Accredited Investor

Before I get into alternative investments, I first have to explain a few things. First of all, access to some of these investments are very limited and also protected by law of who can invest. Typically, only accredited investors can invest in vehicles that have potentially the highest returns available. An accredited investor in the US is a person with a net worth in excess of $1 million and annual income greater than $200,000 per year or $300,000 per year if filing as a couple on IRS tax returns. Also, their income has to be consistent in the last two years and the expectation to continue in the present year. In Canada, the same applies except the net worth can not include their principle residence.

Why are the best investments reserved for the wealthy? A very good question. The standard answer is that it is for the protection of the investor, with higher returns the risk typically increases. The average person does not have the resources to risk their assets and have the sophistication to do proper due diligence to understand that risk. This is partially true. But if you can do the proper risk assessment and due diligence, why can you still not participate? The simple answer is, they don't want you to. It's part of the good ol' boys club where you have to be one of them (the wealthy) to get in. So much for the land of opportunity! These rules were instituted by the Securities Act of 1933, and are enforced by the Securities and Exchange Commission (SEC).

These rules apply to US and Canadian citizens. They do not apply to foreign investors or foreign citizens. Foreigners can invest in the US, make a ton of money, and not pay income taxes on the proceeds. Why? They are not subject to US laws. They are subject to the laws where they live or are domiciled (registered) in, in the case of a corporation or other legal entity. The US is the largest tax haven in the world, but not to its citizens. This is why they don't want you to know how to get access to these investments. They want your tax dollars.

So, what stops you from getting access to these investments through a foreign entity? Nothing, except the process or the contacts to do that. Your local CPA, lawyer, tax advisor, broker, financial advisor, or other legal professional are prohibited from telling you anything about these things because you are not eligible. Most of these professionals don't even know that these legal structures and international investments exist. The ones that cater to the wealthy know, and set up these structures to make their clients more money, and shelter the returns from taxes. Do you ever wonder why the Carnegies, Rockefellers, Kennedys, and Clintons, et al, never seem to pay anything in income tax? Because they don't own anything. Their foundations and international business corporations do everything, they just control them. And this is all perfectly legal.

Heed this warning ...

Woe to him who builds his realm by unjust gain to set his nest on high,
to escape the clutches of ruin!
You have plotted the ruin of many peoples, shaming your own house and forfeiting your life. Habakkuk 2:9-10

More on alternative investment vehicles this week. Stay tuned ...