Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
Support MFO
Donate through PayPal
That "Accredited Investor" thing and how to arrive.....
Morn'in @Derf The first link of Investopedia is the "lite" version and gives the info one needs. I had to awake today before the sunrise; so I'm already deep into the coffee intake. Probably too much so.....
Sigh. Why are so many of the popular financial "press" pages wrong?
Investopedia is correct in saying that net worth excludes value of home except when it is underwater. But in its examples (e.g. Carla), the investors are not underwater. Carla has a $500K home with a $400K mortgage, yet Investopedia says that Carla is $100K underwater. (Same problem with Brian - doesn't matter that part of his debt is home line of credit as opposed to a mortgage.)
Just reverse the figures - say that Carla's home is worth $400K but she has a $500K mortgage, and the example works.
Investopedia also says that anyone selling to accredited investors "must take a number of different steps in order to verify this status". Wrong again, or at least incomplete.
In 2013 a new rule, 506(c) became effective. Previously, sellers could not advertise these securities to the general public. This new rule allows advertising, but requires the issuer to take steps to verify that investors are indeed accredited. However, the old rules are still operative. Issuers of securities that are not generally advertised need only ask the investor to check a box saying that the investor is accredited.
Comments
Have a good weekend , Derf
The first link of Investopedia is the "lite" version and gives the info one needs.
I had to awake today before the sunrise; so I'm already deep into the coffee intake. Probably too much so.....
Investopedia is correct in saying that net worth excludes value of home except when it is underwater. But in its examples (e.g. Carla), the investors are not underwater. Carla has a $500K home with a $400K mortgage, yet Investopedia says that Carla is $100K underwater. (Same problem with Brian - doesn't matter that part of his debt is home line of credit as opposed to a mortgage.)
Just reverse the figures - say that Carla's home is worth $400K but she has a $500K mortgage, and the example works.
Investopedia also says that anyone selling to accredited investors "must take a number of different steps in order to verify this status". Wrong again, or at least incomplete.
In 2013 a new rule, 506(c) became effective. Previously, sellers could not advertise these securities to the general public. This new rule allows advertising, but requires the issuer to take steps to verify that investors are indeed accredited. However, the old rules are still operative. Issuers of securities that are not generally advertised need only ask the investor to check a box saying that the investor is accredited.
A much shorter SEC read (3 pages) that is also more accurate than Investopedia can be found here:
https://www.sec.gov/investor/alerts/ib_accreditedinvestors.pdf
Thank you. Although I glanced through the Investopedia write and was "awake" too early today; I apparently was not "alert".