What Is an Accredited Investor and How to be One?
The Lanturn Team
The number of high net-worth individuals in Singapore is growing.
What does it mean to be an accredited investor?
Becoming an accredited investor in Singapore means that you have the opportunity of exploring investment options that aren’t given to retail investors. These investments could include hedge funds, venture capital, and real estate private equity funds. While it’s true that these types of investments often have higher returns than traditional ones, they also come with higher risk.
Moreover, in most cases, the regulatory measures of these investments are much more lenient when offered to an accredited investor. When shares, bonds, and investment funds are being sold to the public, they need a prospectus registered by MAS and intermediaries who are licensed. All can be bypassed when dealing with an accredited investors.
To be considered as an accredited investor, you must fulfil at least one of the three following criteria:
Have an annual income in the preceding 12 months of not less than S$300,000
Have net financial assets exceeding S$1,000,000.
Have net personal assets exceeding S$2,000,000, of which net equity of the individual’s primary residence is no more than S$1,000,000.
Investors must opt-in for consideration as an accredited investors.
These criteria started to be implemented in 2019. In the past, the value of one’s house alone would categorize you as an accredited investor without opting in. This could make you a target for banks and fund managers. These financial consultants may offer you risky investment options that are nowhere to be found in the public market.
Regardless of the source of your wealth, banks would assume that you’re financially savvy as accredited investors. However, this is not always the case.
For this reason, the opt-in measure was put in place, minimizing predatory tactics by financial institutions.
Yes, being an accredited investor brings several benefits, including investment options with higher returns that aren’t available to the masses. But, it’s important to remember that it’s much riskier than the traditional plans offered to the regular Singapore investor.
Becoming an accredited investor is for those with the expertise, confidence, and willingness to weather the ups and downs of a riskier investment. Are you one of the people who fall into the category? Let Lanturn and our experts help guide you to make the right investments and financial decisions for your situation.
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