15 min
What is an Accredited Investor and How To Become One? The Option Genius Podcast: Options Trading For Income and Growth
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- Investing
What is an accredited investor? How do I become one? And why do I want to become one? It's a great question. So let's talk about the why before we get into what it is and how you become one. So as you know, you know, we talk a lot about trading, we talk a lot about passive trading, investing in the stock market selling options. But the goal, the long term goal is to not be a trader.
It doesn't make sense, right? Like, what are you talking about, the goal is not for you to be a trader for the rest of your life, unless you want to, right? Now, if you look at the passive trading manifesto, and the goals of passive trading, there are three freedoms that we're trying to accomplish. Financial freedom, time, freedom, and choice, freedom. And choice freedom gives you the choice of doing what you want, when you want. And if that means that you don't want to trade, then you don't have to trade. Right? Now, if you do decide to continue to trade because you want to, then that is perfectly fine. That's your choice and more power to you. But if you don't want to, then you shouldn't have to. So that's where this accredited investor comes in. Because the point is, for us to increase not only our monthly income, basically, you know, the more income you have coming in, when you have money coming in, that pays for all your bills, you can essentially retire and you have financial freedom. But we need to also increase our net worth, so that we can have other opportunities to investing, where we don't have to be active or you don't have to be trading, even though it's called passive trading, you're still doing it. Right?
Now, it's a lot less active than day trading, or stock trading or any of that stuff. But you still have to still do something. There's nothing totally, totally passive, even, you know, regular passive investing is still takes time and energy and learning and all that other stuff, stress, a lot of it. But that comes with the territory. So the goal as the way I see it, and the way I'm trying to live it and I try to teach it to my students, is that we want to use trading as a very safe, but very quick way to get us to first financial independence, where we have enough money coming in from our assets that pay for all of our expenses. Once you get there, then you are not beholden to a job, then you're not both beholden to the economy, your recession doesn't matter, right? Because you have enough money coming in, you have a skill, you can go into the market, and you can extract money, at will. And that's what we teach. That's what passive trading is all about. But once you get to that point, you want to keep going further, and you want to become what's called accredited investor. So what is that? Well, an accredited investor, according the SEC, is someone who has either $1 million in net worth, not including their house. So if you're a millionaire, and you don't count your house, you're an accredited investor officially. Or the other thing is, the other criteria is that you've made if you're by yourself, you've made $200,000 In the last two years, and you're going to keep doing that. So your income is over $200,000 a year by yourself, or if you're married, it has to be 300,000 for the both of you over the last two years, and going into the future.
Now, look at the numbers. If you're making $300,000 a year, and you're not worth a million dollars, that's a problem, you should probably work on that first before talking about whatever we're doing here, right, your your expenses are way too high, you need to worry about that, first get your debt down or get your build on or whatever it is. And then you know, get to that million dollar net worth requirement. Now again, we're not counting our primary residence. So if you have a business, if you have other properties, if you have cars, you've shoved jewelry, if you have notes or anything that you have anything valuable antiques, all that stuff counts in this million dollar net worth crit
What is an accredited investor? How do I become one? And why do I want to become one? It's a great question. So let's talk about the why before we get into what it is and how you become one. So as you know, you know, we talk a lot about trading, we talk a lot about passive trading, investing in the stock market selling options. But the goal, the long term goal is to not be a trader.
It doesn't make sense, right? Like, what are you talking about, the goal is not for you to be a trader for the rest of your life, unless you want to, right? Now, if you look at the passive trading manifesto, and the goals of passive trading, there are three freedoms that we're trying to accomplish. Financial freedom, time, freedom, and choice, freedom. And choice freedom gives you the choice of doing what you want, when you want. And if that means that you don't want to trade, then you don't have to trade. Right? Now, if you do decide to continue to trade because you want to, then that is perfectly fine. That's your choice and more power to you. But if you don't want to, then you shouldn't have to. So that's where this accredited investor comes in. Because the point is, for us to increase not only our monthly income, basically, you know, the more income you have coming in, when you have money coming in, that pays for all your bills, you can essentially retire and you have financial freedom. But we need to also increase our net worth, so that we can have other opportunities to investing, where we don't have to be active or you don't have to be trading, even though it's called passive trading, you're still doing it. Right?
Now, it's a lot less active than day trading, or stock trading or any of that stuff. But you still have to still do something. There's nothing totally, totally passive, even, you know, regular passive investing is still takes time and energy and learning and all that other stuff, stress, a lot of it. But that comes with the territory. So the goal as the way I see it, and the way I'm trying to live it and I try to teach it to my students, is that we want to use trading as a very safe, but very quick way to get us to first financial independence, where we have enough money coming in from our assets that pay for all of our expenses. Once you get there, then you are not beholden to a job, then you're not both beholden to the economy, your recession doesn't matter, right? Because you have enough money coming in, you have a skill, you can go into the market, and you can extract money, at will. And that's what we teach. That's what passive trading is all about. But once you get to that point, you want to keep going further, and you want to become what's called accredited investor. So what is that? Well, an accredited investor, according the SEC, is someone who has either $1 million in net worth, not including their house. So if you're a millionaire, and you don't count your house, you're an accredited investor officially. Or the other thing is, the other criteria is that you've made if you're by yourself, you've made $200,000 In the last two years, and you're going to keep doing that. So your income is over $200,000 a year by yourself, or if you're married, it has to be 300,000 for the both of you over the last two years, and going into the future.
Now, look at the numbers. If you're making $300,000 a year, and you're not worth a million dollars, that's a problem, you should probably work on that first before talking about whatever we're doing here, right, your your expenses are way too high, you need to worry about that, first get your debt down or get your build on or whatever it is. And then you know, get to that million dollar net worth requirement. Now again, we're not counting our primary residence. So if you have a business, if you have other properties, if you have cars, you've shoved jewelry, if you have notes or anything that you have anything valuable antiques, all that stuff counts in this million dollar net worth crit
15 min