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An accredited investor is an individual or entity meeting certain income or net worth thresholds defined by securities laws.
In contrast, a non-accredited investor refers to individuals who do not meet these requirements.
This article aims to shed light on who exactly falls into the category of non-accredited investors based on the following information.
Income and Net Worth Criteria
To be classified as an accredited investor, one must meet specific income and net worth thresholds set by regulatory bodies such as the United States Securities and Exchange Commission (SEC).
As such, a non-accredited investor is generally someone who does not meet the following requirements:
- Annual Income: A non-accredited investor is anyone who earns less than $200,000 annually. This income threshold increases to $300,000 if the individual is married and filing joint tax returns.
- Net Worth: An individual's net worth, excluding the value of their primary residence, is another crucial factor in determining accreditation. A non-accredited investor typically has a total net worth of less than $1 million when their primary residence is excluded from the calculation.
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|$8,000+||View Investments||Yes||US Farmland, Timberland, Vineyards|
|$5,000+||View Investments||Yes||Commercial Real Estate Properties|
|$15,000+||View Investments||Yes||US Farmland|
|$10||View Investments||No||Private Real Estate Deals|
Implications of Non-Accredited Investor Status
Being classified as a non-accredited investor carries certain implications in the investment landscape.
While it does not restrict individuals from investing altogether, it does limit their access to certain types of investments.
The rationale behind this limitation is to ensure that investments with higher risks or limited liquidity are made by individuals who can afford potential losses without significant financial hardship.
Restricted Investment Opportunities
Non-accredited investors may face restrictions when investing in specific offerings, including private placements, hedge funds, venture capital funds, and other alternative investment vehicles.
These investment opportunities often require a higher degree of financial sophistication and carry a higher risk level than more traditional investment options like stocks and bonds.