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Over 700 finance terms, Shmooped to perfection.
The difference between an accredited college and an unaccredited college can be the difference between Princeton and the School of Feel Good Energy your Great-Aunt Bertha set up in her garage last year. Accredited investors work on a similar idea: a bunch of someones have come along and agreed that accredited investors have a bunch of qualifications or meet a bunch of rules.
So accredited investors are simply investors who qualify to do a certain investment. Usually "accredited" means that they have... credit. Or assets. Or wampum. Or knowledge. Which means that they're big boys and girls who are able to invest a large amount of money in a risky venture.
Officially, they're investors who have an income of at least $200,000 for the past two years ($300,000 for joint accredited investors); or have a net worth of at least $1,000,000 (individually or jointly); or are executives, partners, or directors of the entity issuing securities. Institutional investors such as mutual funds, hedge funds, and pension funds also fit the bill.