Any individual or entity that commits capital expecting a financial return. Investors can choose from different financial instruments to achieve a particular rate of return. They can invest in established markets or individual businesses.
Anyone can be an investor. One who puts money into something is an investor.
Some of the different investment vehicles that people can use:
- Exchange Traded Funds (ETFs)
- Real Estate
- Precious Metals including Gold and Silver
- Mutual Funds
An investor differs from a traders. The former is seeking long term gains whereas the latter is concerned with short term moves. Traders will buy and sell the same securities over and over to achieve their goals.
Two Types of Investors
There are two basic types of investors.
- Individual investors
- Angel investors (individuals and groups)
- Sweat equity investor
- Pension plans making investments on behalf of employees
- Businesses that make investments, either directly or via a captive fund
- Endowment funds used by universities, churches, etc.
- Mutual funds, hedge funds, and other funds, ownership of which may or may not be publicly traded
- Sovereign wealth funds
- Large money managers
Why do people invest?
The goals people have are as varied as those doing the investing Many have different objectives.
The rate of return investors receive is tied to the amount of risk they are willing to take on. Many seek to gain through speculation. This is where an asset is acquired and sold for a higher price at a later day. Then there are those who go after yield, which is a fixed return over a certain period of time.