Accredited investors are privy to a world of investments that most Americans are not. Are you aware that the majority of investors do not have access to, and will never hear about, the most lucrative investment opportunities available in the United States? In fact, secure investments that offer high double digit returns and promising new company start-up proposals are just a couple of the things that most of us will never be offered to participate in. This article explains WHY.
ACCREDITED INVESTORS BACKGROUND
Following the 1929 Stock Market crash and ensuing Great Depression, the U.S. Congress decided that the federal government needed to intervene in the securities markets and establish new “rules of the road”. Subsequently, Congress passed the Securities Act of 1933, (still in effect today), which required companies offering securities to the public, to provide detailed information about both their company and the investments themselves. The objective was to allow potential investors to make better informed investment decisions.
The Securities Act of 1933 also provided a new definition of those investors that can be permitted to invest in certain types of investments and called them “accredited investors”.
Then, In 1934, Congress passed the Securities Act of 1934, which created the United States Securities and Exchange Commission. The SEC was given authority to administer all laws relevant to the securities markets, including the Securities Act of 1933.
ACCREDITED INVESTORS DEFINITION
According to the Securities Act of 1933 – “For an individual to be considered an accredited investor, they must have a net worth of at least one million US dollars or have made at least $ 200,000 each year for the last two years (or $ 300,000 combined income with his or her spouse if married) and have the expectation to make the same amount this year.”
NET WORTH DEFINITION
Net worth is the value of everything you own minus what you owe. (Assets – Liabilities = Net Worth)
ACCREDITED INVESTORS: WHY IT IS IMPORTANT TO KNOW IF YOU QUALIFY
Some people aren’t aware that they qualify as accredited investors. Many have never given it much thought and might be surprised to find that they fit the definition. The most common oversights are: they forget to include the equity in their home and/or the value of their IRA and 401K accounts.
The reason all of this is important is because if you DO qualify as an accredited investor, you have access to a whole new universe of investments that most people will never see! Many people think that double-digit returns have to be scams. Well, guess again!
Is there risk associated with these investments? Of course! But show me one investment that is completely safe.
Here is the bottom line: You owe it to yourself to find out if you qualify as an accredited investor. If you do, you should get together with your financial adviser and ask them to share with you all current and future investment opportunities that are only available to accredited investors. You may never invest in any of these opportunities, but then again, you might!
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