On this video I answer the questions "What is an Accredited Investor?" and "What is A Sophisticated Investor?". You'll learn the differences between an Accredited Investor, a Sophisticated Investor, and everyone else. By the end you'll know what it takes to qualify as an accredited or sophisticated investor. Future videos will explain why this is important your business and investments. Full Transcript Below! Like and Subscribe to support the Channel!
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Full Transcript:
Hi everyone. This is Paul Cooper totes of notes number I'm bringing you your 13th note nugget in a minute. And on this episode we're going to talk about what it means to be an accredited investor, a sophisticated investor, and everyone else. So let's get started. An accredited investor is someone who meets the standards and requirements of being an accredited investor set forth by the government. Currently. That means someone that earns an income that exceeds 200,000 or if they have a spouse then it needs to be 300,000 or greater and it needs to meet these requirements in each of the prior two years and that person needs to reasonably expect to make that money for the current year or an accredited investor is someone that has a net worth of $1 million or greater either alone or together with a spouse. And this excludes the value of their primary residence. So it can't include their primary home, it can include a other real estate they own or vacation homes and things like that, just not the primary residence.
There are other categories of accredited investors and those would be for non individuals that would be trusts and companies and if it's a trust that's trying to qualify to be an incredible investor, they need to have total assets of at least $5 million or it could be an entity in which all the equity owners are also accredited investors. The next category is a sophisticated investor and this would be an individual that doesn't qualify to be an accredited investor because they don't have the annual income or the net worth over a million dollars, but this would be someone that usually has some type of experience or education sufficient knowledge so they should be able to understand the type of investments that are being offered to them so they can make a proper decision on the financial risk. And the last category is going to be everyone else. Everyone that's not sophisticated or accredited and that's going to be the vast majority of the population it's probably going to be well over 90% of the population.
Being an accredited or sophisticated investor allows you to invest in other opportunities, or if you are a business, allows you to have investors invest in other opportunities that the general public just wouldn't be allowed to. So it's very important that you understand what type of investor you're going to have invest with you. We're going to go into more detail on another episode on how you can actually use accredited and sophisticated investors and what the requirements would be to have them come in and invest with you. I hope you enjoyed this episode and don't hesitate to reach out with any questions, comments, or suggestions.
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