By Lorna Tan

Where do you see this?

In financial articles and reports.

What does it mean?

Accredited investors are classified according to net worth and income.

In Singapore, an accredited investor refers to an individual whose net personal assets are at least $2 million in value or whose income in the preceding 12 months is not less than $300,000.

The term can also refer to a firm with net assets exceeding $10 million in value.

Why is it important?

Because of their accredited status, these high net worth individuals enjoy access to certain financial products that are not sold to retail investors.

This is because some products from financial institutions, such as unit trusts and structured products, are made available only to these accredited or sophisticated investors.

The minimum investment amount for these products may start from at least $200,000.

These products are usually deemed too risky for the man in the street.

The underlying assumption is that accredited investors are either financially savvy or they possess resources not available to non-accredited investors in terms of seeking recourse from financial institutions.

So you want to use the term. Just say...

Private bank ABC has just launched a commodities fund that is open to accredited investors only.

This article was first published in The Straits Times.