Everybody knows Investment means profit. But do you know how many types of investors are in the market?
Not to worry. We will discuss it.
Today we will discuss how many types of investors are in the market and their investment limits.
There are 10 types of investors in Indian Stock Market like Retail Investors, Institutional Investors, Foreign Institutional Investors (FIIs), High Net Worth Individuals (HNIs), Angel Investors, Venture Capitalists, Private Equity Investors, Speculators, Traders, and Long Term Investors.
Retail Investor
Retail Investors are individual or nonprofessional investors who can buy and sell stocks, bonds, ETFs, Mutual Funds, etc. by a brokerage account or other financial institutions. They are common people. People can bring any company from the ground to the floor and the same people can bring the company from the floor to the ground. Retail investors can now invest directly in the stock market as so many discount brokers are available these days. They can invest up to Rs 2 lakh per year in IPO and trade up to 10% of the capital issued by the company.
Institutional Investors
Big companies like insurance companies, pension funds, mutual funds, and even banks also come as institutional investors. Yes, the Bank also comes under the category of investors. They are involved in the collection of significant amounts of money for trading in securities, real estate, and other investment assets. There are no investment limits for these types of investors. They can invest in the open stock market. They also influence the stock market, both positively and negatively.
Foreign Institutional Investors
Foreign Institutional Investors are institutional, individual, or group entities seeking to invest in the economy of another country. These institutional investors are generally from outside of India and invest money in the Indian stock market. As India is a growing country, it has huge opportunities for them to get higher growth potential than mature economies. FIIs are permitted to invest up to 10% in the equity of any one company and an aggregate limit of 24%.
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High Net Worth Individuals (HNI)
These are individual investors who have big net worth. They are generally defined as businessmen, investors, big company owners, etc. Individual investors holding liquid assets of above Rs. 5 crore fall under this category. There is no limit for them, they can invest as much as they want.
Angel Investors
Angel investors are the investors who invest money in the initial stage of the start-up and take the equity of the company in return. They offer support to the new start-up by giving seed money to them. There is no limit on Angel Investors. They can invest as much money as they want.
Venture Capitalist
These investors also invest money in start-ups, the only difference between them and Angel Investors are that venture capitalists invest money on a high level and take the equity of the company in return. Their investment strategy is to provide capital to companies with high growth potential in exchange for equity stakes. There is no investment limit for them too.
Private Equity Investors
Private equity investors are wealthy individual investors who invest money in companies which are not listed in the stock market. High-net-worth individuals invest money in companies only through private equity. They invest money in such companies that can give very good returns in the future. An investment of $26.5 Billion was made from private equity in Jio & Reliance Retail during the pandemic.
Speculators
These are investors who buy and sell stocks rapidly to earn quick profits. They transact at great risk. The period of holding their shares generally ranges from 1 day to 1 year. They can invest as much money as they want.
Traders
These people invest to make profits in the short term. They make profits even with small price movements. They are day-to-day investors who sell and buy shares same day. There is no investment limit for them. They can invest as much as they want.
Long-Term Investors
These investors come to the stock market for a long time. They come into the market with a long-term perspective and their investments generally last for years. There is no investment limit for them. They can invest as much as you want.