Skip to content
  • About
  • Contact
  • Contribute
  • Book
  • Careers
  • Podcast
  • Recommended
  • Speaking
  • All
  • Physician
  • Practice
  • Policy
  • Finance
  • Conditions
  • .edu
  • Patient
  • Meds
  • Tech
  • Social
  • Video
    • All
    • Physician
    • Practice
    • Policy
    • Finance
    • Conditions
    • .edu
    • Patient
    • Meds
    • Tech
    • Social
    • Video
    • About
    • Contact
    • Contribute
    • Book
    • Careers
    • Podcast
    • Recommended
    • Speaking

What does it mean to be an accredited investor?

Passive Income, MD
Finance
December 20, 2017
17 Shares
Share
Tweet
Share

I first heard the term “accredited investor” over coffee with a friend who happened to be a financial advisor. He was excited about a real estate deal he was involved in. My interest piqued, I asked him how he finds access to these deals. He said he’d be happy to introduce me to the operators, but I needed to be an accredited investor first.

I had no idea what that meant, other than it sounded like a secret society–the kind where you need a password to even get past the man at the door. So naturally, I asked him, “what’s an accredited investor?” He basically told me that it’s a designation that gives you access to a whole new level of investment opportunities.

As soon as I could, I went home and found out how I could qualify for this secret club. As it turns out . . . it’s not all that secret. In fact, a simple Google search provided me with a definition straight from the SEC.

To be “accredited,” you must:

  • Have a net worth of at least $1 million, not including the value of a primary residence; or
  • Have an annual income of at least $200,000 for an individual, or $300,000 for a married couple. The income bar must have been reached in each of the past two years, and there must be a reasonable expectation that it will continue to be met in the coming year.

Accredited investors can be an individual or entities (company, trusts, banks, etc.), but for the purposes of this post, I’m going to assume most of my audience is classified as an individual. To cut right to it, accredited investors have access to some investments that non-accredited investors do not.

At the time when I learned about this term, I had just finished my training and absolutely did not meet the criteria.

Why does accreditation exist?

The Securities and Exchange Commission (SEC) created this distinction to refer to individuals who are considered “sophisticated investors.” These types of investor may not necessarily require the same protection that smaller or novice investors may need when investing in a project.

It was created as a protective measurement to protect the novice investors from getting into riskier projects, especially because they may not have the fund reserves to handle a loss.

In fact, the SEC uses this label to regulate companies against advertising to or soliciting investments from non-accredited investors. So if you’re a non-accredited investor, you actually shouldn’t even know about some of these offerings. In a sense, this does create a secret society of sorts. For accredited investors, deals get passed around that could be riskier, but they also provide greater opportunities.

Advantages of being accredited

In short, the advantage of being an accredited investor is that you have the opportunity to hear about more deals, get access to them, and ultimately invest in those deals. I’ve mentioned several of these in previous posts, but a few of these unique opportunities may include:

  • real estate syndications
  • real estate crowdfunding
  • angel investing / venture capital
  • hedge funds

Now, some will argue that this whole “accredited investor” thing is just another way for the rich to get richer. The government may have actually agreed with that, and so in 2016, they passed Title III of the Jobs Act. This opened up some of the investments to non-accredited investors — under certain conditions.

Becoming an accredited investor

Once I met the criteria a few years later, I remember wondering if I would be sent a special ID card with the words “accredited investor” in big, bold letters across the front. This card would get me into all of the exclusive opportunities.

Actually, it’s a lot less involved than that. In fact, some places only require self-qualification. You check a box that certifies that you are one (and understand the implications behind it), and you’re in. In other cases, they require you to submit a letter of verification from your CPA, while others may ask you to produce your tax returns. In any case, please only say that you’re an accredited investor if, you know, you actually are one. If you falsely claim that you are, it could cause some legal ramifications down the road for you and the company you invest with.

Summary

Ultimately, it is true that being an accredited investor gets you special access to certain deals. Some deals are a little more out in the open (like crowdfunding) in the sense that you can find them online versus over investor dinners and meetings or passed along at country clubs. However, if you’re actively looking for deals and talking to people in that space, it’s likely that they’ll only talk to you if you’re an accredited investor. That’s not because they don’t like you, it’s because they must keep in compliance with regulations.

So if you do meet the requirement, great! Know that there’s a vast number of opportunities available to you as a result. Some are riskier, but honestly, a lot of good deals are only open to you. If you’re not, don’t worry. There are still tons of opportunities available for everyone.

“Passive Income, MD” is a physician who blogs at his self-titled site, Passive Income M.D.

Image credit: Shutterstock.com

Prev

Can doctors recover from burnout?

December 19, 2017 Kevin 10
…
Next

Are we living in a medical Zombie Land?

December 20, 2017 Kevin 33
…

Tagged as: Practice Management

Post navigation

< Previous Post
Can doctors recover from burnout?
Next Post >
Are we living in a medical Zombie Land?

More by Passive Income, MD

  • How do you celebrate small wins?

    Passive Income, MD
  • 3 myths about financial freedom

    Passive Income, MD
  • How to make $5 million from investing in real estate

    Passive Income, MD

Related Posts

  • Low income is a neglected public health issue

    Vania Silva
  • One person’s wasteful medical spending is another person’s income

    Edward Hoffer, MD
  • Improve mental health by improving how we finance health care

    Steven Siegel, MD, PhD
  • Want to change medicine? Work in finance.

    Ryan O’Keefe
  • Medicine is very much like driving. But don’t be a passive driver.

    Ton La, Jr., MD, JD
  • #MedBikini and medical professionalism [PODCAST]

    The Podcast by KevinMD

More in Finance

  • Secure your future today: the essential guide to disability and life insurance for physicians and professionals

    Set for Life Insurance & The Podcast by KevinMD
  • A tiny step to reduce physician burnout

    Dennis Hursh, Esq
  • Why a business education is essential for financial stability and cutting-edge medical care

    Curtis G. Graham, MD
  • The myth of wealthy doctors: Why business education is vital for every physician

    Randall S. Fong, MD
  • Revolutionizing health care: lessons from Michael Jordan’s partnership with Nike

    Chris Grant
  • Mastering the art of transition: essential tips for leaving your medical career behind and pursuing a new path

    Amanda Hill, JD
  • Most Popular

  • Past Week

    • The power of coaching for physicians: transforming thoughts, changing lives

      Kim Downey, PT | Conditions
    • The hidden factor in physician burnout: How the climate crisis is contributing to the erosion of well-being

      Elizabeth Cerceo, MD | Physician
    • Why affirmative action is crucial for health equity and social justice in medicine

      Katrina Gipson, MD, MPH | Policy
    • Unlocking the secrets of cancer conferences: an end-of-life counselor’s journey among pharmaceutical giants

      Althea Halchuck, EJD | Conditions
    • Why doctors aren’t to blame for the U.S. opioid crisis [PODCAST]

      The Podcast by KevinMD | Podcast
    • Nose-brain connection: The surprising link between allergies and mental health revealed

      Kara Wada, MD | Conditions
  • Past 6 Months

    • It’s time to replace the 0 to 10 pain intensity scale with a better measure

      Mark Sullivan, MD and Jane Ballantyne, MD | Conditions
    • “Is your surgeon really skilled? The hidden threat to public safety in medicine.

      Gene Uzawa Dorio, MD | Physician
    • Breaking point: the 5 reasons American doctors are dreaming of walking away from medicine

      Amol Shrikhande, MD | Physician
    • Revolutionize your practice: the value-based care model that reduces physician burnout

      Chandravadan Patel, MD | Physician
    • Unveiling the hidden damage: the secretive world of medical boards

      Alan Lindemann, MD | Physician
    • Breaking the cycle of racism in health care: a call for anti-racist action

      Tomi Mitchell, MD | Policy
  • Recent Posts

    • Medical errors and the power of apologies [PODCAST]

      The Podcast by KevinMD | Podcast
    • Finding your ideal work-life balance: tips for prioritizing personal life and achieving professional success

      Zahid Awan, MD | Physician
    • Boxing legends Tyson and Foreman: powerful lessons for a resilient and evolving health care future

      Harvey Castro, MD, MBA | Physician
    • 7 ways to beat burnout: a guide for health care professionals to reduce stress and reclaim their passion

      Marie Livesey, DO | Physician
    • The unjust reality of racial disparities in pediatric kidney transplants

      Lien Morcate | Conditions
    • The pros and cons of taking a gap year during medical school

      Med School Insiders | Education, Sponsored

Subscribe to KevinMD and never miss a story!

Get free updates delivered free to your inbox.


Find jobs at
Careers by KevinMD.com

Search thousands of physician, PA, NP, and CRNA jobs now.

Learn more

Leave a Comment

Founded in 2004 by Kevin Pho, MD, KevinMD.com is the web’s leading platform where physicians, advanced practitioners, nurses, medical students, and patients share their insight and tell their stories.

Social

  • Like on Facebook
  • Follow on Twitter
  • Connect on Linkedin
  • Subscribe on Youtube
  • Instagram

CME Spotlights

From MedPage Today

Latest News

  • Long COVID Cognitive, Depressive Symptoms Tied to Brain Inflammation Marker
  • 'Practice Changing' Trial on Activity Recs After Prolapse Surgery
  • What's With the Buzz Around NAD+ Injections?
  • Standing, Walking After Major Surgery Tied to Less Risk of Post-Op Complications
  • Tenapanor Improves Abdominal Symptoms in Patients With IBS-C

Meeting Coverage

  • Tenapanor Improves Abdominal Symptoms in Patients With IBS-C
  • Benefits Found for Hand OA Drug Treatments
  • MRI-Based Screening May Detect Prostate Cancer Earlier
  • New Model Aims to Study Intestinal Fibrosis in Crohn's Disease
  • Hypertension Tied to Worse Survival After Surgery for Upper Tract Urothelial Cancers
  • Most Popular

  • Past Week

    • The power of coaching for physicians: transforming thoughts, changing lives

      Kim Downey, PT | Conditions
    • The hidden factor in physician burnout: How the climate crisis is contributing to the erosion of well-being

      Elizabeth Cerceo, MD | Physician
    • Why affirmative action is crucial for health equity and social justice in medicine

      Katrina Gipson, MD, MPH | Policy
    • Unlocking the secrets of cancer conferences: an end-of-life counselor’s journey among pharmaceutical giants

      Althea Halchuck, EJD | Conditions
    • Why doctors aren’t to blame for the U.S. opioid crisis [PODCAST]

      The Podcast by KevinMD | Podcast
    • Nose-brain connection: The surprising link between allergies and mental health revealed

      Kara Wada, MD | Conditions
  • Past 6 Months

    • It’s time to replace the 0 to 10 pain intensity scale with a better measure

      Mark Sullivan, MD and Jane Ballantyne, MD | Conditions
    • “Is your surgeon really skilled? The hidden threat to public safety in medicine.

      Gene Uzawa Dorio, MD | Physician
    • Breaking point: the 5 reasons American doctors are dreaming of walking away from medicine

      Amol Shrikhande, MD | Physician
    • Revolutionize your practice: the value-based care model that reduces physician burnout

      Chandravadan Patel, MD | Physician
    • Unveiling the hidden damage: the secretive world of medical boards

      Alan Lindemann, MD | Physician
    • Breaking the cycle of racism in health care: a call for anti-racist action

      Tomi Mitchell, MD | Policy
  • Recent Posts

    • Medical errors and the power of apologies [PODCAST]

      The Podcast by KevinMD | Podcast
    • Finding your ideal work-life balance: tips for prioritizing personal life and achieving professional success

      Zahid Awan, MD | Physician
    • Boxing legends Tyson and Foreman: powerful lessons for a resilient and evolving health care future

      Harvey Castro, MD, MBA | Physician
    • 7 ways to beat burnout: a guide for health care professionals to reduce stress and reclaim their passion

      Marie Livesey, DO | Physician
    • The unjust reality of racial disparities in pediatric kidney transplants

      Lien Morcate | Conditions
    • The pros and cons of taking a gap year during medical school

      Med School Insiders | Education, Sponsored

MedPage Today Professional

An Everyday Health Property Medpage Today
  • Terms of Use | Disclaimer
  • Privacy Policy
  • DMCA Policy
All Content © KevinMD, LLC
Site by Outthink Group

Leave a Comment

Comments are moderated before they are published. Please read the comment policy.

Loading Comments...