Accredited investors have more investment opportunities than regular retail investors, since they are allowed to invest in securities not registered with the U.S. Securities and Exchange Commission (SEC). But what exactly does that mean and how do you become an accredited investor?

What Is an Accredited Investor?

An accredited investor is an investor that has more expertise and/or wealth than the “average” retail investor, according to the U.S. Securities & Exchange Commission. The accredited investor is eligible to invest in a broader range of investments, such as private real estate, venture capital, private equity, hedge funds, etc. Such investments are not registered with the SEC, and both the investments and the markets they trade in may be riskier, less liquid, and less transparent than publicly traded investments and public markets, but also promise greater returns.

The SEC is tasked with “protecting” investors and the investment markets, by requiring market and security transparency, and by providing oversight and enforcement. It defines an “accredited investor” as an investor that may invest without that protection, based on net worth and/or expertise.

The investors that can become accredited include individuals, alone or with “spousal equivalents,” trusts, and other “certain entities,” such as a Native American tribe, a limited liability corporation (LLC), or a family office.

Accredited Investor Requirements for 2022

The SEC specifies the requirements for an individual to qualify as an accredited investor, based on net worth and/or expertise. To qualify, you must meet at least one of these requirements:

  • An annual income of $200,000 or more for the two most recent years (and sustainable into the future) for a single investor, or $300,000 for a married couple.
  • Net worth of at least $1,000,000, which does not include the value of your primary residence.
  • Expertise, demonstrated by having a current Series 7, 65, or 82 license.

For a trust or other entity, the net worth requirement is $5,000,000.

Let’s take a closer look.

The annual income requirement indicates that, as a high earner, you are in a better position to afford the risks of unregulated investments and markets.

Alternatively, if you have a net worth of over $1,000,000, not including the value of your primary residence, you are also in a better position to afford those risks. Net worth is the difference between the value of your assets and liabilities. In this case, your assets can include any bank and investment accounts, including retirement accounts, except your primary residence, that you are the sole owner of (or own with your spouse).

Your liabilities include any debts such as student loans, car loans, home equity loans, etc. For this calculation, your liabilities also include any portion of your mortgage in excess of the value of your home, that is, the amount that your mortgage is “under water.”

And, you can qualify as an accredited investor by demonstrating investment expertise. You can do this by holding a currently valid

  • Series 7 (General Securities Representative),
  • Series 65 (Licensed Investment Advisor Representative), or
  • Series 82 (Private Securities Offering Representative) license

When the SEC added this qualification in 2020, it left the door open for other certifications to be added to this list as well, but for now, one of these three licenses is required.

How Do You Become an Accredited Investor?

The burden of proof falls on those offering or issuing an unregistered investment. In other words, it is the financial advisor, hedge fund, private equity firm, venture capitalist, or crowdfunder, etc. that is responsible for doing the due diligence on its investors before allowing them to invest. The issuer will ask you to show proof of income or wealth, such as tax returns or brokerage statements, or perhaps a personal balance sheet approved by a certified accountant or lawyer. Each issuer may have its own requirements.

What License Do You Need to Become an Accredited Investor?

Currently, the professional licenses that qualify you to be an accredited investor are issued by the SEC:

  • Series 7 (General Securities Representative),
  • Series 65 (Licensed Investment Adviser Representative), or
  • Series 82 (Private Securities Offering Representative) license.

However, when the SEC added this path to qualification in 2020, it made clear that other professional certifications or qualifications may be added to this list in the future.

Pros and Cons of Becoming an Accredited Investor


  • Access to more kinds of investments and asset classes, which provides more ways to diversify investments
  • Access to investments with potentially greater returns, which can increase wealth faster


  • Exposure to investments with less transparency and fewer regulatory obligations, which increases risks and can decrease wealth faster
  • Exposure to markets with less transparency and regulatory obligations, which increases risks and provides less SEC “protection” and recourse against issuers

Example of Accredited Investors

Here are profiles of several investors:

QualificationsSallyJack Simone Don
Annual income$500,000$150,000$350,000$100,000
Retirement accounts$150,000$1,000,000$1,200,000$25,000
Primary residence$1,200,000$300,000$1,500,000$250,000
Student loans $100,000 $50,000
Other loans $10,000
Balance on mortgage$900,000$200,000$1,000,000$270,000
Net worth$900,000$1,250,000$1,825,000($55,000)
CertificationsCertified Financial Planner (CFP) Series 82Series 7 and 65
  • Sally qualifies as an accredited investor based on income, although her net worth is too low and she has no qualifying certifications (being a CFP doesn’t count).
  • Jack qualifies based on his net worth, although his income is too low and he has no certifications.
  • Simone qualifies based on income, net worth, and certifications.
  • Don, although his income is too low and his net worth is actually negative, qualifies based on his certifications. Note that Don’s net worth calculation includes the amount that his mortgage is “under water” (= $20,000 = $270,000 - $250,000) as an additional liability.

Accredited Investor Changes Over the Years

The latest change to the accredited investor qualifications is the addition of the certifications of expertise, currently the Series 7, 65, or 82 licenses in 2020. The SEC also added qualifications for investing entities such as trusts, tribes, LLCs, and family offices. And, it added the definition of “spousal equivalent” and “knowledgeable employee of a private fund” for individual investors.

Is Being an Accredited Investor Worth It?

The short answer is yes, if it boosts your investment returns or if the added diversification can offset the added risk. The investments available can potentially allow you to increase your wealth further and faster than with more conventional, publicly traded investments.

But that added risk is very real, as most investments that require accredited investors are significantly less transparent and less liquid, or trade in markets that are significantly less transparent and less liquid. You may not be able to research your investment or its market as you might with a publicly traded investment. You may not be able to withdraw your funds should an unexpected need arise. And, you could lose your investment value altogether.

In other words, as an accredited investor, you are swimming in the deeper and darker end of the pond. If you are confident in your skills and knowledge, the benefits are real … but so are the risks.

Accredited Investor? Check out our Crowdstreet Review: Crowdfunded Real Estate for Accredited Investors.

Are Accredited Investors Rich?

Accredited investors do have to meet a minimum net worth requirements, unless they can meet another qualification such as income or professional certification. So they may or may not be “rich,” but like most investors, they certainly hope to be.


Accredited investors demonstrate more wealth or expertise than an “average” investor, according to the SEC. The qualifications are based on income, wealth, and professional certification. Each investment issuer must determine the investors qualifications. Once qualified, accredited investors may invest in a broader range of investments, including asset classes and investments that are not publicly traded, such as real estate, venture capital, private equity, and hedge funds. Such investments can add diversification and greater expected returns, but can also decrease transparency and liquidity and increase risk.

Not an accredited investor? Check out the 5 Best Real Estate Crowdfunding Sites for Non-Accredited Investors.