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Finance Glossary

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Accredited Investor

Definition:

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.