Risks And Benefits That Comes With Getting Accredited As An Investor
Financial institutions, large corporations, banks, and individuals with a high-net-worth are some of the people who get accredited as an investor.
An investor who is accredited neither gets the chance to invest in high-risk securities nor is registered under SEC (Securities & Exchange Commission).
These investments can result in huge profits for the investor but carry equally higher risks for losses as well. This is why anyone without a net worth of a minimum of $1 million apart from primary residence is not eligible to become accredited as an investor because they will not be able to mitigate the risks that come with investments in unregistered securities.
As accredited investors, if you are looking for new gas fields to invest in, you can get in touch with Legacy Explorations. With Headquarters situated in Dallas, Texas, this company looks for partnerships to develop and explore new gas fields in Texas.
They have a network of experienced engineers, geophysicists, and researchers to perform various tests on the drilling location. Along with their high-technology equipment, the chances of receiving a high ROI are on the higher side.
Are You Accredited As An Investor – How Would You Know?
To qualify as an investor who is accredited in the United States, you must fulfill the following requirements:
- Your net worth should be more than $1 million, either alone or in a joint venture with your spouse.
- The net worth excludes the cost of your primary residence.
- The net worth also excludes debt against primary residence if the residence value is more than the debt amount.
- Any excess debt against primary residence will be counted as liability under net-worth calculation.
Benefits Of Getting Accredited
- The primary benefit of getting accredited is that you get more financial opportunities than other investors.
- You get more opportunities to diversify your investments to mitigate risks and increase your wealth in a shorter period.
- There are higher returns associated with these investments.
Risks That Investors Who Are Accredited Have To Face
- Normal investors can start their investment in registered securities with a few hundred dollars. On the other hand, if you are accredited, you will need to invest a minimum of a hundred thousand to a million dollars.
- Along with high returns, the risks associated are also very high and this is why investors with lower net-worth do not get accredited. Losing a million dollars is a huge investment risk that everyone cannot bear.
- Your investment capital gets locked for years at a time and thus affects the liquidity of your funds.
- Apart from management fees, these investors have also to pay a very high-performance fee on their investments.
If you fulfill the income and net-worth requirements to become accredited as an investor in your state, you get the chance to invest in securities that are non-registered such as equity firms, venture capitals, etc.
The minimal amount that you have to invest after getting accredited in these high-risk securities is very high and you have to calculate the benefits Vs risk ratio before you put in your hard-earned money in any new investment field.