Accredited investor opportunities for small business owners
Back in my CFP education days, this term came up as we discussed wealth management options for potential clients. Being an accredited investor allows an individual the opportunity to grow their portfolio through securities offerings that are nonpublic/exempt from registration and are outside the traditional investment options. The most common investments available to accredited investors are direct investment in startups or venture capital, hedge funds, and private real estate/commercial property deals. But fundamentally, what is an accredited investor?
As defined by the Securities Exchange Commission (SEC), there are several characteristics that can be used to qualify an individual, business, or organization as an accredited investor. Let’s peek at the qualifications most applicable to us as individuals and business owners.
Individuals
an individual with a net worth or joint net worth with a spouse or spousal equivalent of at least $1 million, not including the value of his or her primary residence
an individual with income exceeding $200,000 in each of the two most recent calendar years or joint income with a spouse or spousal equivalent exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year
an individual holding in good standing any of the general securities representative license (Series 7), the investment adviser representative license (Series 65), or the private securities offerings representative license (Series 82)
a director, executive officer, or general partner of the company selling the securities, or any director, executive officer, or general partner of a general partner of that company
Business
an enterprise in which all the equity owners are accredited investors
a tax exempt charitable organization, corporation, limited liability corporation, or partnership with assets in excess of $5 million
an entity of a type not otherwise qualifying as accredited that own investments in excess of $5 million
Key ideas are net worth, current income, professional credentials, and the individual having sufficient knowledge and experience in financial and business matters to adequately evaluate the risk in the offering.
Net worth, income and credentials are easy to quantify. Run the numbers and/or take the exam. But how do you easily define someone’s knowledge and ability to evaluate the merits of an investment deal? Pretty sure an aptitude test isn’t administered before the investment is complete. That is the beauty and importance of building a relationship with your financial planner and advisor. It shouldn’t be a once every 8-to-10-year discussion or a panicked conversation three days before your retirement date. Your advisor is a trusted member of your financial team and can assist you in funding the life you desire. Express interest in building your portfolio and learning more about available opportunities.
I, as your financial coach have the responsibility and pleasure to introduce you to the basics of personal finance and help you prepare for these types of options. We have worked through your savings and spending plan, discussed healthy relationships with credit and debt and created sustainable habits. An accredited investor can be very much in your future. Let’s get ready for it together.
Let us know how we can help you create a structure that will carry you year round so you are ready without the scramble. Email us at letstalk@studiomfinancial.net or hit us up on social media. Linktree: https://linktr.ee/StudioMfin
Look forward to serving you in 2026. Until we meet, keep working on the change.
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