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If you’re looking to build and diversify your investment portfolio, consider investments from commercial real estate to farmland, wine or fine art. As an accredited investor, you have the opportunity to allocate a portion of your portfolio to more speculative asset classes that offer diversification and the potential for high returns. Considering new opportunities? Check out the accredited investor opportunities below that have shown strong historical returns here.
Quick Look: Best Accredited Investor Opportunities
Best Accredited Investor Opportunities
If you’re an accredited investor looking for new opportunities, consider the following diversified investment.
1. Best for Diversified Investing App: Yieldstreet
Yieldstreet specializes in investments in real estate, legal settlements, art, financial instruments and shipping vessels. Yieldstreet is one of the best real estate investing apps for those interested in real estate and alternative investments who have a high net worth, with offerings for accredited and nonaccredited investors. You can create a custom Yieldstreet portfolio for a minimum investment of $10,000 across various asset classes as an accredited investor.
- Average Return: 9.6% annualized returns
- Fees: Investment-dependent; ranges from 0.00% for short-term note series to 2.0%.
2. Best for Art Investments: Masterworks
Masterworks allows investors to own fractional shares of fine art. Masterworks gives you the option to diversify your portfolio and invest in blue-chip artwork while potentially earning profits from 8% to 30% or more. Art has been a strong historical hedge against stock market volatility. With a minimum investment of $15,000, Masterworks can be a good option for accredited investors looking to diversify their portfolios.
- Average Return: 12% annualized returns
- Fees: 1.5% management fee based on the total value of your account and a 20% performance fee.
3. Best for Wine Investments: Vinovest
Vinovest offers accredited investors the opportunity to invest in fine wines. Vinovest is the first online platform designed to provide easy access to wine as an investment asset, with a low minimum investment of just $1,000. This opportunity comes with all the benefits of other alt investments on the list, such as diversifying your portfolio to protect against stock market volatility. Vinovest has shown profits of 10% to 13% annually in the past.
- Average Return: 10.6% annualized returns
- Fees: Annual fees start at 2.25%
4. Best for Rental Home Investments: Arrived Homes
Arrived Homes offers accredited and nonaccredited investors the option to buy and sell single-family residents and vacation rental properties with an ultra-low minimum investment of just $100. The platform’s simplified investing process and accessible platform are a definite plus. Arrived homes charge a 3.5% to 5% sourcing fee, 0.15% AUM and 5% gross rents fee.
- Average Return: 6%-12% annualized returns
- Fees: Long Term Rentals: 3.5% sourcing Fee, 0.15% AUM fee. Vacation rentals: 5% sourcing fee, 5% gross rents fee, property management fees (third party-pass-through fees): vary
5. Best for Commercial Real Estate: EquityMultiple
EquityMultiple is a real estate crowdfunding platform for accredited investors that gives you access to professionally managed commercial real estate. The minimum investment is $5,000, making it comparable to RealtyMogul. However, EquityMultiple offers a better selection of institutional-level real estate, equity and senior debt investments.
- Average Return: 7%-12% annualized returns
- Fees: Investment-dependent; approximate range is 0.5% to 1.5% plus an origination fee.
What is an Accredited Investor?
An accredited investor has a special status under financial regulation laws. Each country defines specific requirements and regulations to qualify as an accredited investor. Usually, accredited investor status is granted by meeting income, net worth, asset size or professional experience requirements.
For example, accredited investors in the U.S. must satisfy at least one requirement regarding their net worth or income, asset size, governance status or professional experience. This requirement includes high-net-worth individuals (HNWIs), brokers, trusts, banks and insurance companies.
The U.S. Securities and Exchange Commission (SEC) defines the term accredited investor under Regulation D. Accredited investors are financially sophisticated individuals or companies with reduced need for protection from regulatory disclosure filings.
How to Become an Accredited Investor
The idea of designating accredited investors is that these individuals are considered financially sophisticated enough to bear the risks. Sellers of unregistered securities may only sell to accredited investors. Unregistered securities are inherently riskier because they aren’t required to provide the normal disclosures of SEC registration.
To become an accredited investor as an individual, you must meet income or net worth criteria, such as an average annual income over $200,000 or $300,000 with a spouse or domestic partner. You could also become an accredited investor if you work in the financial industry.
To meet SEC requirements to become an accredited investor, you must meet one of two criteria:
- Income: Have a gross income exceeding $200,000 in each of the two most recent years or joint income with a spouse or partner exceeding $300,000 for those years. You must also reasonably expect the same income level in the current year.
- Net worth: A person whose net worth exceeds $1 million, excluding the primary residence. The net worth may be combined with a spouse or partner.
You could also meet SEC professional criteria. Learn more on how to become an accredited investor here.
Types of Investments for Accredited Investors
A number of investment options for accredited investors, from crowdfunding and REITs to hard money loans. Here’s what you can consider.
Crowdfunding
Crowdfunding is an investment opportunity growing in popularity in which a company, individual or project seeks to raise necessary capital online. This opportunity is facilitated by online crowdfunding platforms.
As an accredited investor, you can also consider equity crowdfunding platforms, which offer the opportunity to obtain a share of a company or project. Consider opportunities from real estate crowdfunding to tech startups for potentially high returns.
Real Estate Syndication
Real estate syndication involves a group of investors combining capital and resources to purchase a larger property such as an apartment complex, mall or other larger commercial investment. Accredited investors can look into the real estate syndication structured by a syndicator. The role of the syndicator is to scout and secure properties, manage them, and connect investment contracts or pair investors. This process simplifies real estate investment while offering accredited investors excellent investment opportunities.
REITs
REITs pool and oversee funds invested in various real estate properties or real-estate-related activities such as mortgages. While there are REITs available to nonaccredited investors, accredited investors have greater opportunities to access private or non-traded REITs.
Hedge Funds
Hedge funds can offer accredited investors exclusive investment opportunities. Hedge funds are professionally managed by career investors, but they’re under less regulation and scrutiny than exchange-traded funds (ETFs) or other funds. Hedge funds may be able to invest in asset classes that are more unique or sophisticated than regulated funds, offering investors the potential for greater returns.
Venture Capital
Venture capital is private equity financing for startups, emerging and early-stage companies with high growth potential or demonstrated high growth. Accredited investors choose venture capital for strong growth opportunities and to put capital into emerging companies that show strong potential or align with investors’ beliefs.
Convertible Investments
Convertible investments are financial securities that can be converted into common stock for a predetermined price. Convertible investments are a hybrid security that combines debt and equity features, blending elements of stocks and bonds to offer potential appreciation opportunities while safeguarding against loss. The value of this opportunity for accredited investors is that they have the potential to appreciate in value over time.
Private Equity Real Estate
Private equity real estate refers to the practice of investing in professionally managed funds that could invest in speculative property offerings from undeveloped land to new luxury high-rises. Private equity real estate encompasses private equity, private debt, public equity and public debt. Accredited investors can invest individually or in a private equity real estate fund.
Interval Funds
An interval fund is a closed-end fund. Shares are not typically traded, but instead, the company periodically extends offers to repurchase shares, typically every 90 to 180 days. Accredited investors use interval funds to diversify their financial portfolio or for regular opportunities to divest themselves of their holdings at a profit.
Hard Money Loans
Hard money loans are short-term loans by individuals or private companies who accept an asset or piece of property as collateral. In the case of hard money loans, if a borrower defaults on the loan, the lender can assume ownership of the asset to recoup their losses. Accredited investors may consider offering hard money loans for the opportunity to charge higher interest rates and high potential returns.
Diversifying for Accelerated Growth
The investment opportunities here offer accredited investors the opportunity to invest in responsibly managed companies with some offerings that have outpaced major markets such as the S&P 500. Whether you should invest in these opportunities depends on your financial goals, portfolio diversification and investment horizon. Learn more about alternative investment platforms here.
Frequently Asked Questions
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Accredited investors may have the opportunity to access more exclusive investment opportunities that can potentially offer better returns. However, higher returns also come with higher risk levels, so it ultimately depends on the individual investor’s risk tolerance and investment strategy.
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The average income for an accredited investor typically ranges from $200,000 to $1 million or more per year. These individuals must meet specific criteria set by the Securities and Exchange Commission in order to qualify as accredited investors.
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Accredited investors can invest in a variety of financial opportunities such as hedge funds, private equity, venture capital, and certain private placements. These investment opportunities are typically higher risk but can also offer the potential for higher returns. Investors must meet certain criteria set by regulatory authorities to be considered accredited and have access to these types of investments.
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