Quick answer: An accredited investor is a person or entity the SEC considers financially sophisticated enough to invest in certain private, unregistered offerings. For individuals, the main tests are income over $200,000 a year (or $300,000 with a spouse) in the last two years, or a net worth over $1 million excluding your primary residence. Certain professional licenses now qualify too. Meeting the bar is not a badge of skill; it is a legal threshold that unlocks access and shifts risk onto you.
Watch Jake Claver’s full YouTube breakdown on What is an Accredited Investor
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By Jake Claver. Educational content, not investment advice.
Jake’s video explains what an accredited investor is, how to qualify, and why the status matters. This page lays out the current SEC criteria and the reasoning behind them.
The income and net worth tests
The definition lives in the SEC’s rules, and Investor.gov summarizes it clearly in its bulletin on accredited investors. An individual qualifies by meeting either:
- Income: earned income above $200,000 (or $300,000 together with a spouse or spousal equivalent) in each of the two most recent years, with a reasonable expectation of the same in the current year.
- Net worth: a net worth over $1 million, alone or with a spouse, excluding the value of your primary residence.
You need to satisfy one of these, not both.
Certifications and entities also count
The definition was expanded so wealth is not the only path. Individuals holding certain professional licenses in good standing, including the Series 7, Series 65, and Series 82, can qualify based on demonstrated knowledge rather than income or assets. Many entities qualify as well, such as banks, registered investment advisers, and organizations above a certain asset threshold. The through-line is a presumption of either financial cushion or professional expertise.
Why the rule exists
Public securities come with mandatory disclosures. Many private offerings, sold under exemptions like Regulation D, skip that registration and the detailed disclosures that go with it. The accredited investor standard is the gate: regulators allow access to these less-transparent, often riskier deals only for investors presumed able to absorb a loss or evaluate the risk themselves. It is investor protection by restriction, not a stamp of approval on any particular deal.
What it unlocks, and the trade-off
Accreditation opens the door to private placements, many hedge funds, venture and private equity funds, and similar offerings covered in Investor.gov’s guide to investment products. These can offer different return profiles, but they also tend to be illiquid, harder to value, and lightly regulated. Qualifying does not make any of them a good idea. It just means you are legally permitted to take on that risk, and the burden of due diligence sits with you.
Why this matters
People often chase accredited status as a status symbol. The more useful framing is what it actually changes: you gain access to a wider, riskier menu, and you give up some of the disclosure protections that come with registered public investments. Knowing the criteria helps you understand what you are being offered and what questions to ask before committing capital.
Common questions
What are the accredited investor requirements?
For individuals, either income above $200,000 a year ($300,000 with a spouse) in the last two years, or net worth over $1 million excluding your primary residence. Certain professional licenses such as the Series 7, 65, or 82 also qualify.
Does my house count toward the net worth test?
No. The value of your primary residence is excluded from the $1 million net worth calculation, though related mortgage liabilities can affect the math in specific situations.
Why does accredited investor status exist?
It lets regulators limit access to private, unregistered offerings that skip the disclosures required of public securities. The standard restricts those higher-risk deals to investors presumed able to bear the risk or evaluate it.
Is being an accredited investor a guarantee of good returns?
No. It only grants legal access to certain private investments, which are often illiquid and lightly regulated. The status says nothing about whether any specific deal is sound.
This content is educational only. It is not tax, legal, or investment advice. Check primary sources and speak with a qualified professional before making financial decisions.
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