Hedge Fund Changes

The US Securities and Exchange Commission is considering raising the financial requirements to participate in certain high risk investments (such as hedge funds). Currently to be an accredited investor, one must have $1 million in net worth to participate in such investments. If many in the SEC have their way, this amount will rise to $2.5 million.

Such actions happen in an effort to protect individuals from losing a disproportional amount of money. Such funds are largely unregulated and uninsured. So there is a belief that it makes sense to limit access to the fund, if they are not going to put limits on the fund itself.

Unfortunately, often the best funds available are those that require being an accredited investor. Robert Kiyosaki has pointed out that the vast majority of investments available to smaller investors (he calls them "retail investments") may be safer, but they have the smallest returns. Thus, the changes being proposed to raise the requirements for hedge funds are only making it more difficult for people to reach serious wealth.

People are smart, they will get part ownership of some lucrative investments for sweat equity when they don't qualify as investors, but it seems to me there needs to be a better way for individuals to have access to the best opportunities.

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A Strange Little Show called "The Millionaire Inside"

I don't normally watch CNBC during the weekend because it is usually a series of infomercials. Recently I stumbled upon the program and I decided to spend a little time with it. I don't know who is usually on the show, but tonight featured:

Erin Burnett. The regular host and a CNBC "Money Honey" in her own right (I think that term is trademarked by another Money Honey, so I hope I don't get sued).

Robert Kiyosaki. The author of one of my favorite books, Rich Dad Poor Dad.

Laura Morgan Roberts. This Harvard professor of organizational psychology described the mental and emotional capabilities of millionaires.

Keith Ferrazzi. Arguably one of the world's greatest networkers.

Larry Winget. One of the country's most reknown success coaches.

Clearly this was an impressive group at an interesting setting (it looked like a Zig Ziglar seminar audience). However, there was an informercial "quality" about the show that I wasn't completely comfortable with. It felt like it was possibly underwritten, but the people involved with the program (maybe an ad hoc version of Forbes on Fox). On the other hand, it could be an educational program designed to help the people who watch the infomercials on the weekend, become financially interested to watch the program during the rest of the week (which are made for serious investors).

I will say that I learned a little on today's program and my curiosity will have me coming back again, even if it is to figure out the angle. If it is an infomercial, it is an highly innovative one.