Chapter: 1 Financial Markets, Instruments and Investment Basics

Section: 9 Types of Investors

While there are many types of investors, they can broadly be classified into two categories:


I) Individual Investors: These include individuals who want to invest their savings into stocks, bonds, etc. Any one of us, who calls up a broker and places an order for a stock or bond, is an individual investor. In most cases, the portfolio of individual investors is not very large and comprises of only a few securities.



II) Institutional Investors: Institutional investors are organizations that pool investor funds for making investments and capitalize on their superior research and portfolio management capabilities. Examples of institutional investors include mutual funds, pension funds, insurance companies, endowment funds, commercial banks, etc. In addition to the accumulation of superior analytical and information resources, institutional investors also benefit from economies of scale.