Many people aspire to one day start making significant investments to secure their finances and make a significant passive income. In the past, to make meaningful, large-scale investments, you had to meet strict criteria. Meeting these criteria is how one comes to be considered an accredited investor. You may be wondering what exactly it takes to become an accredited investor and what the process looks like for newcomers?

What Is an Accredited Investor?

Defining “Accredited Investor”

The title of accredited investor isn’t something you apply for and wait to be accepted into, but it’s still regulated by the SEC. These criteria and regulations are put in place to protect potential investors and ensure they are aware of higher-stakes investing’s potential risk. While the SEC used to have a much more rigorous qualification process in place, a recent ruling has changed the degree of scrutiny used for the accreditation process.

The requirements to achieve this investor status consider the following factors: income, net worth, professional certifications or designations, and knowledgeable employees of private funds. If you’re wondering how to become an accredited investor, the title has become much more accessible since the SEC ruling took effect on December 8, 2020. Now prospective investors need to meet the requirements within only one of the aforementioned categories to be considered an accredited investor.

Moving forward, you can become an accredited investor if the pre-tax annual income that you’ve reported on your two most recent years’ tax returns exceeds $200,000, your individual net worth exceeds $1M, you’ve received the proper professional designations and credentials, or you meet the designation of a knowledgeable employee of a private fund. The necessary credentials can be received from an accredited university. Examples of these designations and certificates include the Series 7, Series 65, or Series 82 licenses. A knowledgeable employee of a private fund is a director, trustee, partner, executive officer, or someone with the same high standing or authority within an investment company.

The Importance of Investment Education

One of the primary reasons for the accredited investor criteria is to ensure that prospective investors know the potential loss involved with the investment process. Having a good understanding of these risks means that accredited investors have a reasonable expectation for their potential profits going into any investment opportunity. Wealth Rocket is an emerging company made of expert financial advisors that are dedicated to providing financial education.

Their finance and investment advisors understand the importance of proper financial education and that most young people don’t have access to traditional professional advisors and CPAs. Wealth Rocket operates with young people in mind, and they want to allow the younger generations to succeed financially.

Wealth Rocket knows that the younger generations are often written off and belittled by older generations as lazy and unambitious. The experts at Wealth Rocket understand the reality of our situation because the world has become harder for young people, and we lack many of the opportunities that older generations were fortunate enough to have handed to them. Without the essential knowledge of investing and financial growth, it’s easier to fall behind. That’s why it’s Wealth Rocket’s goal to provide a thorough education to young people everywhere.

Their educational guides aren’t made for Wall Street traders, hedge fund investors, private companies, or trust fund beneficiaries; they’re made with the general public in mind. They believe that you deserve to make and meet your important financial goals, no matter your income level or financial background. With the help of Wealth Rocket, young people everywhere can tackle their debt, find investment opportunities, build their personal portfolio, and even work toward real estate and business ownership.