Accredited Investor: Definition and Requirements

Accredited Investor Requirements and Advantages

An accredited investor is a person or entity that is allowed to participate in investments not registered with the SEC.

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What is an accredited investor? How do you become an accredited investor? Why do you have to be an accredited investor? Types of investments that usually require accredited investors Can nonaccredited investors invest? Best Financial Advisors Find a Financial Advisor Near You | NerdWallet How to Choose a Financial Advisor in 5 Steps 5 Best Wealth Management Services Nerdy takeaways To purchase certain investments, you must be an accredited investor. But what does that mean, and how do you know if you qualify?

What is an accredited investor?

An accredited investor is a person or entity that is allowed to participate in investments not registered with the SEC. Accredited investors are typically high-net-worth individuals and companies with the means and experience to trade private, riskier investments. According to the Securities and Exchange Commission, an individual accredited investor is anyone who: Earned income of more than $200,000 (or $300,000 together with a spouse) in each of the last two years and reasonably expects to earn the same for the current year. Has a net worth over $1 million, either individually or together with a spouse or spousal equivalent (excluding the value of a primary residence). Is a "knowledgeable employee" of a private fund. Is a financial professional who has Series 7, Series 65 or Series 82 financial securities licenses. The rule is meant to help prove investors have the sophistication and means to invest in potentially riskier investments, as well as weather any losses . » MORE: Learn how to choose a financial advisor who can help you invest MORE:

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How do you become an accredited investor?

There’s no certification offered to prove you’re an accredited investor. Instead, companies selling investments to accredited investors are required to take steps to verify you qualify. That likely will mean you must provide financial statements — such as W-2s, tax returns, bank and brokerage statements — showing your current net worth is more than $1 million (your primary place of residence not included) or that you had income in the past two calendar years that qualifies. » MORE: Find you net worth with our free worth calculator » MORE: Find you net worth with our free worth calculator

Why do you have to be an accredited investor?

The accredited investor exemption seeks “...to ensure that all participating investors are financially sophisticated and able to fend for themselves or sustain the risk of loss, thus rendering unnecessary the protections that come from a registered offering,” the SEC says. The rules regarding accredited investors are governed by SEC Rule 501 under Regulation D of the Securities Act of 1933, a government response to the Great Depression. Also known as the “truth in securities” law, this act improved financial disclosure requirements so investors are informed about the investments they are buying. It also tightened rules prohibiting fraud and misrepresentation in the sale of securities. » MORE: Ways to protect your assets » MORE: » MORE:

Types of investments that usually require accredited investors

Hedge funds

Since hedge funds can invest in more speculative investments, they usually only accept accredited investors.

Private equity

Most forms of private equity investing, including angel investing, require accredited investors.

Online real estate investments

Some real estate crowdfunding platforms, such as Crowdstreet or EquityMultiple, are only open to accredited investors.

Venture capital and startups

Because venture capital funds do not require the same information disclosures as offerings registered with the SEC, they usually require accredited investors due to the higher risks. » MORE: Learn about other types of alternative investments » MORE: » MORE:

Can nonaccredited investors invest?

Yes. Any publicly traded stock, bond, mutual fund or publicly traded real estate investment trust, or REIT, is available to any adult who opens a brokerage account. Many of these investments are also available within retirement accounts, such as 401(k)s and individual retirement accounts. The SEC requires these investment vehicles to meet various disclosure standards in order to help safeguard average investors. But remember, no investment is without risk, and you can end up losing some or all your principal investment. » MORE: See our picks for the year's best financial advisors » MORE: Explore more on Article sources NerdWallet writers are subject matter authorities who use primary, trustworthy sources to inform their work, including peer-reviewed studies, government websites, academic research and interviews with industry experts. All content is fact-checked for accuracy, timeliness and relevance. You can learn more about NerdWallet's high standards for journalism by reading our editorial guidelines. Securities and Exchange Commission. Frequently Asked Questions About Exempt Offerings. Accessed Oct 5, 2025. Securities and Exchange Commission. Private Placements under Regulation D – Investor Bulletin. Accessed Oct 5, 2025. National Archives. § 230.501 Definitions and terms used in Regulation D.. Accessed Oct 5, 2025. Investor.gov. Accredited Investors – Updated Investor Bulletin. Accessed Oct 5, 2025. About the authors Voigt Kevin Voigt is a freelance writer covering personal loans and investing topics for NerdWallet. He previously was a reporter with The Wall Street Journal and business producer for CNN.com in Hong Kong, where he was based for nearly two decades. Fuente Pamela de la Fuente is a managing editor of NerdWallet's personal finance content. She leads budgeting, money-making, consumer credit and and debt coverage. Ask her and her talented team about why credit scores matter, how to save money on your grocery bill, finding the right side hustle, how to protect your identity for free and more. Previously, she led taxes and retirement coverage at NerdWallet. Pamela joined NerdWallet after working at companies including Hallmark Cards, Sprint Corp. and The Kansas City Star. She has been a writer and editor for more than 20 years. Pamela is a thought leader in content diversity, equity, inclusion and belonging, and finds ways to make every piece of content conversational and accessible to all. She is a graduate of the Maynard Institute's Maynard 200 program, and the National Association of Black Journalists Executive Leadership Academy. She is a two-time winner of the Kansas City Association of Black Journalists' President's Award. She was also founding co-chair of NerdWallet's Nerds of Color employee resource group. How Much Does a Financial Advisor Cost? By Arielle O'Shea Do You Need a Financial Advisor? 7 Ways to Tell By Taryn Phaneuf How to Find Cheap or Free Financial Advice By June Sham 3 Steps to Prepare for Your First Financial Advisor Meeting By June Sham