niche investors who have the financial influence and sophistication defined by the commission. They also have a limited need for protection provided by a number of government filings. In simple terms it is a situation where an investor is considered immune to all types of market conditions owing to his/her financial background, credit history and net worth.
What are the funds accessible to you in accredited investing?
As mentioned earlier the funds accessible to accredited investors are quite niche. These funds are not accessible to every investor. Investments such as hedge funds, seed money, limited partnerships, angel investor networks, high risk oil and natural gas funds are open for investments from accredited investors. The nature of these funds is that they require individuals who enjoy certain immunity from market conditions and fluctuations of money. Accredited investors are by nature high net worth individuals and hence fit the bill perfectly well.
Who can become an accredited investor?
As mentioned earlier not every investor qualifies to be an accredited investor. The SEC defines the criteria to qualify as an accredited investor very clearly in its ‘Regulation D’. An individual needs to achieve atleast one of the following criteria according to the commission:
• An individual must show a joint income of $300,000 or an individual income of $200,000 per year for the last two years. Apart from this the predicted earnings must also touch the same level of income
• An individual must have a net worth that exceeds $1 million. This can be the net worth of an individual or the joint earnings of an individual and his or her spouse
• The security being offered is also a prime concern wherein the investor must be a partner, director or executive officer of the security against which the investment is made
Accredited investing – why it needs to be your goal
As an investor it is obvious that you want the best from your money and accredited investing can assure you of the best returns and security. However, owing to the fact that your money is going to be put into some of the best performing high risk investments, you may wonder why accredited investing has to be your goal. The answer can be summed up into these three reasons:
A. You want to be respected and looked up to in the market as a high profile investor
B. You want your money to be safe from market fluctuations and earn for you at all times
C. You want to make quick, large sized and sustained profits from your investments
These three reasons are sufficient for any investor to work towards the goal of being identified as an accredited investor. However the advantages of being an accredited investor do not end here. We will further discuss the advantages you can enjoy as an investor once you achieve the goal of being an accredited investor.
Advantages of accredited investing:
The fundamental question, as mentioned earlier, is “why accredited investing has to be my goal when I can comfortably deal with minor every day investments?” Well the answer lies in what kind of investment goals one has. If one is satisfied with a hand to mouth existence in the market then there is no point in investing money on high risk funds. However, if one expects any headway in the investment market then aspiring to meet the accredited investor benchmark is a great way to get there. Here are a few advantages of accredited investing:
• Accredited investments protect investor portfolio
• They increase the power the investor influences in the market
• These investments generate very high returns
• Capable of earning massive goodwill
• They are independent of the market showing up or going down
• The returns from these investments are consistent
• These funds aim and achieve absolute returns
• They do not pose rigid benchmarks hence the sky is the limit for investors
Accredited investing – in summary:
To conclude, one may say that accredited investing is a great goal to pursue for the simple reason that it brings not just profits but also ensures a great place in the market for the investor. Every investor who gets there enjoys not just high returns and consistent performance of funds, but also earns certain immunity from market conditions. Accredited investing ensures that investors achieve a high profit benchmark and enjoys the privilege of being counted among the crème de la crème of the market.