Have you ever wondered on the different type of investors in the stock market? You’ll find a lot many based on the priorities and investment objectives.
The stock market relatively works around the growth of companies and the overall trading power of the common man. It’s where the inflation and deflation of stock occurs, which paves the way for substantial gains and incremental losses. We all know that the stock market is quite volatile at any given point, and making any profits through small investments might seem a far fetched idea. However, multiple people are betting on this to get some returns.
The entire market tends to shift sides when passive and active buying and selling of shares and stocks. Amongst the common man investing in the various options listed on the stock market, different “individuals” are looking to make a quick buck. Such people come under the term investors where they could be investing for a considerable amount of time and have more massive gains or a brisk trade to make small profits with little investments.
Under the very terminology of investors, there are different types where each of them has their trading style, but the end goal is to make a profit or sensible high-return investments for the same.
We have listed all of them below that will give you a broader idea about what they have to offer.
Different Types of Investors in the Stock Market
Let’s dig into the popular category of investors in the stock market:
1. Active Investors
If you look into the different types of investors in the stock market, you will realize that about 70%-80% invest after having detailed research and analytics. These investors are called “Active investors” who are predominantly on the hunt for the next best thing in the stock market that would get them higher benefits.
It’s more like they revolve around the stock market 24/7 and are always glued to financial news channels, emerging trends around the stock market, and more. These are investors who care about their money and are looking to make a quick buck while knowing what they would gain from the investment.
Fast-paced, quick reflexes and strategical investments are a few of the many things you could say about Speculators. Simply stating, speculators are the type of investors that wait for the right time and then invest. They hunt down the market in search of the company whose share prices will rise to some extent. Mergers, fiscal year profit report of companies, new product launch of a company, investment made into a company, etc., often indicate the share prices to rise.
Before the news gets official, these investors start investing in that company and wait for the prices to rise. With rising prices, they don’t wait for an extended period; instead, sell it off at a price that would fetch them some profits. They have a broad portfolio comprising of investments in various segments to gain vital returns.
3. Passive Investors
Passive investors are those investors that want peace in life and no stress about their investments. They are long term investors where they would sell off their investment if it seems profitable. Moreover, such investors don’t research much but do a brief analysis of long-term investment and keep that investment for over a year. The perfect example of this is people investing in mutual funds.
They aren’t worried about short term goals but know that the stock would rise someday. However, with such investing, don’t expect some vital improvements overnight as millions are investing in the same category. But, if you’re persistent and have the patience to sit out the waiting time frame, then becoming wealthy is also an option through this form of investing.
4. Individual Investor
The stock market is filled with investors looking to make a quick buck all buy following the market momentum, and trends emerging in the stock market. They are less knowledgeable, more dependent on tips given by investing gurus, and are on the hunt for making money as fast as possible. These types of investors are classified as retail investors who can only afford to apply for shares below one lakh rupees.
However, there is one more category under individual investors called “high net worth individuals.” These are people who tend to invest in the stock market for shares that are more than one lakh rupees. These individuals have liquidated surplus with them that they can use to invest in potential companies of their choosing to get ROI’s that would inflict significantly against the money invested.
5. Value Investors
Reminiscent from its name, value investors are the ones that take the value and price of the stock in accordance before investing. They are quite tedious in what they invest and fall somewhere in the middle of active and passive investors. They have a different strategy altogether for seeking their potential investment.
Value investors have a dilemma of investing in companies that are trading for less than their initial stock value. The reason behind it is simple; it’s all a calculated, high-intensity research work to get the necessary investment just right. It’s more like investing before the market catches up with the stock and sell it at a higher price. They don’t focus much on the market charts, momentum, and so on. But focus more on the productivity of the company and its trading aspect.
6. Retirement Investors
Retirement is where you spend your life doing what you love and have no worries about financial issues. However, if you want a lavish retirement, you will have to work significantly at a younger age to ensure that you have enough saved up for retirement. While some prefer to save some earnings into their retirement plans, others look into the stock market for potential gain.
Retirement investors are investors that have a long-term plan to gain potential benefits. They buy risker stocks and keep them for an extended period as they think it might have the potential to grow. It’s quite a promising plan if you know what you are doing. If the plan clicks, then you would gain profitable returns on every share you sell. If the plan backfires, then it’s a mess that you have to deal with.
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Which Types of Investor are You?
Thus, it’s a quite unpredictable market as to which investors will invest in which company or buy how many shares. Each investor has their own will and way of making necessary investments and ensures that they get their returns no matter what.
However, from the above-given list of investors, depending upon your financial status and inclination over investing in the stock market, a calculation and statistical investment can reap your fantastic benefits and higher returns. See what type of investor you are and then plan your investment strategies.