There are a variety of investment opportunities for accredited investors that are not present to your typical middle-class family. Accredited investors have access to an additional investment world that can help them generate a great rate of return.
Understanding exactly what these investment opportunities are is important if you are looking to maximize your returns. Let’s explore the best investment opportunities for accredited investors.
Quicklook: Best Investment Opportunities for Accredited Investors
- RealtyMogul — Best for Immediate Income and Long Term Earnings Growth
- Personal Capital — Best for High End Investing
- Crowdstreet — Best for Online Real Estate Investing
- Fundrise — Best for Long Term Growth
- Equity Multiple — Best for Commercial Real Estate
- Angel List — Best for Those Interested in Startups
Table of Contents
- Best Investment Opportunities for Accredited Investors
- Accredited Investor Definition
- How To Become an Accredited Investor
- Types of Accredited Investments You Can Make
6 Best Investment Opportunities for Accredited Investors
Here are some of the best investment opportunities for accredited investors.
RealtyMogul (Best for Immediate Income and Long Term Earnings Growth)
RealtyMogul is a great platform to help accredited investors invest in real estate. This platform will invest in a wide range of commercial real estate deals.
If you’re looking to hedge your stock and bond risk with the real estate market, this may be a perfect option for you.
- Investing in real estate provides a great rate of return.
- The management fee takes care of the buying and selling decisions.
- You can generate passive income.
- There are high manager fees, upwards of 1.25%.
- There is an account minimum of $5,000.
How to Invest: The first step is to visit their site and create an account. Once your account is created, you will need to fund your account. Once all your money has cleared, you can select what investment you’d like to invest in, and begin the exciting investment process.
Investment Minimum: $5,000 is the minimum account value, but often times, the minimum investment will be $35k+
Personal Capital (Best for High End Investing)
Personal Capital combines analysis and personalized advice to help you reach your financial goals. Additionally, Personal Capital leverages state-of-the-art technology and dashboards to help you monitor and track your investments and net worth.
- You will have a team of dedicated financial advisors to work with.
- Personal Capital can also assist you with taxes.
- There are an abundance of tools at your disposal.
- The account minimum is high at $100,000.
- There is also a high management fee.
How to Invest: Investing is easy! You must sign up and get approved for an account. Once the account is approved, you will fund the account and you’ll have access to all the investment choices Personal Capital uses.
Investment Minimum: $100,000
CrowdStreet (Best for Online Real Estate Investing)
CrowdStreet specializes in helping to simplify the commercial real estate investment process by connecting investors and project developers, all through their platform. Project developers are chosen by CrowdStreet to help narrow down the pool of potential investments for individual investors.
This platform offers both individual property investments as well as what they call, CrowdStreet Funds, which is a pool of diversified real estate investments and acts almost like a mutual fund.
- Helps to simplify part of the real estate investing process by pooling together worthy project directors looking for investors
- Transparent and easy to navigate websites to help you begin investing in real estate from the comfort of your own home
- Every investment on the CrowdStreet website is complemented by an in depth video review of the project where you can also ask any questions you have
- High investment minimums and rather illiquid investment options
- The commercial real estate deals offered are quite complicated and may be better suited for more advanced investors
How to Invest: This option is only for accredited investors. As a confirmed accredited investor, you can sign up and register for a CrowdStreet account for free on their website! Once your account is active, begin the new investor orientation and then create an investing entity to begin submitting offers!
Investment Minimum: The investment minimum varies between investments but is generally going to be $25,000.
Fundrise (Best for Long Term Growth)
Fundrise is similar to RealtyMogul. You can invest in real estate without having to be the landlord of a property. Investing in real estate provides a long list of benefits,
- There is a low account minimum.
- It’s open to all investors.
- IRA accounts are an option.
- The investments are not liquid.
- Fees can vary by investment, which can get complicated.
- Fundrise is not for short term gains.
How to Invest: Similar to RealtyMogul, you can open an account with just a few simple steps 100% online.
Investment Minimum: $500
Equity Multiple (Best for Commercial Real Estate)
Equity Multiple is a commercial real estate investment opportunity. They have a history of generating a healthy rate of return, 16.8%, and invests sizable positions into some iconic properties all across the country.
- The historical rate of return is greater than the S&P 500.
- The platform is easy to use.
- Equity Multiple is only open to accredited investors.
- There are high investment minimums that must be met before you can take a single position.
- The fee structure is complex to follow, but can range as high as 1.5%.
How to Invest: Before you can invest, you must create an account. Once your account has been approved, you can see their investment portfolio within their website. Each investment option will have various investment details that you can read before making your investment decision.
Investment Minimum: $5,000
AngelList (Best for Those Interested in Startups)
AngelList was named one of the world’s most innovative companies in 2021. AngelList’s mission is clear – “to increase the number of successful starts in the world.” If you’re interested in investing in startups, this can’t be missed.
- Investing in startups provide a great deal of upside potential.
- You can personally select which startup you’re most interested in investing in.
- Startups provide less liquidity than other investment options.
- Startups have a greater upside, but this risk comes at a cost.
How to Invest: Accredited investors can complete an application in roughly 5 minutes. Once your account is active, you’ll have access to the many startup investment options AngelList has.
Investment Minimum: You must be an accredited investor to invest with AngelList. Each investment will have its own minimum investment requirement.
Accredited Investor Definition
What is an accredited investor? To answer that question, let’s review the accredited investor definition.
By definition, an accredited investor is an individual, or couple, that has received a specific financial status as established by financial regulation laws. In simple terms, an accredited investor is one that has a sizable amount of income and savings.
These individuals, or couples, are able to invest in securities that are not registered with the securities and exchange commission.
How To Become an Accredited Investor
Becoming an accredited investor is not easy. If you’re curious how to become an accredited investor, here are some of the accredited investor requirements:
Net Worth and Income Minimums
There are net worth and income minimums that must be satisfied before earning the accredited investor status. As an individual, your income needs to be at least $200,000, each year for the last 2 years, and you must have a net worth of at least $1,000,000.
Your primary residence does not count towards your net worth and this income requirement adjusts if you are married. Married couples must have an income of at least $300,000 each year for the last 2 years to be eligible for accredited investor status.
Series 7, Series 65, or Series 82 Licenses
The net income requirement was true for all accredited investors up until August of 2020. In August of 2020, the securities and exchange commission (or SEC), amended the rule slightly.
If you hold investment licenses, you can also be considered an accredited investor. These licenses include the Series 7, Series 65, or Series 82 license.
“Knowledgeable Employees” of a Private Fund
Some employees of a private fund can also earn accredited investor status. Various executives, directors, general partners, and board members may be eligible to be considered an accredited investor.
This is made possible with a recent addendum to the initial SEC rule.
Verification of Status
If you meet the accredited investor requirements, the fund or security you are investing in will ask you to verify your status. Ultimately, the onus is on the investment vehicle to ensure they are only accepting accredited investors.
Proof of income and assets is often required.
Types of Accredited Investments You Can Make
There are a wider range of investment options you can make as an accredited investor. These include:
Crowdfunding is when money is raised from a pool of investors to fund a project, new business or bring a new product to the market. The internet is the crowdfunding platform of choice.
Anyone has the opportunity to put their money in a crowdfunding platform, however, accredited investors have an opportunity to take an equity position in the underlying product, company, or project.
Learn More: Best Real Estate Crowdfunding Platforms
Real Estate Syndication
Real estate syndication is when numerous investors come together to purchase real estate. There is strength in numbers, which is why numerous investors pool together their money as it will help them purchase properties that they typically couldn’t qualify to purchase – for example, a large apartment building, a mall, or vacation villas.
Private Equity Real Estate
Private equity real estate is not the same as a REIT. A REIT gives an investor access to publicly traded shares in underlying real estate opportunities.
However, private equity real estate is when a group of private investors pool together their money to purchase real estate. This is a common practice for developing a large plot of land, a hotel, or vacation villas.
A REIT is a real estate investment trust. An accredited investor can invest their money in a REIT, and the REIT owns specific physical properties.
As the property values rise, the accredited investor makes money. REITs are one of the ways accredited investors diversify their investment portfolios.
Venture capital, also referred to as VC, is when private investors and angel investors provide money to startup companies with a promising upside. In exchange for providing money, the company will provide the venture capitalists with an equity position within the company.
This is often used when a startup cannot secure money through a more traditional financing option – such as a large bank. These companies are startups, which often goes against a traditional bank’s risk tolerance.
A venture capital company will be willing to accept higher risk, however, they will be seeking a higher rate of return.
Hedge funds are managed by a hedge fund manager and their underlying goal is to beat the overall rate of return the stock market provides. To beat the rate of return the market provides, the hedge fund takes on increased risk, which is why they are exclusively for accredited investors.
In fact, being an accredited investor does not mean you can invest in any hedge fund you want. Many hedge funds have their own requirements one must meet.
Learn More: How To Invest in a Hedge Fund
Learn More: How To Start a Hedge Fund
Learn More: Best Hedge Funds
An investment company that repurchases its shares from its shareholders at various intervals is known as an interval fund. These are closed-end funds that have limited selling options.
However, the yield, or rate of return, is typically above and beyond what the typical stock market returns are.
A convertible investment is a financial security that can be exchanged or converted into stock at a predetermined and agreed-upon price. These investment options help protect the downside risk while simultaneously allowing the investor to realize significant appreciation.
A Larger Playing Field
Accredited investors have a larger playing field to invest in. Not only can an accredited investor invest in the stock, bond, mutual funds, REITs, or commodities a typical investor has access to, an accredited investor has access to many more unique investment opportunities.
These investment options provide a great deal of upside potential, which can help maximize the investors wealth. However, the greater the upside potential, the greater the risk.
Accredited investors still need to be careful with their money as accreditation status does not prevent anyone from losing money. But, overall the investment opportunities for accredited investors are endless so there will surely be one investment that will help to generate a positive return.
Frequently Asked Questions
Accredited investors can invest in traditional investment options or exclusive investment options. Exclusive investment options include; startups, venture capital, real estate deals, and crowdfunding.
You can lie about being an accredited investor, but you shouldn’t. Serious consequences can occur to both you, and the company if the SEC found out you were lying.
Accredited investors make money when their underlying investments increase in value. For example, if an accredited investor invested $500,000 to own $25% of a real estate property, and 3 years later the property appreciated by 30%, the accredited investor would be able to sell their investment for a 30% profit.