To qualify as an accredited investor, there are certain requirements to meet. The SEC permits individuals to meet one of these requirements to qualify for the status of accredited investor. These requirements include but not limited to, net worth, income, knowledgeable employees of private funds, and professional certifications. How to become an accredited investor in 2021 is connected with qualifying under one of these tests.
Financial Qualification
Under the category of financial qualification are the net worth and income tests. Having a net worth greater than $1 million USD can qualify you for accredited investor status. This net worth must not include the value of the investor’s primary residence.
Becoming an accredited investor includes having a yearly income (pre-tax) of $200,000 USD as an individual or $300,000 USD as combined with a spouse or spousal equivalent in the two most recent tax years with the expectation to meet or exceed that amount in the upcoming year.
Knowledgeable Employee Test
Knowledgeable employees of private funds can qualify as accredited investors.
Knowledgeable employees are general partners, trustees, officers, directors, or other persons who serve in the capacity of an affiliate management person or a private fund.
In addition, knowledgeable employees can be employees of a private fund or an affiliate management individuals of such a fund who actively engages in the investment activities of an investment company or private fund for a minimum of 12 months.
Professional Certifications
With professional certifications and the right knowledge, an investor may become an accredited investor to perform investment activities for others.
Individuals with certain professional designations, certifications, or credentials, or other issued credentials from an accredited educational institution as designated by the SEC may qualify. SEC- and state-registered investment advisors fall under the category of qualification.
How to become an accredited investor is something an investor who may want to expand his or her opportunities in the investment world should consider.
