In the ever-evolving world of personal finance, diversification is often hailed as the bedrock of a sound investment strategy. You’ve likely heard the standard advice about balancing stocks and bonds or diversifying between domestic and international equities. But if you’re an accredited investor, the scope of diversification opens up significantly, offering access to unique opportunities that were once the playground of only the ultra-wealthy. Today, the democratization of these high-value investment opportunities means that even more investors can take part in asset classes once considered exclusive.

I’ve been following this shift toward accessible high-value investments since I first dipped my toes into angel investing with FundersClub back in 2012. Over the years, I’ve had many conversations about these opportunities for "average" accredited investors, so I thought it was a good time to compile a list of my favorites. But before we dive into the specifics, let’s revisit why diversification is so important.

Why Diversification Matters

Diversification is a time-tested principle in investment strategy that helps investors mitigate risk while maximizing potential returns. By spreading your investments across different asset classes, sectors, and geographies, you reduce the impact of any one investment’s poor performance on your overall portfolio. Here's how it works:

1. Risk Management: With a diversified portfolio, you’re less vulnerable to the downturn of any single asset or sector, since gains in other areas can help offset losses.

2. Enhanced Returns: Diversifying allows you to tap into different sources of growth. For example, while stocks might be underperforming, real estate or private equity might be yielding strong returns.

3. Portfolio Stability: A well-diversified portfolio is typically less volatile, giving you a more consistent and stable investment experience over time.

The Foundation: Cash

You’ve likely heard the standard advice: keep 3–6 months of living expenses in an emergency fund. Do it. And for any major expenses you plan to incur in the near future—like buying a house, car, or taking that dream vacation—it’s wise to keep those funds readily available in cash. But that doesn’t mean your cash should sit idly in a checking account earning next to nothing.

Move most of your cash into a High Yield Savings Account (HYSA). HYSAs offer significantly higher interest rates than traditional checking or savings accounts, while still providing easy access to your money and government deposit insurance. Some platforms, like Wealthfront, even offer same-day transfers so you can quickly and easily access your funds when you need them.

Here are a couple of my top picks for HYSAs:

• Wealthfront: Known for its ease of use and high interest rates, Wealthfront offers same-day fund transfers to your linked checking account.

• Raisin: This platform connects you to a variety of FDIC-insured short-term savings products, allowing you to choose the best rates across multiple banks with a single account. (use my referral code for an extra $200 — jonathanc020120 💰)

Stocks, Mutual Funds, and Bonds

You probably already have a brokerage account, so I’ll keep this section brief. The major players in the brokerage industry offer similar services, and there are plenty of other articles comparing them. If you’re looking for low fees and an easy-to-use platform, Interactive Brokers is a great choice with a wide range of investment options. If you're an active trader, I recommend checking out Schwab and their thinkorswim platform.

What is an Accredited Investor?

Now, let’s get into the exciting part. If you qualify as an accredited investor, the range of potential investments available to you expands significantly. But first, what qualifies someone as an accredited investor?

According to the SEC, you qualify if:

1. You’ve earned at least $200K per year for the last two years, and expect to earn at least $200K in the coming year or

2. You have a net worth exceeding $1 million, excluding the value of your primary residence.

Many people qualify for accredited investor status without realizing it, especially since these limits haven’t been updated in decades. For example, startup founders may qualify based on the equity they hold in their businesses, even if their annual salary doesn’t reach the $200K mark and their equity is illiquid. Additionally, your retirement accounts count toward your net worth, which could push you over the $1 million threshold.

Opportunities Available to Accredited Investors

Accredited investors have access to financial tools and strategies that aren’t available to the general public. These can offer higher potential returns and can be less correlated to the traditional stock market, providing additional diversification. Some key opportunities include:

1. Private Credit: Privately negotiated loans and debt financing from non-bank lenders. This includes small business and consumer loans, venture debt, and other forms of private debt. In exchange for higher risk, it offers significantly higher yields than FDIC-insured investments.

2. Venture Capital: High-risk, high-reward—venture capital allows you to invest in early-stage startups with the potential for massive growth.

3. Real Estate Syndications: By pooling resources with other investors, you can invest in commercial properties or real estate developments, generating passive income and potentially high returns.

4. Private Equity: Invest directly in private companies or buyout funds, gaining access to high-growth companies before they go public.

5. Hedge Funds: Hedge funds use sophisticated strategies—like leveraging assets and investing in derivatives—to generate potentially outsized returns uncorrelated to the general market.

6. Art Syndications: Similar to real estate syndicates, you can buy shares of high-value artwork, benefiting from the rising prices in the art world.

Democratizing Access to High-Value Investments

Recent years have seen the rise of platforms that make these exclusive opportunities more accessible to accredited investors. These platforms streamline the process of investing in asset classes that were traditionally limited to the ultra-wealthy and well-connected. Here are a few of my favorites:

1. Percent: A marketplace for curated private credit deals across industries like venture finance, litigation finance, and corporate loans

2. AngelList: Originally created to help startups raise money, AngelList has since expanded to include venture capital funds/syndicates, making it easier for accredited investors to back early-stage companies.

3. LAUNCH Syndicate: An angel investing club led by super-angel Jason Calacanis

4. EquityZen: Allows you to buy shares of private companies before they go public, giving you access to growth-stage startups.

5. YieldStreet: Offers alternative investments in asset classes like real estate, marine finance, and legal finance.

6. Equi: The hedge fund for the rest of us. Provides highly curated alternative investment portfolios designed to be uncorrelated to public markets.

7. Masterworks: Offers fractional ownership in blue-chip artwork, letting you easily diversify your portfolio with an asset class that has historically outperformed stocks in certain periods.

Conclusion

Diversification is a critical strategy for managing risk and maximizing returns. For accredited investors, the rise of innovative platforms has made it easier than ever to access a wide range of investment opportunities that go beyond traditional stocks and bonds.

By leveraging these financial tools, you can build a more resilient, diversified portfolio and better navigate the complexities of the financial markets. So whether you’re dipping your toes into private equity, venturing into real estate syndications, or diversifying with art, embrace the power of diversification to help maximize your financial growth and secure your financial future.

I’d love to hear from you—what are your favorite alternative investment platforms? Share your recommendations in the comments below!