For investors seeking more profitable opportunities, knowing how to qualify for accredited investor status is important. There are certain “tests” a prospective investor must pass to achieve this position in the world of investing. These tests are methods of qualifying and are based on possessing at least one of many assets, including net worth, income, knowledge, or professional certifications.
Qualifying Based on Finances
These consist of the net worth and income tests.
If you have a net worth individually or with your spouse or spousal equivalent of more than $1 million USD, excluding the value of your primary residence, you qualify as an accredited investor.
If you have earned over $200,000 USD as an individual or over $300,000 USD jointly with a spouse or spousal equivalent during the previous two tax years with the expectation of earning the same or more in the current year, you qualify as an accredited investor.
Qualifying Based on Knowledge
When it comes to how to qualify for accredited investor status, it is important to know that a knowledgeable employee of a private fund can qualify as an accredited investor. These knowledgeable employees may be general partners, executive officers, trustees, directors, or any individuals working at a private fund. Affiliate management personnel may also qualify.
In addition, those qualifying may be employees of a private fund or affiliate management personnel of a private fund who for at least the last 12 years has operated in the fund’s or investment company’s investment activities.
Qualifying Based on Professional Certifications
Possessing certain professional certificates, credentials, or designations, or being accredited by an SEC-recognized educational institution can qualify you for accredited investor status. This includes obtaining a Series 7, 65, or 82 licenses and remaining in good standing with the Financial Industry Regulatory Authority (FINRA). State and SEC-registered investment advisors can also qualify.
Knowing how to qualify for accredited investor status can open the door to opportunities that allow you to diversify your portfolio and achieve higher rates of return on investments. Many investors qualify through the net worth or income test, but it is possible for some to qualify based on professional certifications or as a knowledgeable employee, as mentioned above.
