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Accredited Investor vs Qualified Purchaser: What’s the Difference?

Are you interested in investing? Investing in a simple fund can top up your investments as well as build your portfolio in the long run!

In investing, you can choose to be an accredited invested or qualified purchaser. However, what are they, and what is similar and different about the two? Read more as we discuss the difference between an accredited investor vs qualified purchaser.

What Is an Accredited Investor?

The Securities Act of 1933 designates the bars for the accredited investor in Rule 501 of the law. Also, the Securities and Exchange Commission has revised the accredited investor provisions. Today, people may qualify based on their employment, net worth, income, or knowledge.

To be an accredited investor, requirements include being and having:

  1. An individual income over $200,000 or a couple earns around $300,000 in two years and the current year.
  2. The net worth of couples or individuals with at least $1 million, not excluding their primary home.
  3. Knowledgeable workers and top officials that offer securities to accredited investors can buy. Employers can buy even if they don’t have one of the accredited investor requirements.
  4. Financial experts can get accredited investor level if they have good standing.

Wealthy people with a firm or family office to handle the assets can qualify if they have $5 million. Also, accredited investors benefits can buy unregistered securities in specific cases.

What Is a Qualified Purchaser?

What is a qualified purchaser, and what do they do? Qualified purchasers are a step forward from accredited investors in what they can fund. The ICA of 1940 sets the bar for qualified purchasers, which spins around an entity or person’s investments.

Investors can qualify to buy if they are:

  • Married or an individual who has around $5 million in assets
  • A trust or a family-owned company that has about $5 million in assets
  • An entity that qualified purchasers fully maintain
  • A trust that’s managed and contributed by qualified purchasers
  • An asset manager who finances qualified purchasers’ money and has around $25 million in investments.
  • A corporation that has about $25 million in assets

Also, to meet the need to become a qualified purchaser, a company or person must make an entity other than funding in a particular unlisted security. First, however, create an entity to invest in unregistered offerings fully.

The Main Differences

The main difference between accredited investors vs qualified purchasers is the eligibility provisions. For example, a person or entity could be eligible for either status based on their assets. Accredited investors may qualify by metrics of their assets, including employment and knowledge.

Also, qualified purchasers depend on total assets and begin at least $5 million. Qualified purchasers could invest in funds that don’t receive buys from accredited investors. Another difference is that the ’33 Act determines accredited investors, while the ICA determines qualified purchasers.

Accredited Investor vs Qualified Purchaser

Aside from the differences between an accredited investor vs qualified purchaser, they are both entities and people eligible to buy securities. Both investments, if invested wisely, can help you learn many investment goals, leading to peace of mind and financial security.

What else should you know about investments? Learn more by browsing through our guides for the best tips!

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About the author

Charmin Patel

Blogger and Digital Marketer by Choice and Chemical Engineer By Chance. Computer and Internet Geek Person Who Loves To Do Something New Every Day.

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