A lot's changed since 1983 when 1.8% of U.S. households qualified as accredited investors. Today, that number's grown to 14.8% — and these investors control about $109.5 trillion in wealth. 

Being an accredited investor is straightforward — you either meet the SEC's requirements or you don't. And while the criteria might seem a bit strict at first, they're there for a good reason: to make sure investors can handle the risks that come with more complex investments like private equity or hedge funds.

The requirements aren't just random numbers the SEC came up with. They're designed to open doors for people who can afford to take bigger risks, while protecting others who might not be ready for these kinds of investments. This guide will walk you through everything you need to know about becoming an accredited investor. 

Meeting Accredited Investor Requirements

The SEC has some pretty specific rules about becoming an accredited investor. It's actually quite simple — you'll need either good financial standing or the right professional background to qualify.

Who Can Qualify?

Money isn't the only way to qualify, but it's probably the most common one. You'll need either $1 million in net worth (not counting your house), or a substantial income — $200,000 if you're on your own, or $300,000 with your spouse or partner. And you'll need to show you've had it for two years and will likely keep it up.

But there's another way too. The SEC says these criteria will get individuals and entities qualify: 

• Investment pros with Series 7, 65, or 82 licenses who are in good standing and want to invest

• Company leaders, like directors and executive officers, who are involved in selling securities

• Members of qualified family offices (and their clients too)

• People working as "knowledgeable employees" in private funds who know their way around investments

• Companies and organizations with more than $5 million in assets

• Banks and insurance companies, who get automatic qualification

The rules might seem a bit strict, but they're there to protect you. After all, these investments can be different from what you might be used to — they often need more money up front and can be a bit harder to sell quickly.

This might seem like a lot to take in, but it's really about making sure you're ready for these kinds of investments. When you qualify, you'll get to look at opportunities that aren't open to everyone — and that can be a good thing for growing your money, even though there's no guarantee these investments will work out better than regular ones.

Professional Experience and Certifications

You don't always need a big bank account to be an accredited investor — your work experience and certifications can get you there too. The SEC has some different ways for professionals to qualify, and they're pretty specific about it.

The Right Licenses Make a Difference

FINRA offers three different licenses that can help you qualify:

• Series 7 — this license allows you to sell all kinds of securities

• Series 65 — it's what many investment advisors get, and shows you know your way around investments and rules

• Series 82 — this one's all about private securities, and it's just as good as the others for qualifying to be an accredited investor

Other Professional Paths

There are a few other ways to qualify too. If you're running a company that's selling securities — like if you're a director or executive officer — you're probably going to qualify. The same goes for general partners.

Family offices are a bit different. If you're part of a family office that qualifies (or you're one of their clients), you might be able to meet the requirements to be an accredited investor. And if you work for a private fund and you really know what you're doing? That could be your ticket in as well.

When you're dealing with complex investments, it helps to know what you're looking at. And having the right experience or certification shows you've got the background to make informed choices.

Just keep in mind that getting one of these licenses or positions doesn't mean you have to use private investments — it just means you can if you want to. And that's valuable, because it gives you more potential opportunities for growing your money.

Recent Changes in Accredited Investor Regulations

Under the Dodd-Frank Act mandate to periodically review the accredited investor definition, the SEC’s staff released a comprehensive report in December 2023 analyzing the current state and potential changes. Importantly, this 2023 staff report did not make official recommendations or rule changes​. The last real change was back in 2020, when the SEC made it a bit easier to qualify. They added those professional certifications we talked about earlier, and made it clearer how domestic partners (not just spouses) could combine their money to qualify.

What Might Change?

The SEC's looking at a few a few different changes to the rules and regulations for qualifying to be an accredited investor:

• Maybe making the income and net worth requirements higher

• Adding new ways for smart investors to qualify

• Changing how retirement savings count

• Setting limits on how much people can invest

• Looking at different rules for couples and partners

It's kind of a tricky situation. Some people say the rules are too strict and keep too many qualified people out. Others worry about protecting investors who might not be ready for riskier investments.   For now, if you're thinking about becoming an accredited investor, you can still use all the current rules we talked about earlier. And while changes might come eventually, you've got time to plan ahead.

Recap: How to Become an Accredited Investor?

There are a few different ways to qualify as an accredited investor, and some might surprise you. Let's break down each path:

The Money Route

This is probably the most common way people qualify, and here's a pretty interesting fact: 79% of millionaires are self-made. They didn't inherit their money — they built it up over time.

You can get there in a few different ways:

• Make $200,000 a year on your own (or $300,000 with your spouse or partner) for two years in a row, and you'll probably make the same this year

• Have a net worth over $1 million (not counting your house)

• Build and sell a business

• Save and invest over time

Most people don't hit these numbers until they're in their 50s or 60s. And that makes sense — it takes time to build up that kind of money, whether you're saving from a good salary or growing a business.

Professional Route

If you work in finance, you might already be qualified. Having certain licenses can get you there:

• A Series 7 license

• A Series 65 (this one's getting more popular because you don't need a company to sponsor you)

• A Series 82

It's a bit like a shortcut — you don't need the big bank account if you've got the right credentials. And while it might take some studying, it's a great option if you're not quite at the income or net worth levels yet.

The Insider Track

Sometimes your job title alone can qualify you. If you're running a company that's selling securities, you're automatically considered accredited for that offering. The same goes for certain employees at private funds — they can invest in their fund's offerings even if they don't meet the other requirements.

Benefits of Being an Accredited Investor

Being an accredited investor affords various opportunities that most other investors don't get to see. It can be valuable for diversifying your portfolio. You'll get chances that most other investors don't see, and that can be very valuable.

More Investment Choices

The biggest benefit is probably all the different ways you can invest your money. Here's what you can invest to as an accredited investor:

• Private companies that aren't on the stock market yet and things like QSBS

• Real estate deals with other investors

• Venture capital funds that back new startups

• Hedge funds with different investment strategies

• Private debt funds that lend money to companies

• Early-stage companies just getting started

• Commodity funds most people can't get into

• Private credit investments with different returns

• Real estate without buying whole buildings

• Investments that don't follow the regular stock market

It's like having a bigger menu to choose from. And sometimes these investments can do well even when the stock market isn't great, which is pretty helpful for your overall money strategy.

Getting in Early

This can be one of the most exciting parts. When you're accredited, you can put money into companies right when they're starting out. You might find the next big tech company before it goes public. But it's not all easy money — these early investments can be pretty risky, and sometimes companies don't make it. 

Final Thoughts

Getting to that accredited investor status might seem like a big step — but it's one that opens up a lot of possibilities. The investment world keeps changing, and having someone guide you through these more complex opportunities can make a real difference. A financial advisor who knows the ins and outs of accredited investing could help you figure out if this path makes sense for you, and what to do once you qualify.

Want to work with someone who gets both the traditional and private investment markets? FINNY can match you with financial advisors who work with accredited investors and know how to combine regular investments with these additional options. After all, having more choices is great — but knowing which ones fit your situation is even better.

Get matched with a financial advisor.