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Category — Market Participants

An investor is any individual or legal entity (for example, a company or a mutual investment fund) that invests its own or borrowed funds for the purpose of obtaining the subsequent profit.

There is are wide range of investment instruments such as stocks, bonds, commodities, mutual funds, exchange traded funds (ETFs), options, futures, foreign exchange, gold, silver, real estate, etc. Investors can be distinguished from traders as they hold long-term strategic positions in companies or projects.

All investors present in the market can be divided into two main groups: institutional and private (non-institutional or retail) investors.

An institutional investor is a legal entity acting as a holder of funds (in the form of contributions, shares) and investing in securities, real estate (including rights for real estate) in order to make a profit. Institutional investors are represented by investment funds, pension funds, insurance organizations, credit unions (banks). Institutional investors can often accumulate and pool money from several smaller investors (individuals and / or firms) to make larger investments. Because of this, institutional investors often have greater bargaining power and influence over the markets than individual retail investors.

Private investors are usually individuals who independently choose an investment instrument and invest their available capital in it. In most cases the return on investment for private investors is not their main source of income.

There are some assets in the financial markets, transactions which can be carried out only with the participation of qualified investors. The criteria for recognizing an investor as qualified in each individual country may differ. A qualified investor understands and accepts responsibility for the riskiest transactions in the stock market.
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