For novice investors:
When you hear the word investing, images of day traders and wealthy stock brokers vigorously trading at high stakes probably comes to mind.
But you need to be neither a millionaire nor an expert in the stock market in order to begin investing. There are multiple investing avenues for a retail investor: mutual funds, real estate, and direct investing, to name a few.
When people speak of individual or retail investors, they are often referring to non-accredited investors. Non-accredited investors are individuals who earn under $200,000 in one year and have a million or less in assets excluding their primary residence. Non-accredited investors actually make up the bulk of retail investors in the United States: 91.75% of investors in America are non-accredited. This term essentially covers the vast majority of American individuals.
The SEC regulates what a non-accredited investor is able to invest in; their investment choices are limited for their own financial safety, preventing potential financial losses. Although options are limited, this does not mean that non-accredited investors don’t have the opportunity to invest in a variety of securities. Where private and hedge funds deal primarily with accredited investors, since there is more risk and volatility, mutual funds deal more with non-accredited investors, as the SEC deems them eligible to invest in them. Due to recent changes by the SEC, there are a variety of options available to non-accredited individuals including direct investing, real estate, equities, municipal bonds, and Peer-to-Peer loans, allowing them to invest in a diverse array of securities.
Direct investment has opened up a plethora of opportunities for non-accredited investors and has supported all sides of the community including helping start-ups across the country fund their companies. Getting started with direct investing is a lot easier than you might think. Pyrium is an educational platform and marketplace for non-accredited investors interested in direct investing into private companies. If you’re interested in learning more about direct investing, check out our Investor Literacy Course for Beginners and/or join our Discord Community – a place where you can talk about investment opportunities in a casual and culture-forward manner with other retail investors.
For informed non-accredited investors:
Historically, non-accredited investors have been left out of the lucrative direct investing space due to previous regulatory restrictions. However, that is rapidly changing thanks to the rise of the Equity Crowdfunding spaces.
In 2016, the SEC made it possible for non-accredited investors to participate in equity crowdfunding, which utilizes small amounts of money from a large number of people in order to finance a new business venture. This amendment paves the way for new, diverse investing opportunities along with a larger pool of potential funding for new business ventures, meaning that angel investors and venture capitalists are no longer the only individuals able to help fund startups.
More and more startups are turning to equity crowdfunding to raise capital – they can now raise up to $5M from non-accredited investors through Reg CF fundraising. This is a massive opportunity for business ventures – particularly diverse-led and/or mission-oriented ventures – that often get overlooked by "traditional" accredited investors. In order to make equity crowdfunding possible, crowdfunding platforms are essential to establish both a fair marketplace where business ventures can find investors while providing guidance to potential investors trying to determine their best investment option.
Creating opportunities for equity crowdfunding for a larger number of individuals can accelerate impact investing progress. In recent years, there has been an increasing appreciation and interest in impact investing as a tool to enact political and social change. There is an extremely underserved market of non-accredited investors, as many are interested in sustainable and impact investing, but lack opportunities to participate in meaningful investments. Equity crowdfunding is one of the best ways to put money into supporting a cause that aligns with one’s values while providing that opportunity to non-accredited investors who care deeply about social impact investments. Socially-conscious investors are now given a platform to back businesses they are passionate about and believe in. Equity crowdfunding provides the missing link connecting impact investing to public support and capital that was previously unavailable to non-accredited investors.
Pyrium is an educational platform and marketplace for non-accredited investors interested in direct investing into private companies. If you’re interested in learning more about direct investing, check out our Investor Literacy Course for Beginners and/or join our Discord Community – a place where you can talk about investment opportunities in a casual and culture-forward manner with other retail investors.