Public Market investments for non-accredited investors

The term “non-accredited investor” refers to an individual who does not meet the Securities and Exchange Commission’s (SEC’s) definition of an accredited investor. Accredited investors are defined as individuals who meet certain income or net worth thresholds, or institutions that meet certain asset thresholds. Non-accredited investors are generally considered to be retail investors.

There are many public markets available to non-accredited investors, also known as retail investors. These markets provide a wide range of investment opportunities, including stocks, bonds, mutual funds, exchange-traded funds (ETFs), and other securities.

Some examples of public markets available to non-accredited investors include:

  1. Stock exchanges: Non-accredited investors can buy and sell stocks on exchanges such as the New York Stock Exchange (NYSE) and the NASDAQ.
  2. Mutual funds: Mutual funds are investment vehicles that pool together the money of many investors and use it to buy a diversified portfolio of stocks, bonds, or other securities. Non-accredited investors can invest in mutual funds through a brokerage account or by purchasing shares directly from the fund company.
  3. ETFs: ETFs are investment vehicles that track the performance of a particular market index, such as the S&P 500, or a specific sector, such as technology or healthcare. Non-accredited investors can buy and sell ETFs through a brokerage account or by purchasing shares directly from the ETF provider.
  4. Bonds: Non-accredited investors can invest in bonds through a brokerage account or by purchasing bonds directly from the issuer.

These are just a few examples of the public markets available to non-accredited investors. Non-accredited investors can also invest in a wide range of other securities, such as government bonds, corporate bonds, and municipal bonds. It is important to carefully consider your investment goals, risk tolerance, and financial situation before deciding which public markets are appropriate for you.

What about Accredited Investors?

What are the thresholds for specific investment guidelines like the accredited investor status? Are there other tiers of investor types with regards to their sophistication and suitability for investment offerings that may be more difficult to grasp?

The Securities and Exchange Commission (SEC) defines an accredited investor as an individual who meets certain income or net worth thresholds, or an institution that meets certain asset thresholds. The specific thresholds for accredited investor status are as follows:

  1. Income: An individual is considered an accredited investor if they have an annual income of at least $200,000 (or $300,000 together with a spouse) in each of the past two years and expect to reasonably maintain the same level of income in the current year.
  2. Net worth: An individual is considered an accredited investor if they have a net worth of at least $1 million, either individually or jointly with a spouse (excluding the value of their primary residence).
  3. Asset size: An institution is considered an accredited investor if it meets one of the following asset thresholds:
  • It has assets under management of at least $5 million.
  • It is a registered investment company, a business development company, or a small business investment company.
  • It is an entity in which all of the equity owners are accredited investors.

Accredited investors are generally considered to be more financially sophisticated and capable of bearing the risks associated with certain types of investments, such as private placements and hedge funds.

In addition to accredited investors, there are other tiers of investor types based on their sophistication and suitability for different types of investments.

For example, qualified clients and qualified purchasers are categories of investors that are eligible to invest in certain private investment funds and other types of investments that are n1ot available to retail investors. The specific criteria for qualified client and qualified purchaser status depend on the type of investment and the regulatory framework under which it is offered.

It is important to carefully consider your financial sophistication, risk tolerance, and financial situation before deciding which types of investments are appropriate for you. It is also important to understand the specific criteria for different investor types and to comply with any relevant investment restrictions or requirements.