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Home equity does not count for “accredited investor” status

Posted by John Reed on

Investopedia says,

An accredited investor is an individual or a business entity that is allowed to trade securities that are not be registered with financial authorities. They are entitled to this access by satisfying at least one requirement regarding their


• income

• net worth

• asset size

• governance status

• professional experience.

In the U.S., the term accredited investor is used by the Securities and Exchange Commission (SEC) under Regulation D to refer to investors who are financially sophisticated and have a reduced need for the protection provided by regulatory disclosure filings. 

VerifyInvestor.com says,

Even though the primary residence presents a significant boost to net worth for many, Rule 501 excludes its value for net worth calculations, posing additional challenges for some individuals.

I do not recommend that you qualify as an “accredited investor.” I have never tried. We would have qualified years ago, but being able to invest in riskier assets like unregistered securities never sounded like a good idea to me.

You can still qualify for “accredited investor” even though you follow the advice in my An American Principal Residence is the Most Advantaged Investment on Earth: Maximize Yours! book by income, net worth if you have more than $1,000,000 outside of home equity, or your professional experience. 

Rich Dad Poor Dad author Robert Kiyosaki says being an “accredited investor” is one of “the secrets of the rich.” He’s an idiot and a BS artist.
.
https://johntreed.com/blogs/john-t-reed-s-real-estate-investment-blog/61651011-john-t-reeds-analysis-of-robert-t-kiyosakis-book-rich-dad-poor-dad-part-1?_pos=8&_sid=04aff1df7&_ss=r

“Accredited investor” sounds to me like something insecure people like to drop at back-yard barbecues and cocktail parties to impress others. Consulting a psychiatrist is a better way to deal with that problem than buying rental property so you can say that you are an “accredited investor.”

I see the fact that Rule 501 does not count home equity as a virtue. Simpler is better than complex. Rule 501 says if you follow my new book’s advice, you got rich by too simple an approach. Good for you being that smart.

 


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