The following is a list of some of the investments in which so-called "Accredited Investors and Sophisticated Investors" invest:
1. Private placements
2. Real estate syndication and limited partnerships
3. Pre-initial public offerings (IPOs)
4. IPOs (while available to all investors, IPOs are not usually easily accessible)
5. Sub-prime financing
6. Merger and acquisitions
7. Loans for startups
8. Hedge funds
For the average investor, these investments are too risky, not because the investment itself is necessarily risky, but because all too often, the average investor lacks the education, experience, and excessive capital to know what he or she is getting into.
I now tend to side with the SEC that it is better to protect unqualified investors by restricting their access to these types of investments because I made some errors and false steps along the way.
As a sophisticated investor today, I now invest in such ventures. If you know what you're doing, the risk is very low while the potential reward can be huge. Investments such as these are where the rich routinely invest their money.
Investing in these investments is about getting very close to the engine of Capitalism.
In reality, the investments are not risky,it is the lack of education, experience, and excessive cash that makes the average investor risky.
