The times are ch-ch-ch-changin'. (In the world of investing, that is.) If you've been following the news, you saw what happened with Gamestop and Reddit. Individual investors showed their collective power, and they’re here to stay.
If you've been watching everything unfold and scratching your head a bit, you're not alone. A lot of people are waking up and wondering, "Wait, why didn't I learn any of THIS in school?"
We’re all about demystifying investing, so this week we want to talk about...accreditation. (Don’t let the jargon fool you; it gets interesting)
In its simplest form, an accredited investor is an individual who either makes $200k/year or has a net worth of $1m+ (AKA a small percentage of the population). Anyone who doesn’t meet those qualifications is simply unaccredited.
Unaccredited investors can invest in things like the public stock market, bonds, and certain regulated private deals.
Accredited investors can invest in anything, with way fewer rules. They have access to deals that can raise a lot more money (think: billions) with fewer headaches.
Why is the system set up this way? It dates back to the Securities Act of 1933, which was put in place after the stock market crash that brought us the Great Depression. More recently, it’s been criticized for the strict restrictions that limit who can invest and how much companies can raise.
Pro: Accredited investors have access to more investment opportunities, increased diversification, and higher potential returns.
Con: Investing is risky and accredited investors incur more risk by investing more money in deals that have fewer regulations and protections. (Remember Theranos?)
Takeaway: Limiting opportunities to certain people based on how much money they have or don’t have doesn’t align with our values.
At Republic, we believe that every investor should have access to the same investment opportunities. That’s why we’ve been providing our recommendations to the SEC (the people who make the rules) to expand who has access to accredited deals and create more favorable rules for unaccredited deals—like raising the limit to $5M. No, really—we’re cited over 20 times in the SEC’s Final Rules release.
Investing will always be risky, but we believe everyone should be allowed access to the same opportunities and make investment decisions themselves.
We work on making as many investments as possible accessible to as many people as possible. Here are deals open to all investors that have gained the most traction in the last week:
We love our community, so we created a place for our investors to connect. If you’ve been looking for a group of people who are just as excited about crypto, startups, and real estate as you—join us in the new Republic Investor Discord Group.