Accredited investors have the privilege to invest in certain assets and alternative investments that are unavailable to unaccredited investors. To be considered an accredited investor, you typically need to have a high net worth and/or high (and stable) income.
It can be a great idea to pursue investment opportunities for accredited investors if you fit the criteria. Many of these opportunities offer higher returns and/or greater passive income than many traditional investments that are available to all traders.
This article will explore some of the very best investment opportunities for accredited investors. Keep reading to learn more about what it means to be an accredited investor, as well as seven great investment opportunities for accredited investors.
What is an accredited investor?
First, what exactly is an accredited investor? It’s important to understand the definition of an accredited investor before you explore investment opportunities that are meant solely for accredited investors.
An accredited investor can be either an individual or a business entity that has privileged access to trading securities. Due to their wealth and/or experience, these individuals or businesses don’t have the same need for regulatory disclosure filings that offer some measure of protection.
High net-worth individuals can be accredited investors, but so can banks, brokers, insurance companies, and trusts. To be considered an accredited investor, it’s necessary to fulfill at least one requirement regarding net worth, asset size, income, governance, or professional investment experience.
According to the SEC, an accredited investor must have gross (or joint) income surpassing $200,000 (or $300,000) in each of the two most recent years. There must also be an expectation that this income level is sustainable for the current year.
Accredited investor status is also available to people who have a net worth (or joint net worth) greater than $1,000,000. It’s important to note, however, that this sum does not include their primary residence.
What are investment opportunities for accredited investors?
Accredited investors receive many benefits since they are considered financially stable and experienced.
In fact, certain investment opportunities are restricted only to accredited investors. For example, these can include:
- Shares in private placements
- Structured products
- Hedge funds
- Other private equity
Accredited investors also may have privileged investment access to various alternative investments, such as crowdfunded real estate investing.
Other potential investment opportunities include venture capitalist investments (becoming an angel investor), private funds (like interval funds), REITs, or hard money loans.
Of course, some investment types generally fare better than others, and you shouldn’t make questionable investments purely because you can.
Volatile investments have a higher earnings potential, but also a great risk of loss. For that reason, we generally recommend making passive income investments as opposed to riskier investments like angel investments.
In fact, passive income investments are exactly what we’ve covered below, so read on to learn about seven great investment opportunities for accredited investors. (Note that some of them are also available to non-accredited investors.)
Investing in commercial property or a REIT (real estate investment trust) are two common types of investments in real estate, but FarmTogether presents a third option: agriculture!
Perfect for anyone concerned about financial portfolio diversification, FarmTogether offered accredited investors the opportunity to directly invest in US farmland with minimal fees.
Investors will have their choice in the method they use for investing. Crowdfunded offerings allow for the purchase of fractional shares, whereas bespoke offerings allow the investors to become the sole owner of a property.
Investors who prefer instant diversification with a single investment may choose to opt for the Sustainable Farmland Fund, which requires a minimum investment of $100k and grants access to a diverse farmland portfolio.
With multiple ways to invest, capital appreciation, and routine dividends, FarmTogether is definitely a platform worth checking out if you’re interested in agriculture.
First National Realty Partners
First National Realty Partners is a highly-rated real estate investment opportunity for accredited investors only.
First National Realty Partners works much like a real estate investment trust. They own and lease properties, and their investors receive dividends. There is also the possibility for capital appreciation.
What sets First National apart is that they focus on institutional-quality offerings among their various real estate investment options. In their case, this refers primarily to retail spaces that feature a stable, national brand, such as Aldi, Dollar Tree, or Walmart (among many others).
To invest with First National, there is a $50,000 minimum per deal. The asset management fee is 0.5% to 1.5%, depending on the deal. Since 2015, more than 1,400 investors have benefitted from an average return of 12% to 18%, far outpacing the stock market.
Click here to learn more about First National Realty Partners and see if it might be the right opportunity for you.
EquityMultiple has a unique offering that blends more traditional real estate investing with crowdfunding. The goal of this real estate investment platform is to achieve higher returns than one typically gets with traditional investment opportunities in the real estate market.
Compared to some of the other firms reviewed here, EquityMultiple has a relatively low barrier to entry. The minimum investment for real estate notes is $5,000. For direct investment and investment pools, that number rises to $10,000 and $20,000, respectively.
EquityMultiple is backed by Mission Capital Advisors, and it was started with the goal of providing more commercial real estate opportunities than what is offered by traditional REITs.
Accredited investors appreciate EquityMultiple for its wide variety of asset classes and offerings, including preferred equity deals, senior debt deals, and much more. Investors can put all their eggs into one basket or spread their investment over multiple opportunities.
Click here to learn more about EquityMultiple and everything it has to offer.
RealtyMogul is another crowdfunding real estate platform that aims to provide higher rates of return than those offered by traditional markets.
RealtyMogul is available to both accredited and non-accredited investors, and its $5,000 financial investment minimum makes it one of the most accessible alternative investing offerings reviewed here.
The company has been around since 2012 but it has grown more in recent years. According to RealtyMogul, they have financed more than $2 billion in property value, with investors receiving more than $170 million in profits.
That said, RealtyMogul is still relatively new and doesn’t have the backing of a major firm (like EquityMultiple above). Other downsides include a relative lack of liquidity and fees that can vary widely for different investments.
RealtyMogul does offer a variety of investments, and this may appeal to investors who want to spread their capital around. At the same time, some of their rules are rather complex and may be off-putting even to relatively experienced investors.
If you’d like to learn more about RealtyMogul, click here.
CrowdStreet offers accredited investors access to a variety of real estate projects. There are both private equity investments as well as single-asset projects and funds.
CrowdStreet has become one of the fastest-growing crowdfunded real estate opportunities. It features an intuitive website, great educational resources, and offers the ability to earn passive income and capital appreciation on real estate through fractional ownership with your long-term investment.
The major downsides to CrowdStreet are that your alternative investment is relatively illiquid and the account minimum is $25,000. That said, they are only open to accredited investors, for whom $25,000 isn’t necessarily a huge sum of money to invest.
CrowdStreet has a thorough vetting process, but projects may vary in terms of success (as is common in real estate). It’s always a good idea to do your own due diligence.
Click here to learn more about CrowdStreet and its opportunities for accredited investors.
Fundrise stands out as an innovative investment platform that allows individuals to invest in commercial real estate in a way that was previously only accessible to institutional investors. This democratization of real estate investing has made Fundrise a popular choice for accredited investors looking to diversify their portfolios.
Fundrise operates on the premise of “crowdfunding” for real estate. This means that many investors contribute a relatively small amount of money, which is pooled together to purchase commercial real estate properties.
It’s worth noting that while Fundrise is available to accredited investors, it’s also open to non-accredited investors. This wider accessibility comes with a low minimum investment of just $500 for their starter portfolio, making it an attractive option for those looking to dip their toes into real estate investing.
Despite its accessibility, Fundrise doesn’t compromise on the quality of its offerings. It provides a diverse array of investment options, including eREITs and eFunds. These offerings give investors the opportunity to invest in portfolios of real estate assets, including apartments, hotels, and office buildings, among others.
One of the key benefits of investing with Fundrise is the potential for both regular income and capital appreciation. Investors receive dividends from the rental income generated by the properties in the portfolio, and there is also the potential for asset value growth over time.
Moreover, Fundrise provides a high level of transparency and offers a comprehensive dashboard where investors can track their investments, returns, and projected growth. They also provide regular updates about the performance of the properties in the portfolio, giving investors insight into their investment’s progress.
Investing with Fundrise is not without its risks, as with any investment. Real estate investments can be affected by market fluctuations, and there is also a level of illiquidity involved. However, for accredited investors seeking a way to diversify their portfolios and potentially earn passive income, Fundrise offers a unique and accessible avenue to explore.
Click here to learn more about Fundrise and see if it’s the right fit for your investment portfolio.
Streitwise provides real estate investment opportunities that are primarily limited to one geographic area, which is the area of expertise of its management team. This investment style aims to provide a high quarterly dividend, one that has returned nearly 10% annualized over the past four to five years.
Streitwise is open to both accredited and non-accredited investors, and the account minimum is $5,000. In terms of fees, Streitwise charges a 2% annual fee, which is a bit higher than many of the offerings reviewed here.
REITs like the one offered by Streitwise can be a great opportunity, especially when managed well. By focusing only on properties in certain area, Streitwise aims to work within its area of expertise and deliver strong returns.
So far, Streitwise generally has. They have a solid loan-to-value ratio of 0.5, which suggests that they are appropriately leveraged and well-run.
To learn more about Streitwise’s REIT, click here.
Yieldstreet offers a crowdfunding investment platform that focuses not only on real estate investments but other alternative investment opportunities as well, including art investments.
Many investors may find Yieldstreet enticing as it offers a unique way to diversify with one platform. With a minimum investment of $10,000, you can start investing in a wide variety of assets.
Current investment category options include art, marine, litigation, real estate, and others.
A big plus with Yieldstreet is that they are extremely transparent, providing detailed information for each investment and the expected annual return. This ensures you’ll know the investment objectives and annual management fees before even making an investment.
However, their fee structure is slightly complicated, and fees can vary from 0% to 2% yearly depending on the given investment.
Yieldstreet may provide outsized returns, but certain assets also carry much greater risk. It’s important (as always) to do your due diligence as you work towards your investment goals.
Click here to learn more about Yieldstreet and its variety of offerings.
Masterworks is a pioneering platform that opens up the world of fine art investing to a broader audience. Traditionally, investing in artwork has been an exclusive domain of the ultra-wealthy or specialized investment funds. However, Masterworks makes it possible for both accredited and non-accredited investors to own shares in high-value pieces of art.
The premise of Masterworks is simple: they purchase artwork from well-established artists, then they issue shares in that artwork for investors to buy. This way, investors can gain exposure to the fine art market without needing to purchase an entire piece of art outright, which can often run into the millions of dollars.
While there is a low minimum investment of just $1,000, it’s important to note that investing in art carries its own unique set of risks and rewards. Unlike more traditional investments like stocks or real estate, the value of art can be subjective and more sensitive to market trends and tastes. However, when a piece of art appreciates in value, the returns can be substantial.
Masterworks carefully curates their collection, focusing on works by blue-chip artists that have a proven track record of appreciation. They also offer detailed research and analysis on each piece of art, which can help investors make more informed decisions.
Another crucial aspect to consider is the illiquid nature of art investments. Unlike stocks or bonds, art cannot be bought or sold at a moment’s notice. It can take years for a piece of art to appreciate significantly in value, and selling a piece of art can also take time. Therefore, this form of investment is often more suitable for those with a long-term investment horizon.
Masterworks presents an intriguing opportunity for investors looking to diversify their portfolio beyond traditional asset classes. Its innovative approach to art investing allows more people to access and benefit from the world of fine art, a market that has historically been known for its potential for high returns.
Click here to learn more about Masterworks and explore its current offerings.
Which is the best investment opportunity for accredited investors?
As an accredited investor, you have a great opportunity to invest in certain assets that aren’t always available to other investors. Some of the investment opportunities for accredited investors reviewed above may also be open to non-accredited investors, although they may be priced out by the higher minimum deposit requirements.
The best investment opportunity for you as an accredited investor will vary greatly depending on your personal preferences, including rate of return, risk tolerance, type of asset, secondary market requirements, and much more.
It’s worth taking your time exploring various options in depth to see what aligns best with your own investment strategy and preferences.
Frequently Asked Questions
Why are certain investment opportunities limited to accredited investors?
The SEC (Securities and Exchange Commission) requires securities to be approved and registered if they are to be open to non-accredited investors.
This regulatory agency’s sole purpose is to protect investors, which is why it requires full public disclosure for any registrants. However, some companies may want to bypass this process.
In that case, said company would be offered unregistered securities, either to individual investors or institutional investors.
Since investments that call into this investment category tend to have higher levels of risk, the SEC has determined that unregistered securities can only be offered to accredited investors.
The logic behind this decision is that higher-wealth investors will have more money they can afford to lose (limiting the potential risks of the investment), and are also likely more experienced than the average investor.
That said, you should always do your due diligence and weigh the pros against the cons before committing to any investment(s).
Is accredited investor status permanent?
No. Both individual investors and entities can lose their accredited investor class status if their financial situation changes drastically, falling below the wealth/income requirements for accredited investors.
However, investors who’ve already invested in an “accredited investors only” investment vehicle can keep their investments: they just won’t be able to make any more until they become accredited again.
Is there a registration process involved?
Contrary to popular belief, becoming an accredited investor is not a formalized or documented process. In actuality, anyone can claim to be an accredited investor; the burden falls on the investment vehicle to prove that they are.
To prove that potential investors are eligible for accredited investor opportunities, these private companies will generally require some sort of documentation as proof of an investor’s wealth, license, and/or income.
Once the company has verified that you meet this requirement, they will allow you to continue with the investing process.
However, it’s important to note that—since this process isn’t standardized—you will need to repeat the verification process with every accredited-only investment you make.
If you make these types of investments frequently, it may be worthwhile to keep your documentation on hand at all times to ensure you can invest quickly.
How does one prove that they are an accredited investor?
There are many different ways that a company can determine whether or not you are an accredited investor.
As most people meet the qualifications either through amassed wealth or annual income, commonly requested documentation includes financial statements (to prove your single or joint income), tax filings, IRS forms, third-party valuations, or deeds.
Is accredited status recognized across the world?
Different countries have different standards when it comes to what constitutes an accredited investor. As such, you would have to look up the specific requirements for a specific country to determine whether or not you met those standards.
The standards explained above apply only to the United States, and may not meet the requirements in other countries. Additionally, it’s worth noting that some companies don’t differentiate between accredited and non-accredited investors.