Accredited Investor

An accredited investor is someone who meets SEC income or net worth thresholds (currently $200,000 in annual income, $300,000 jointly, or $1 million in net worth excluding a primary residence) that qualify them to invest in unregistered securities like hedge funds, private placements, and many venture deals.

The threshold exists because those investments carry less mandatory disclosure than public securities, and regulators assume accredited investors can either absorb the loss or fend for themselves in due diligence. It is a wealth test, not a sophistication test, which is a frequent criticism of the rule.