YouTube video transcript in which Jerremy Newsome explains what an accredited investor is (income or net-worth thresholds), describes the practical effects and permissions that label grants (access to syndications, private equity, venture capital), shares a personal anecdote that verification is often lax, and emphasizes the importance of performing due diligence and asking how an investment can fail.
What is an accredited investor? And secondly, do you want to become one? In this video, I'm going to answer exactly what that is and how you can become an accredited investor. Here we go. Step one. An accreditation is actually kind of a label. And that label is you are making $250,000 a year in net salary or you have a net worth over $1 million, not including your primary residence. If you fall into one of those two categories, you have this label, this definition of an accredited investor. Now, what's interesting about an accredited investor is this is really not something that's extremely cool, unique, or fascinating, because what it does is it labels you and provides the ability for you to invest into certain products. Those products are generally called syndications, private equity, venture capital. It really is a qualification for the person like me who's putting together an investment portfolio for others that says, are you a good risk profile to invest with me? And if you say you are an accredited investor and the deal goes belly up, you lose most of your rights as an investor because you are accredited and you're supposed to know what to do. I know that sounds kind of wild, but that's really what it was designed to do. The accreditation effect was designed for individuals to say, hey, I have enough money, I have enough net worth, and I have enough know how to take bigger risks, bigger gambles or bigger investments. And if something happens to those investments, I'm not really going to come after you. Now is that the case? Can you still not come after the person if something fraudulent transpires? Of course not. In the US you have plenty of rights that protect you as an investor. But when you do become or agree to or mark yourself or label yourself as an accredited investor, it opens up a humongous flood of opportunities and things to invest in. But would you like to know a secret? The secret is no one checks. I was investing into accredited investor opportunities well before I was a credit investor. I just simply said, yeah, I am one. Never got a phone call, never got an email, never got a message, no background, no credit report, no one verified me, nothing. I said, hey, I got money and I want to buy the thing that you're selling. I'm an accredited investor, I promise. And I wasn't. The truth is, the investments worked out, and that's because I did my due diligence. That's the most important part. Regardless of your label, regardless of how much money you have or what you want to invest in or why you want to invest in it, have you done the due diligence what's the likelihood that the thing that you're going to invest in is going to go to zero, going to go belly up or going to make you lose a lot of money? You need to understand those risks. One of the most important questions you can ask as an accredited investor or non accredited investor is quite simply tell me how this can go wrong. How can I lose money? What are the likelihood that I'm going to lose money? And please expect realistic expectations if you are told can't lose money. This is guaranteed, this is simple, this is, this is a no brainer. Everyone's going to win on this situation. Run away from that. Every investment has risks even though they might be small. Every investment has possibilities where you can lose money and again those risks should be mitigated but they're always going to be there. Do your due diligence and if you're a credit investor or not you can still make incredible investments into your future by thinking and growing rich.
