Movie Case Study
The scene that you saw shows Raj Malhotra, an architect (played by Shahid Kapoor) presenting his plan to the board of directors of the company ‘Batra & Gill’. Mr. Malhotra gets up and proclaims that he is an Investor and he funds the business. Hence, he is only interested in the returns of the business and not the community.
In this blog, learning Perspectives will explore, who exactly is an Investor.
Who is an Investor?
An investor is a person or an entity that infuses money into the business. He does this, with the expectation to receive financial returns. Investors generally look at opportunities from different perspectives. They take a stand, which helps them to minimize their risk and maximize their returns. Since the amount of money invested is high, therefore they invest in projects that assure positive returns.
Investors earn a rate of return through various instruments such as mutual funds, stocks, bonds, futures, options, debt instruments, etc. Investors can create portfolios according to their risk appetite which earns them high financial returns. The risk appetite of an investor can be high, moderate, or low. This means that an investor with a high-risk appetite would mean he is willing to invest in risky securities (shares) to get an even higher return. Similarly, someone with a low-risk appetite would invest in government bonds or debt instruments (FD, PPF, etc.) to get an assured return.
Types of Investors:
An investor and trader are different from each other. A trader buys and sells securities on a short-term basis while an investor generally makes an investment for the long term.
Institutional investors:
They are generally a company or an organization that collects money from varied sources such as financial entities or individuals and further buys and sells securities. Examples of institutional investors include Mutual funds, Hedge funds, Insurance companies, etc.
Passive Investors:
These investors generally engage in long-term investments. They build their wealth over a period of time. A strategy that passive investors resort to is buying and holding.
Active-Investors:
These are those investors who closely look at the security. They want to take advantage of the opportunity that shows up in the market. Hence, making them extremely active and up-to-date with any fluctuations occurring in the market.
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