To access certain high-risk, high-reward investments — like hedge funds, private equity, and venture capital — you need to qualify as an accredited investor. This designation, defined by the Securities and Exchange Commission (SEC), is reserved for individuals or entities that meet specific income or net worth requirements. We'll walk you through what it means to be an accredited investor and walk you through how to become one.
Wise Takeaways
- An accredited investor is someone who meets specific financial or professional criteria set by the SEC, allowing access to high-risk, high-reward investments.
- You can qualify as an accredited investor through income, net worth, certain professional licenses, or executive roles within investment firms.
- Entities like corporations, trusts, and nonprofits can also qualify if they meet asset thresholds or have accredited owners.
- Accredited investors can access exclusive opportunities like hedge funds, private equity, venture capital, and private real estate deals.
What is an accredited investor?
An accredited investor is someone defined by the SEC as an individual or household meeting specific financial or professional criteria, which the agency believes makes them suitable to invest in sometimes higher-risk offerings that are not appropriate for the general public.
There are varying criteria that can qualify someone as an accredited investor, including:
- Income
- Net worth
- Certain investment professionals may also qualify
Accredited vs non-accredited investor
Here’s a quick glance at some requirements and differences between accredited and non-accredited investors.
| Action | Accredited investor | Non-accredited investor |
|---|---|---|
| Can invest in unregistered securities | Yes | No |
| Considered financially stable by the SEC | Yes | Potentially |
| Considered able to take on additional financial risk by the SEC | Yes | No |
| Financial or job-related requirements | Yes | No |
| Can invest in registered stocks, bonds and funds | Yes | Yes |
How to become an accredited investor
The U.S. Securities and Exchange Commission (SEC) sets the official criteria for who qualifies as an accredited investor, based on income, net worth and certain professional credentials. And even if you’re an accredited investor by definition, you may still need to prove your status to investment companies. Here’s a look at the detailed requirements to become an accredited investor.
Financial requirements
- Net worth. You're considered an accredited investor if you have a net worth of at least $1 million, not including your primary residence. Add the value of your bank and investment accounts to get an idea of your status based on net worth.1
- Income. You're considered an accredited investor if you earned at least $200,000 last year as an individual or at least $300,000, including your spouse or partner’s income. You must also reasonably expect to earn at least the same amount this year.2
Professional requirements
- Professional licenses. If you work in the investment industry and hold a professional license in good standing, you may qualify for accredited investor status. Allowed licenses are the general securities representative license (Series 7), the investment adviser representative license (Series 65), or the private securities offerings representative license (Series 82).3
- Investment company executives. If you work at a company offering securities and hold the title of director, executive officer or general partner, you are considered an accredited investor for the company’s securities, even if you don’t otherwise qualify.4
- Family office. If a family office manages your funds, which makes you a family office client or family client, you are qualified as an accredited investor.5
- Knowledgeable employees. If you’re a “knowledgeable employee” of a fund company, you can invest in those private funds even if you’re not an accredited investor through other qualifications.6
How to verify your accredited investor status
Meeting the SEC’s definition of an accredited investor doesn’t automatically give you access to exclusive investment opportunities — you may also need to verify your status. Investment firms are often required by law to confirm that you qualify before allowing you to invest in certain private offerings.
There are generally two ways this verification happens:
Self-certification: Some platforms or investments may ask you to sign a statement confirming that you meet the income or net worth requirements. This is common with lower-risk offerings or smaller investments.
Third-party verification: In many cases, especially with higher-value investments, you’ll need to provide documentation. This could include:
- Tax returns or W-2s to verify income
- Bank or brokerage statements to verify net worth
- A letter from a licensed attorney, CPA, investment adviser, or broker confirming your status
Some investment platforms use third-party services or internal compliance teams to verify documents before granting access.
Example of an accredited investor
Here's an example to better understand how someone becomes an accredited investor.
Let’s say Pat is single, works as an accountant and has these financial details:
- Cash in the bank: $100,000
- Retirement funds: $700,000
- Other investments: $200,000
- Home value: $500,000 (no mortgage)
- Annual income: $180,000
In this case, Pat’s annual income wouldn't qualify them as an accredited investor, as it’s below $200,000. But if you add up Pat’s cash and investments, they total $1.1 million, which makes Pat an accredited investor.
Can entities qualify as accredited investors or only individuals?
Some entities can qualify as accredited investors. While not all businesses and organizations count as accredited investors, these qualifications make a business or nonprofit entity an accredited investor.
- Investment assets. If an organization holds at least $5 million in investment assets, it’s considered accredited and can invest funds in securities reserved for accredited investors. This applies to corporations, partnerships, LLCs, trusts, 501(c)(3) organizations, employee benefit plans, “family offices” and any “family client” of that office.7
- Accredited owners. If a small business is owned by one or more owners who are all accredited investors on their own, the entity is an accredited investor.8
- Investment advisers. SEC-registered broker-dealers and licensed financial advisers are accredited.9
- Financial entities. Banks, insurance companies, and some investment companies are considered accredited investors by the SEC.10
What can you invest in as an accredited investor?
When you’re an accredited investor, you can buy into many less-traditional assets. Some include:
- Private real estate: Private real estate investments and funds operated by companies such as Fundrise, YieldStreet and AcreTrader.
- Private equity: Private equity funds buy and sell other businesses looking to earn a profit. Shares are typically reserved for accredited investors.
- Hedge funds: Hedge funds can take on riskier investments with less oversight than traditional mutual funds and ETFs, and they’re generally restricted to accredited investors.
- Venture capital and startups: Private companies are riskier places to invest than larger, established companies on the stock market. Venture capital funds and startups are typically available only for investments from accredited investors.
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Eric Rosenberg is a finance, travel and technology writer in Ventura, California. He is a former bank manager and corporate finance and accounting professional who left his day job in 2016 to take his online side hustle full time.
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