what investments are only for accredited investors?

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rob in cal
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Joined: Mon Jan 08, 2018 5:36 pm

what investments are only for accredited investors?

Post by rob in cal » Fri Jan 12, 2018 8:10 pm

I've been lurking on the boards for awhile and enjoy the discussions. In researching investment products out there it seems that many real estate investments such as hard money loan funds, and some random things like oil well ownership (what could possibly go wrong with that) are for accredited investors only. Is there a basic list of what type of investments are only for accredited investors? Also, isn't it a warning sign of sorts if only accredited investors are accepted?
Fun fact, I wonder how many people there are in high property value states who would qualify if they sold their home, added that money to their net assets and rented?

Buysider
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Re: what investments are only for accredited investors?

Post by Buysider » Fri Jan 12, 2018 9:01 pm

Fund fact, anyone can qualify for accredited investor status, since you generally only self-certify that your net worth & income meet the criteria.

Since the people "selling" products to accredited investors generally earn commissions or fees on such sales, their levels of due diligence on the financial status of the people buying their product can ... vary.

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CABob
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Location: Southern California

Re: what investments are only for accredited investors?

Post by CABob » Fri Jan 12, 2018 11:48 pm

Buysider wrote:
Fri Jan 12, 2018 9:01 pm
Fund fact, anyone can qualify for accredited investor status, since you generally only self-certify that your net worth & income meet the criteria.

Since the people "selling" products to accredited investors generally earn commissions or fees on such sales, their levels of due diligence on the financial status of the people buying their product can ... vary.
I recall being asked by a broker a number of years ago how much I had as assets available for investing. Not wanting to share that information at that time I gave him a vague answer that probably implied I had more than what I really did have. My investments with that broker were most likely less than $10,000, but some time later in a conversation with him he mentioned that he considered me an accredited investor.
Bob

MathWizard
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Re: what investments are only for accredited investors?

Post by MathWizard » Sat Jan 13, 2018 12:09 am

Generally speaking, those investments are those that have not met the SEC regulations for sale to the general public, such as disclosures and IPOs.

So it is not that the investment is risk, per se, it is that the offering to investors has not met specific criteria from the SEC. The same investment could either be for only accredited investors, or for all investors. Think about the times an investment group takes a company private by buying up all the shares. It does that so it can avoid SEC regulations which restrict what the investors can do. So the investment is the same investment, just the rules of what can be done, and the secrecy by which things can be done change, and it is that change that means it is only for accredited investors.

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