Australia's government wants to tighten rules on who can invest in high-return deals. Currently you need AUD 2.5 million in net worth, AUD 200k annual income for two years, or AUD 500k for a single investment. The presenter argues this locks out people who could actually use these opportunities to build wealth.
Something which is hitting the news at the moment about a push by the Labor government is all about the changes in the sophisticated investor test. Now, to qualify for a sophisticated investor, you have to meet a few different criteria. In Australia, what that looks like is that you have to either A, have a net worth of $2.5 million or more, B, you have to be earning a minimum of $200,000 a year over the space of 2 years, or C, you have to have $500,000 ready to put into one deal. And that means you passed the sophisticated investor test. Here's the simple problem. If only sophisticated investors who have a higher net worth can access deals with a higher level of return, obviously their wealth is going to be able to expand. Where people who have less assets, who really need that type of return to be able to grow their wealth and kind of bridge that gap between this wealth divide which is going on, they're not even allowed to access it, nor is these type of deals even spoken about to them.
