So Ramit is now arguing with the @B_REInvest @capital_sb crowd about accredited investor status not being worth anything?
I get that he has a book he wants to sell, but man... Talk about taking advantage of the common man's confusion on #investment.
I get that he has a book he wants to sell, but man... Talk about taking advantage of the common man's confusion on #investment.
Let me break this down for people.
Accredited investor status is basically "I'm a millionaire, so let me invest in seed round/pre IPO companies like a big boy, with minimal paperwork*."
*You can also qualify by making six figures a year; the exact amount is on the SEC website.
Accredited investor status is basically "I'm a millionaire, so let me invest in seed round/pre IPO companies like a big boy, with minimal paperwork*."
*You can also qualify by making six figures a year; the exact amount is on the SEC website.
@capital_sb said, IF you have a network, accredited investor status can help get you in to really lucrative investments.
This is 100% true. SEC compliance is a pain in the ass. People are not looking to deal with it, and the easy button is "only deal with accredited investors."
This is 100% true. SEC compliance is a pain in the ass. People are not looking to deal with it, and the easy button is "only deal with accredited investors."
Ramit takes a case at the *extreme other end* of things and says, "yeah but a lot of deals are garbage and if you ONLY have accredited status you'll be fleeced."
Only having accredited status and being incompetent is not what @capital_sb was talking about, at all.
Only having accredited status and being incompetent is not what @capital_sb was talking about, at all.
What Ramit said is not false. There are a lot of garbage deals. But if you know what you're looking to invest in, more deals crossing your table is NEVER A BAD THING.
If you get 4,000 potential investments, and 4 of them are decent, you still have 4 more deals than before.
If you get 4,000 potential investments, and 4 of them are decent, you still have 4 more deals than before.
Furthermore, there are certain types of business financing that are ONLY AVAILABLE if you have people with enough net worth to sign for them.
It's an actual, bona fide business advantage. Here's an example:
You invest with a small real estate investment firm.
It's an actual, bona fide business advantage. Here's an example:
You invest with a small real estate investment firm.
A competing firm has to borrow money from hard money lenders to flip houses, at 12%.
But you're a millionaire. You sign as guarantor and your firm gets a line of credit at 5%.
Over time, which firm is going to do better? Obviously the one with cheaper capital.
But you're a millionaire. You sign as guarantor and your firm gets a line of credit at 5%.
Over time, which firm is going to do better? Obviously the one with cheaper capital.
You are ACTIVELY IMPROVING YOUR RETURN, solely by being involved in the project and willing to sign paperwork. (With a non-recourse loan, it is extremely unlikely that you are risking anything more than what you invested with the firm.)
It's common to pay the guarantor a guarantor's fee.
So in the above scenario you could be netting an additional 3k-5k/yr on top of your investment returns.
What's the downside?
You have to know what you're doing. But you need that anyway.
So in the above scenario you could be netting an additional 3k-5k/yr on top of your investment returns.
What's the downside?
You have to know what you're doing. But you need that anyway.
MORE OPTIONS = GOOD
ACCREDITATION = MORE OPTIONS
The only time you want to limit your options is if you have some kind of uncontrolled self-destructive impulse, in which case, why are you actively investing?
Go fix that first.
#mindset
ACCREDITATION = MORE OPTIONS
The only time you want to limit your options is if you have some kind of uncontrolled self-destructive impulse, in which case, why are you actively investing?
Go fix that first.
#mindset
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