If you have any thoughts about investing in oil wells and exploration. You need to know what is an accredited investor. Energy and fuel resources are very high in demand, thus making gas and oil investment a lucrative choice if you are wise in getting behind a certain company that has extensive experience in profitability. The great benefits are well-known, such as incentives for drilling and tax shelters. Right before making any oil and gas investment, it is always necessary to know that because of some laws in place along with the company preferences, only those who are accredited investors are allowed to participate.
Accredited investors are those individuals who are considered to be fully functional. Aside from that, they are also not bound to all the SEC’s restrictions. Accredited investors qualify through meeting one of the three criteria:
- You are director, a general partner, or an executive officer for the security’s issuer that is offered.
- You have a net worth that is more than $1 million, either as a jointly or an individual with your wife or husband.
- You have an individual income of more than $200,000; jointly, you have an income that is more than $300,000, in a previous year and last year, and you also expect to maintain the same level.
Majority of the companies mainly recommend that one must become an accredited investor to protect themselves against the risks that are involved in oil and gas investment strategies. However, there are some exceptions that are made most especially if an individual shows that he has the equivalent knowledge and experience of the industry, and knows what the risks are when making any decision to invest.
Some people are not aware that they qualify as accredited investors. The main reason why it is important to know that one qualifies as an accredited investor is because if they qualify as accredited investors, they have the access to a whole new universe of investments that other people would never see. You really owe it to yourself to know if you really qualify as an accredited investor. Take note that if you do, you must get together with your financial advisor and then ask him to share with your current as well as future investment opportunities, which are only available to those accredited investors.
A small or even minimal investment in oil and gas is usually $50,000, but it still depends on how many units an individual investor purchases. The units can be priced at around $15,000 up to $25,000. Those big investors have enough net worth needed to fund their entire oil wells. Aside from that, they can also invest thousands of dollars in wells, and could still be able absorb the shock of the huge loss. According to many experts right in the field, investors must only risk an amount of money in any oil and gas investment that they can afford to lose.
Becoming an accredited investor is not a process; instead it is a status that is based upon the fixed numbers listed above. Always remember that there are specific requirements that should be met if an individual wants to be called an accredited investor.