Ask Matt: It’s all about protecting consumers

Q: Why do regulators stop me from making money?

A: If you’re not an “accredited investor” there are some investments not available to you.

It’s not a conspiracy theory.

These rules are a protection since some investments are so risky they could be dangerous to those who can’t afford to take a big loss or not understand the risks.

Accredited investors may invest in a broader array of investments than most because it’s presumed they can afford to take giant risks and understand as much. Large investors make mistakes, too, which make you question if they appreciate risk. But the rules at least offer some assurance these investors take a hit.

To be an accredited investor in the U.S., you need to have a net worth of at least $1 million, excluding your home, or have earned $200,000 a year for the past two years ($300,000 if married). Accredited investors also include big institutional investors ranging from banks and insurers to large charities.

Being considered an accredited investor allows you to buy some risky investments ranging from venture capital funds to hedge funds. These high-risk ventures can be lucrative.

But they can also generate massive losses not appropriate for most investors.

Paste BN markets reporter Matt Krantz answers a different reader question twice a week. To submit a question, e-mail Matt at mkrantz@usatoday.com or on Twitter @mattkrantz.