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Accredited vs. non-accredited investors: What’s the difference?

An accredited investor has to meet certain income or net worth requirements to invest in certain investments non-accredited investors don’t have access to.
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While I don’t consider myself the king of investing, I have been around the block a few times. So I decided I wanted to get into a more advanced form of investing: real estate crowdfunding.

I decided to check out a reputable company – EquityMultiple. But, I quickly found out that I wasn’t allowed to invest through them.

Why? Because I’m not an accredited investor.

Most people never even run into a situation where they need to know what an accredited investor is. I certainly didn’t think I would. But, now that I’ve found out the hard way, here’s what you need to know about being an accredited investor (or not).

What is an accredited investor? 

Technically, there are two types of investors. You’re either an accredited investor or a non-accredited investor.

Figuring out whether or not you’re an accredited investor is easy. There are two different ways you can qualify.

Accredited investor income test

If you make a ton of money, you might be an accredited investor. Specifically, you have to earn $200,000 every year for the past two years, and expect to earn at least as much this year.

If you’d rather qualify as an accredited investor as a couple with your spouse, the earned income requirement increases to $300,000.

Accredited investor net worth test

The other way to become an accredited investor is by being a millionaire. Your net worth has to exceed $1,000,000 without including your primary residence.

Since you can’t include your primary residence, you don’t have to include the mortgage, either, except if you are underwater on your home.

While it doesn’t make much sense, this requirement is the same whether you’re trying to qualify as an individual or together with your spouse. Either way, my wife and I calculated our net worth,  but we still didn’t qualify to be accredited investors.

What are some good investments for accredited investors?

When you invest as an accredited investor, you must look at the same concepts any other person would look at for an investment. Some examples include:

  • Does this investment help me meet my goals?
  • Is this investment’s risk worth the potential return?
  • How volatile is the investment?
  • Can I sell this investment at any time or do I have to wait until a certain time to sell?

Based on these criteria, a crowdfunded real estate investment may be a great fit for accredited investors that want to lock up their money long-term.

On the other hand, a flexible hedge fund may be a good fit for someone that needs to cash out their money in just a few years.

You’d think being an accredited investor unlocks the ability to invest in assets that make people wealthy beyond their dreams. Unfortunately, that’s not the case.

What may be a good investment for me might be an awful investment for you. It all depends on your situation. Even though all accredited investors have crazy high incomes or million dollar plus net worths, they all have different appetites for risk and investment return requirements.

You do have more options to invest in as an accredited investor, but they’re typically riskier and require more research prior to investing.

You must be an accredited investor to invest in these investments because they don’t normally publish the same types of information regulated investments like public companies have to. Instead, you’re relying on your own knowledge, research and the limited information the company you’re considering investing in provides.

That said, here are some popular types of investments usually only open to accredited investors.

Real estate crowdfunding

Many websites, such as RealtyMogul, allow you to pool money with other investors to invest in specific real estate opportunities. This could include an apartment complex or an office building.

Most investors, including many accredited investors, can’t afford to buy entire properties of this size while still remaining diversified. Real estate crowdfunding allows accredited investors to do just that.

Fundrise is another real estate investing site that requires you to be an accredited investor to invest. You will need a minimum of $10 to start using Fundrise Pro, but in the real estate world, that’s a super low minimum investment.

You can choose from one of Fundrise’s four portfolios. The Starter Portfolio is built for beginner investors, while the other three are for more advanced investors.

With Fundrise, you’ll be investing in a group of real estate projects that typically earn investors an 8%+ return rate.

Read More: RealtyMogul Vs Fundrise Vs Roofstock: Which Real Estate Investing Platform Is Best?

Equity crowdfunding

Large companies raise capital by offering stock for sale to the public through an initial public offering (IPO) but small companies may not be ready for that step yet. Instead, private accredited investors may be able to invest through equity crowdfunding sites.

Equity crowdfunding is like real estate crowdfunding but with businesses instead of real estate. Some equity crowdfunding deals are open to accredited investors only while others are open non-accredited investors, as well.

Hedge funds

Hedge funds are much like mutual funds or ETFs, but they’re less regulated. The risks and fees are generally higher, but there may be more potential for higher returns, too.

Hedge funds may limit your ability to cash out of the investment in certain ways and are less regulated than a typical mutual fund. These are some reasons hedge fund investments are usually limited to accredited investors.

What is a non-accredited investor? 

A non-accredited investor is exactly what it sounds like. It is someone that doesn’t meet the accredited investor requirements.

I am an example of a non-accredited investor. I don’t meet the requirements. That means I can’t invest in accredited investor-only investments.

While this seems like a major bummer, it isn’t. Despite being non-accredited, I still have a ton of other investment options I can invest in. In fact, there are so many options I often get overwhelmed when I think about them all.

What are some good investments for non-accredited investors?

Just like an accredited investor, non-accredited investors must ask themselves the same questions to see what is a good investment for them.

Starting a company could make you rich, but it could also leave you broke if it ends up failing.

Investing in a single stock could make you a millionaire or the company could go bankrupt.

A more conservative person might invest in a mutual fund that is well-diversified and earn a smaller return each year, but it might meet their goals and provide the growth they need with less risk than investing in a single company.

If you’re having trouble finding a good investment as a non-accredited investor, consider consulting with a financial advisor to get advice for your specific situation.


Non-accredited investors can easily invest in stocks of publicly traded companies and there are several brokerages out there that you can use to do just that such as J. P. Morgan Self-Directed Investing.

By choosing individual companies, you can focus on finding the stocks that offer the highest potential return based on your research. You could also subject yourself to higher risk if the company doesn’t do well.

Mutual funds or ETFs

Mutual funds and ETFs are essentially baskets of several investments bundled together.

This allows you to invest in multiple companies without investing thousands of dollars to do so. It also allows you to diversify your holdings in case one company doesn’t do as well as you would have hoped.

Non-accredited investors can use the following companies to invest:


Wealthfront focuses solely on ETFs, because they are extremely low-cost. They also have a low annual fee of just 0.25%, which is very competitive among robo-advisors.

When you go to build your Wealthfront account, they’ll take into consideration your risks and goals, and will craft a portfolio that aligns with your values.


Betterment offers multiple ETF portfolio options and has a low annual fee of 0.25%

What’s great about Betterment is that they offer a variety of automated tools to help you work towards your investing goals.


M1 takes the cake when it comes to investing with no fees. M1 is completely free to use and still has many of the same features as Wealthfront and Betterment.

You will have to do a little more work in choosing your own stocks and funds that you want to invest in, but M1 will do the rest of the work for you!

Real estate

While you may not qualify for all real estate crowdfunding companies as a non-accredited investor, there are some crowdfunding sites you can find that welcome non-accredited investors.


Streitwise offers private real estate investment opportunities to non-accredited investors through a website and iOS app. All you’ll need is $5,000 to begin building a portfolio of real estate investments. You can fund your investment through a variety of methods, including Bitcoin and Ethereum.

With Streitwise, you’ll be investing in commercial properties. Since Streitwise is a real estate investment trust, rather than a crowdfunding trust, you earn money from the rent being collected on the property, as well as having a stake in the value of the property.

According to Streitwise, historically, dividends have averaged 9.44%, and the last dividend was 8.4%, making it a solid alternative to other forms of investment.

Buying real estate properties

Many real estate investors I know buy multiple properties. They turn them into rentals and do very well for themselves.

Of course, there are plenty of risks and not everyone is successful. It is possible, though, if you carefully study the markets, find good deals, and good tenants.

One place to start your rental search is through Roofstock. They’re a rental real estate site that can show you all the rental building opportunities in your area. The properties are easy to browse and include important information such as current rent, neighborhood ratings, and total return.

Most of Roofstock properties already come with tenants in the building, so you can start making rental income as soon as your purchase!

Start a business

You don’t have to be an accredited investor to start your own business. In fact, you may grow to a point where one day you get investments from accredited investors.

Running a business isn’t easy. It takes dedication, hard work, vision, luck and more. However, starting a business is an amazing opportunity to build your wealth if you do it right.

Which is better: accredited or non-accredited investors?

It’s easy to see accredited investors have more investment options than non-accredited investors. It’s also nice to have a huge annual income or be a millionaire, too. For these reasons, it’s clearly better to be an accredited investor.

Even so, it doesn’t make a difference whether you’re an accredited investor or not for most people. While the types of investments accredited investors have access to sound sexy, they’re actually just more complicated and higher risk in many cases.

While an accredited investor might hit a home run, there’s a good chance they could lose their entire investment in some cases. For this reason, you might be better off as a non-accredited investor.

An investment that steadily grows at a decent rate of return can still help you get rich if you continue investing prudently. There are plenty of these options for non-accredited investors.


While being an accredited investor opens up a few new types of investments you otherwise wouldn’t have access to, being an accredited investor isn’t a huge deal.

I was initially bummed out I couldn’t invest in sites like Equity Multiple, but then I realized there are still plenty of other investments I can invest in.

If you’re an accredited investor, it definitely makes sense to look at all of your investment options including sites like Equity Multiple. If you aren’t, focus on what you can control and stick with the everyday investments you can invest in.

About the author

Lance Cothern

Lance is a personal finance expert who graduated from James Madison University's College of Business in 2009 and earned his Certified Public Accountant license in 2010. He has written for a number of publications including Forbes, Business Insider and here on Money Under 30.