The crowdfunding platforms of today offer investors new opportunities not known about in the past. However, the majority of these opportunities are only accessible to those who either are or can become an accredited investor.
Determining if You Are Accredited
No formal accredited investor certification is issued from an institution or agency that confirms your accredited status. To the contrary, the Securities Exchange Commission (SEC) offers a couple of ways for issuers to evaluate if an individual is accredited. Compliance with one of the following criteria can establish you as an accredited investor.
An individual with an income in excess of $200,000 in both of the previous two years, or joint income with a spouse greater than $300,000, with the realistic expectation that income will remain above that threshold in the current year.
A person having a net worth (either individually or jointly with a spouse) in excess of $1 million when the purchase was made (not to include the value of that person’s primary residence)
Ways to Boost Your Net Worth
Owning a business can serve as an asset from which you can significantly increase your net worth. A broker or CPA may be able to help you use the valuation of this asset to achieve this goal, which may in turn enable you to qualify as an accredited investor.
As well, if you have a significant amount of home equity, you could consider refinancing your home and taking out some cash. You can count the cash you took out of your home as an asset as long as you wait for a period of two months to count it as such.
Due to the low interest rates that presently exist, utilizing home equity can be a successful means of increasing net worth.
If you have not yet qualified as an accredited investor, you may be able to invest in private placements that fall under Regulation D Rule 506 (b). The SEC permits a maximum of 35 non-accredited investors who are able to prove their sophistication in understanding a particular deal as well as those who have the necessary financial reserves to absorb potential losses.
If you’ve yet to become an accredited investor, you may want to take some time to consider the options mentioned above.
