Updated: Apr 02, 2024

How to Become an Accredited Investor Based on Income or Net Worth

Learn how to become an accredited investor based on your annual income or total net worth, which will then allow you to access certain types of investments.
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Many people may have heard the words “accredited investor” but never had occasion to worry about what they mean or whether they qualify as one.

When you open a brokerage or other investment account, the brokerage will likely check to see if you’re an accredited investor, but your status only comes up in very specific situations.

Most people won’t know whether they’re an accredited or non-accredited investor until they find out the hard way by getting denied an investment opportunity.

In short:

The difference between an accredited and non-accredited investor lies in their annual income and net worth.

If you want to know more about accredited investors and what that status means, this article will cover the important pieces of information.

What is an Accredited Investor?

An accredited investor is anyone who meets the requirements laid out by the federal government.

There are two ways to qualify as an accredited investor:

1. Income

To qualify as an accredited investor based on your income, you must earn more than $200,000 in each of the last two years and expect to do the same for the current year.

For people married filing jointly, the threshold is $300,000.

2. Net worth

To earn accredited investor status based on your net worth, you must have a net worth (alone or with your spouse) exceeding $1 million, excluding the value of your primary home.

Meeting either of these requirements is sufficient to qualify as an accredited investor.

You do not have to meet both the income and net worth requirements.

What is a Non-Accredited Investor?

A non-accredited investor is anyone who does not meet the requirements to be an accredited investor.

Not surprisingly:

The vast majority of Americans are non-accredited investors.

Access to Different Investments

Non-accredited investors have many investment options available to them.

They can purchase stocks, bonds, mutual funds, ETFs, options, and a huge variety of other securities.

However, some types of investments are only made available to accredited investors.

For example, only accredited investors can participate in real estate crowdfunding investments. These types of investments let many individuals pool their funds to invest in real estate projects, like apartment buildings or shopping malls.

Accredited investors can also participate in venture capital or certain investing portals and platforms.

Generally, hedge funds and private equity funds are also restricted to accredited investors. Non-accredited investors cannot purchase shares in these funds.

Reasons for Accredited- Investor Rules

Accredited investor rules exist to help protect everyday investors.


The types of investments that are only available to accredited investors tend to be highly complex and difficult to understand.

If anyone could invest in private equity or hedge funds, many people would invest without fully understanding the things that they are buying.

Many people could lose money on investments they failed to properly understand.

Restricting investment in these products only to accredited investors helps make sure that the people buying them have a clearer understanding of how they work.

At a minimum:

It helps prevent people who don’t have much money that they can afford to lose from experiencing large losses caused by complex investments.

How investors are protected

There are many regulations dedicated to keeping investors protected.

Accredited investor rules are part of these regulations.

By limiting investment in complex securities to those with more experience and more resources to weather losses, the government helps protect people who don’t understand the things in which they invest.

Other regulations, such as requiring publicly traded companies to file regular reports with the SEC help to protect investors because it ensures that they have easy access to important company data, such as revenue and profits.

There are other groups, like the Securities Investor Protection Corporation (SIPC) that offer protection to regular investors.

SIPC insurance protects up to $500,000 worth of holdings at a protected brokerage. This insurance reimburses investors for losses incurred due to a brokerage’s failure (not loss of investment value). The protection doesn’t extend to investment losses.

How to Become an Accredited Investor

There is no special process for becoming an accredited investor.

You don’t have to submit an application or register with any organization.

Once you meet the requirements for being an accredited investor, you automatically become one.

If you want to make investments that are only available to accredited investors, the companies facilitating those investments, such as your brokerage or crowdfunding sites need to verify your status.

That typically means:

You'll have to provide financial statements or pay stubs to prove that you meet one of the requirements.


There are no special rules that qualify for accredited investors but not to non-accredited investors.

The only restrictions are related to the investment options, such as hedge funds and private equity, that accredited investors can take advantage of that non-accredited investors cannot invest in.

Why become an accredited investor

Becoming an accredited investor opens up new investment opportunities.

Non-accredited investors have many investment options available to them.

You can construct an effective portfolio using just things like stocks, bonds, mutual funds, ETFs, and real estate investment trusts (REITs). There’s no requirement that you qualify as an accredited investor if you want to make money while investing.


Some of the special opportunities afforded to accredited investors can be appealing.

Real estate crowdfunding, for example, gives accredited investors close control over how their money is used to invest in real estate where investing in a REIT affords much less control. This gives accredited investors more power to direct their investment, which can help them earn higher returns (or make them lose more money).

Becoming an accredited investor doesn’t close any doors in the world of investing.

Accredited investors can invest in the same things that non-accredited investors can. It only provides more choices, making it understandable that people want to become accredited investors.

Bottom Line

The accredited investor rule is designed to help protect regular investors from investing in complex investments.

By restricting access to confusing investments like hedge funds, private equity, and real estate crowdfunding, the government can help less sophisticated investors or those who can’t afford large losses from losing money on investments they don’t understand.

Qualifying as an accredited investor requires a high income or net worth, but opens up some new investment options that you may find worth consideration.