Broker Check

Money held in ‘private placement investments’ are for accredited investors.

| November 24, 2014

In today’s low-interest rate environment, traditional investors may avoid reaching for more yield, or growth possibilities, because of the higher risks involved.

That may define investors with a portfolio of securities purchased in the open markets, like the New York Stock Exchange, NASDAQ, for example.

In addition, traditional investors may already be aware of their own risk tolerance as they regularly balance, and rebalance their portfolios. Ideally, by not taking on too much risk with their money they may be well positioned to not sell their holdings at the wrong time.

But for the accredited investor, those looking for alternative forms through private placement investments that include tangible assets (rental housing, oil & gas, tech and cell tower investments, for example), may find a way to smooth out the volatility of their portfolio by accepting a more long-term strategy.

To begin with, an accredited investor who seeks private placement investments must have a net worth of $1 million dollars; this, without counting a home residence, but the total can be calculated either singularly or by using spousal assets as well.

Furthermore, the investor must have an income that’s over $200,000 for the last two years—$300K with a spouse. What’s more, there must also be a “reasonable expectation” to earn that same amount for the coming year.

The key to private placements investing is to use a broker tied to the Financial Industry Regulatory Authority (FINRA) who can sell such investments that are not offered to the public.

Be sure to to learn more about investing in tangible asset classes that may offer the investment opportunities suited to your financial goals.