4 ms·
What's funny (well, sad) is that the government considers one an accredited investor by virtue of having money, not actual investment knowledge. You could have
by secret 17y ago
What's funny (well, sad) is that the government considers one an accredited investor by virtue of having money, not actual investment knowledge. You could have a PhD in finance, on the other hand, and be considered by law unsophisticated enough to make an educated investment.
- hga 17y agoIt's not so much an "educated" investment but one you can afford to lose without significant pain.
- secret 17y agoGood points (you and URSpider), it's just a regulation that really bothers me. Anyway, when I finish my MS in mathemetical finance, I plan to lose money through options instead :). (It's much faster that way lol!)
- URSpider94 17y agoThis isn't entirely correct. Regulation D also includes requirements that the investor be knowledgeable and experienced enough to evaluate the potential risks and rewards of the investment, and be able to tolerate those risks. However, the net worth/income test is a pre-requisite. Now, in practice, an investor's knowledge and risk tolerance are usually established by signing a piece of paper attesting to such, or at most by having the investor check "YES" in a check-box.
- krav 17y agoA PhD in finance should automatically deem you unsophisticated enough to make an educated investment. For proof, I give you Wall Street.
- anigbrowl 17y agoActually, that is only one of the criteria for accreditation. There are multiple ways to qualify as such without meeting the specified financial thresholds.
- gojomo 17y agoThey're harder to prove, more subject to dispute, or require greater entanglement in a venture's management (like taking a title). Essentially, the wealth tests are the bright-line rules an investor needs to meet to have the legally-cheapest/safest/standard financing terms.