Sophisticated Investors

[Ace in the Hole]

I think I remember hearing this term way back when reading some of Kiyosakis stuff.
I just noticed it again recently, but don't hear much about it usually.
For those who don't know the definition, it's:

Definition of a Sophisticated Investor
Sophisticated investors, as defined by Corporations Law are:

1. Individual entities in respect of whom a qualified accountant has given a certificate in the last 24 months confirming that the individual entity either has net assets of at least A$2.5 million, or has a gross annual income (for each of the last 2 financial years, of at least A$250,000.

2. Individual entities who subscribe for and are allocated at least $500,000 worth of the securities being offered.

3. Individual entities who control for the purpose of investment in securities (that is, shares, debentures, units in managed funds - not property), at least $10,000,000.

4. Individual entities who are licensed dealers subscribing for the securities as principal. More info in this link:
http://www.ozinvestor.com.au/articles/2010/aug/001.html


Do sophisticated investors really get an advantage with available opportunities offered to them?
Does anybody have experience with any examples?

I was watching Dragons' Den and that's what got me thinking of alternative type investments.
May start to persue some investments other than property for a change....

 

[Peter_Tersteeg]

Australia does have a legal definition for 'sophisticated investor'. I don't remember the specifics, but it's along the same lines as you've described.

People who fall into these categories do have access to various 'wholesale' funds/opportunities, which the rest of us don't get. There are financial products out there which most people have to get financial advice on, whereas sophisticated investors don't have that requirement. Many of these types of products do have greater returns, but they are also substantially higher risk.

The average pleb can still get access to many of these products, but the may be required to get additional financial & legal advice. In many cases the buy-in price might be out of reach for most people.

 

[Rolf Latham]

Do sophisticated investors really get an advantage with available opportunities offered to them?
Does anybody have experience with any examples?

yup

Plenty times things come across my desk which will go to existing clients that have the resources and risk profile to handle that transaction.

Common sense says one isnt going to offer these opps to all and sundry, but to simplify one's life they will first go to those with the resources and hands up, and then they filter down

Id expect its the same in the "real" world

ta
rolf

 

[Ace in the Hole]

Can I join your list Rolf?
Once we knock over the current development later this year, will probably take a break from property, for a change up.

Add me to the "HIGH" risk profile group please....

 

[MTR]

I think I remember hearing this term way back when reading some of Kiyosakis stuff.
I just noticed it again recently, but don't hear much about it usually.
For those who don't know the definition, it's:

Definition of a Sophisticated Investor
Sophisticated investors, as defined by Corporations Law are:

1. Individual entities in respect of whom a qualified accountant has given a certificate in the last 24 months confirming that the individual entity either has net assets of at least A$2.5 million, or has a gross annual income (for each of the last 2 financial years, of at least A$250,000.

2. Individual entities who subscribe for and are allocated at least $500,000 worth of the securities being offered.

3. Individual entities who control for the purpose of investment in securities (that is, shares, debentures, units in managed funds - not property), at least $10,000,000.

4. Individual entities who are licensed dealers subscribing for the securities as principal. More info in this link:
http://www.ozinvestor.com.au/articles/2010/aug/001.html


Do sophisticated investors really get an advantage with available opportunities offered to them?
Does anybody have experience with any examples?

I was watching Dragons' Den and that's what got me thinking of alternative type investments.
May start to persue some investments other than property for a change....

I think I am a "simple investor", slowly increasing equity and cashflow, very s l o w l y

 

[Aaron_C]

Yes sophisticated investors do not have the same protections under consumer law that we all do but do not have the same restrictions either.

 

[Dazz]

Yes sophisticated investors do not have the same protections under consumer law that we all do but do not have the same restrictions either.

....and they normally smoke a pipe and take tea and wafer thin cucumber sandwiches out on the lawn at 4pm.

Normally they are either a Reginald or St Quentin, and have a squeeze called Penelope.

Such fun.

 

[lizzie]

....and they normally smoke a pipe and take tea and wafer thin cucumber sandwiches out on the lawn at 4pm.

Normally they are either a Reginald or St Quentin, and have a squeeze called Penelope.

Such fun.

Not a Dazz in an orange Kaftan on his Harley?

 

[Dazz]

Nah mate, those things are waaay impractical.

I've tried riding around with a skirt flapping around my neck, it's not a good look.

 

[pursefattener]

Arrrggggh come on , tuck the kaftan into you're socks and you'll be right ..

 

[Intrinsic_Value]

a very silly set of responses to what is potentially a very relevant opportunity to those who know how to utilise this benefit.

Anyway, given the responses, i am logging off on this topic.

Let others figure it out.

A very disapointing response to a thread, that can be fundamental to the goals of somersoft forum.

Good nite.

 

[scha9799]

If you Google something like "angle investor".

you can find many of "investment opportunity".

if you are a sophisticated investor, you deem to have higher finance understanding, higher risk tolerance level.

In the null shell, a sophisticated investor can afford to be "f up" big time and still put food and provide basic to themselves and his/her family. so they can play big, risk big and win big.

The government don't want to receive people's complaint, centerlink hand out to people's stupidity over some "investment scheme". Hence they setup a rule for people to play their money game.

This is my knowledge and experience about "sophisticated investor".

Regards,

Taylor

 

[redwing]

If you Google something like "angle investor".

Angle or Angel

 

[BayView]

a very silly set of responses to what is potentially a very relevant opportunity to those who know how to utilise this benefit.

Anyway, given the responses, i am logging off on this topic.

Let others figure it out.

A very disapointing response to a thread, that can be fundamental to the goals of somersoft forum.

Good nite.

I try to take all the responses in relating to various topics, evaluate the sensible ones, and have a bit of a laugh at the other ones....

Otherwise I'd give up on this place.

Someone will come up with one soon enough IV.

 

[Peter_Tersteeg]

I thought Rolf's and my explainations were actually reasonably useful, although not definitive. A quick Google search came up with some useful information:

What is a Sophisticated Investor?

To be recognized as a Sophisticated (Wholesale) Investor, you must meet one of the following characteristics as identified in subsections 708(8) to 708(20) of the Corporations Act:
Net Assets of at least $2.5 million; or
Gross Income for each of the last 2 financial years of at least $250,000 p.a.

A superannuation fund may also be eligible if it has:
Net Assets of at least $10.0 million.

Implications for a sophisticated investor:

Under ASIC regulations, an issue of securities to the public normally requires a disclosure statement/prospectus to ensure participants are fully informed about the securities being offered. As a result of this, many investment opportunities are unavailable to retail investors.

There are a number of classifications of individuals whom, under the Corporations Act, do not need the same level of protection as retail investors.

These include:

Sophisticated Investors
Professional and Experienced Investors

The exemption for these persons recognizes that certain investors are able to protect their own investment interests without regulatory protection. Thus, by gaining classification as one of these investment types, you will be able to access a wider range of investment options.

I've met a few people who might fall into these categories, although some of them aren't really taking advantage of it. There are a lot of opportunities within certain circles if you qualify, but a lot of people simply don't move within those circles even if they do qualify.

There are also plenty of examples of celebrities, etc, who have built an asset base by virtue of their income (as opposed to being investment savvy) and qualified. They've then tried to take advantage of the additional investment opportunities, only to loose massive amounts of money because they didn't have a clue what they were doing.

For most people, if they want to know more about it, then they probably don't qualify in the first place or at that point in time. Kind of like asking what something costs, to get the reply, "If you have to ask, you can't afford it."

 

[HotRod]

OK, question.

What is Gross Income?

I take this to mean total income (salary, investment, rental, interest) prior to any expenses/deductions?

 

[sanj]

im pretty sure it is taxable income. so you could include your personal income and perhaps income from a business you own but im not 100% sure as our accountant sorted that out.

it is worth looking into though because as previously mentioned you do get a chance to participate in some raisings or other opportunities that you wouldnt normally be able to.

 

[Dazz]

a very silly set of responses

Fair cop gov. Soz. Won't happen again for at least a week.

 

[The Falcon]

Remembered this thread and thought I'd comment on what I have found. This is stock related, not property but some may be interested. Cheap margin rates are available, 4.9% in AUD and 3.3% in USD. Access to off market offerings / placement, this is as mentioned above typically higher risk/reward. Sometimes placements in unlisted companies too will come across brokers desk for sophisticated / professional investors only. Obviously, due diligence super important but sophisticated investors know that already.

 

[roe]

Do sophisticated investors really get an advantage with available opportunities offered to them?
Does anybody have experience with any examples?

In stock market, among other things like unique structure investment products, you also get offered shares in IPO not available to the general public, up to you to take it up or not ...some good one you can make serious money when it listed.

Basically if you got money and turn over a fair bit of money in stock trade, they like you and like anything else in life you get special treatment every so often.

Google wasn't available to the public when it goes IPO, same with our asx beauty Veda
it aren't available to public.