What is the difference between a qualified and a non-qualified investor?

In Washington state, investors must meet certain requirements and qualifications in order to invest in certain investments. Qualified investors have a higher level of financial qualification and have a greater understanding of the risks associated with investing than non-qualified investors. Qualified investors must have either a net worth of at least $1 million or an income of at least $200,000 in each of the last two years. Additionally, they must have a reasonable expectation of being able to maintain the same level of income in the future. Qualified investors have proven financial sophistication and are assumed to have a greater understanding of the risks associated with investing. In contrast, non-qualified investors have not been able to meet these requirements and may have some financial experience, but it is likely not on the same level as a qualified investor. Non-qualified investors may be more likely to be taken advantage of in investments because they may not have the same understanding of the risk factors associated with investing. In Washington state, investments can only be offered to qualified investors. This is to ensure that individuals are not taken advantage of and that everyone who is investing is prepared to assume the risks associated with the investments they are offered.

Related FAQs

What is the purpose of the Investment Company Act of 1940?
What is a "cold call" scam?
What is a prospectus?
What documents should I review before investing?
What is the role of the Financial Industry Regulatory Authority (FINRA) in regulating the securities industry?
What is the difference between a hedge fund and a private equity fund?
What are the regulations governing the sale of securities?
What should I do if I am approached by someone offering a “great” investment opportunity?
What is the difference between a registered and unregistered security?
What should I know about mutual fund fees?

What is the difference between a qualified and a non-qualified investor?

Related FAQs

Related Blog Posts