Many individuals who qualify as accredited investors do not even know they qualify for this privileged status. As a result, they do not know about some of the investment opportunities they have access to. Many skilled and reliable sponsors offer excellent investment opportunities which can generate great returns. Some examples of the opportunities available to these investors include commercial real estate, hedge funds, hard money loans, angel investing, late-stage pre-IPO businesses, and crypto-funds.
The downsides, if any, with these investment opportunities are that they are not regulated by the SEC, and they carry a higher risk. Accredited investors must do their homework to determine if an investment is right for their portfolio, financial risk tolerance, and goals.
Some of the benefits of becoming an accredited investor are explained further below:
Opportunity to Invest in Small Businesses
When you operate as an accredited investor, you have the chance to support small businesses, startups, and causes you hold dear. Many online platforms make it easy to connect with emerging companies. You can become a part of what a new startup company is doing and play an important part in its success.
Higher Yield Opportunities
When a business raises funds somewhere other than in the public markets, it usually is done as a private placement offering. Private placements typically provide higher yield returns than public capital market investments because the issuer has access to desirable capital with these offerings. Online investing platforms enable easier access than ever to these types of higher-yielding investment opportunities.
Portfolio Diversification
If interest rates rise, having investments exclusively in the public market sector provides limited options to diversify your investment portfolio. You can reduce reoccurring exposure to risk by finding alternative investments that are not connected to the public markets. An accredited investor has access to these investment opportunities that are unavailable to other non-accredited investors.
With all of the potentially profitable investment opportunities available to accredited investors, it may be worth finding out more about them if you fall into the category of qualifying as one of these investors.
With some education on the potential risks and benefits of participating in accredited investor opportunities, you can decide whether or not to invest in these types of securities offerings.
