Investor - who is this in simple words? Types and Types of Investors

Investing in various stock assets is one of the most profitable business projects. More and more investors are coming to the Russian securities market for quick profits.

Some investors prefer to pour capital into bonds and bills, while others seek to acquire ultra-profitable assets of IT companies. All types of investors can be divided into three main groups: conservative, moderate and aggressive. In general, an aggressive investor is a person who uses risky strategies to obtain maximum profit.

Who is an investor?

In simple words, an investor is an individual or legal entity who invests money in a project in order to make a profit in the future. The main meaning of an investment is precisely income; if an investment does not imply financial return, then this can already be attributed to charity or other activities.

So, a person or organization is involved in an investment, it can be one of the following types:

1. Sole investment. The investor receives money from a business in which he has invested entirely himself, that is, there are no other partners.
2. Collective investment. In this situation, there are several investors and the income is distributed depending on the share or other agreements.

Now let’s look at who an investor is using the simplest example, which is familiar to many in everyday life – shared construction.

Example

The development company invests money in construction, but not in full. She may not have the required amount, or she is carrying out several construction projects at once and directs all available funds to new objects. Future apartment buyers are offered to participate in construction, that is, to pay the cost of future housing in whole or in part. Of course, the final price will be less than what others who do not participate in the construction will pay.

It turns out that by investing money right now, a person (investor) receives a profit in the form of a reduction in price, that is, a discount. If the construction company is well-known and has a good reputation, there will be no problems with those wishing to participate. And this can be true in absolutely any industry.

The main idea is that investment costs are subsequently recouped and bring profit. Initially, these were simple projects like buying land and providing plots for farming in Ancient Greece. Mortgages and lending with agreed payments were also born there.

The next big step, which expanded the horizons of investment, was the purchase and provision of equipment for experienced professionals. For example, equipping merchant ships on which it was possible to sail to exotic countries and carry out trade transactions with the natives. The team itself could not buy a ship, but it could sail on a ship issued by the merchant and share the profits. This was beneficial for each side. Sailors earn money through specific actions, and merchants receive passive income from simply transferring a ship for use.

In the history of Russia, three periods of the investment climate can be distinguished:

1. Tsarist times before the formation of the Soviet Union. In parallel with the development of the economy in Europe, Russia also followed all modern trends. It was a healthy, fully functioning financial space where almost anyone could make money by becoming an investor.
2. Soviet time. There was practically zero investment activity, there were practically no investors as such. All enterprises are state-owned; there is simply nothing to invest in, and if there is anything, they can be punished. In general, complete degradation.
3. Post-Soviet time. The revival of capitalism, almost limitless opportunities for investment. At first, however, everything was resolved through criminal means, but even these people can easily be classified as investors. But the situation has returned to normal and at the moment anyone can become an investor.

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The best and proven investment options

A proven option for an investor is to search for undervalued assets (in financial jargon - “cigarette butts”). The purchase and subsequent sale bring a good income. The second option is to purchase at fair value with further increase in value.

Choose, for example:

• purchase of real estate upon sale of collateral;
• investment portfolio with the top ten domestic companies in various sectors of the economy;
• an undervalued collection of wines, paintings, gold coins, etc.

How to become an investor?

Each of us has seen advertisements on the Internet or somewhere else that encourage us to start trading Forex and earn money literally after 2-3 transactions. Such promises are very far from reality; in order to make money on the difference in rates, you need to study for a long time, know a lot and be a disciplined person.

In the case of investing, everything is much simpler. There are many ready-made solutions, which we will talk about later.

Initially, in order to become an investor you will need the following:

1. The desire to receive income from your investments . That is, you need to accept the fact that money just lying in the nightstand does not bring any financial benefit. It may seem strange, but a lot of people actually feel a lot safer with this type of savings. It’s as if it’s always at hand, it’s safer at home, and so on. But this is more of a financial airbag. An investor is a person who must allocate a certain part of his capital to such a cushion, and put the rest to work.
2. Availability of available funds . This should be money that is not needed in the near future. The essence of investing, as we have already said, is to make money work. Nobody says that in a week there will be income. Sometimes years can pass, depending on how and where we invest. Therefore, we can add here the patience and stable financial situation of a potential investor.
3. Investment plan . Before investing somewhere, you need to understand what you can count on, in what time frame and evaluate future prospects. The investor must think through the strategy in advance, and not along the way, otherwise downtime may occur later. Investing involves income, so it is wise to make it as large as possible and at the same time continuous.

It would seem that what was described above is quite logical without it. But for some inexplicable reason, many people invest money without thinking at all about what they will do next. To avoid such situations, the future investor must plan everything well, and this applies to any stage - if there is money, then where to invest, and if there is none, then where to get it and where to invest.

Benefits and Risks

The benefits of investing in a business come with risks:

• you can get unlimited profitability, but you pay with a high risk of losing all your savings;
• you can earn a lot of money on interest if you issue a loan, but there is a risk of non-repayment of funds on time or even... non-repayment;
• the business owner receives complete freedom to work to make a profit (within the law, of course), but in most cases you will not be able to control his activities;
• you get a share in the operating business along with all dividends, but it is often difficult to sell.

Investments in business are the most promising investments. But they require special knowledge and skills, as well as strong nerves to endure losses and resist the temptation to withdraw investments just before the company takes off!

In general, this type of investment is very interesting and promising, subscribe and wait for new articles, I will write a lot more useful and informative things. Good luck and may the money be with you!

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Main areas of investment

A person who has firmly decided not to keep his capital just like that (and if he has decided so, then he is taking the path of an investor), then proceeds to choosing the direction of investment, that is, in simple words, the investor decides where to invest the money . There are a huge number of options, each with its own subtleties, nuances, strengths and weaknesses.

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Simple options

Let us first consider those types that are available to anyone, do not require special knowledge and which, say, even pensioners can choose:

1. Currency, precious metals. Everything is very simple here. The ruble tends to depreciate, probably everyone has noticed this. Therefore, by buying euros and dollars, you can always make a profit after a while. Previously, this would have been called speculation. If we are not talking about hundreds of thousands of rubles, then there will be no questions from the tax service. You can slowly buy and store currency without attracting any attention.

   
   currency It is a little more complicated with investments in precious metals - they are sold in the form of bars with an accompanying certificate. At the moment, an initiative is being developed to provide an exemption from VAT for transactions with precious metals, which should make life much easier for such speculative investors.

   
   precious metals

2. Securities. It’s also not very difficult, the most difficult stage can be called registration with a broker (this can be done quite quickly, simply and conveniently at Tinkoff Investments). After this, the most interesting and promising paper is selected, after which it is purchased for the required amount. In general, investing in the stock market is a big separate topic, so let’s just say that you can buy different stocks and government bonds. A good conservative type of investment, suitable for those investors who want to quietly receive a small profit.

   

3. Investing in housing and real estate . In other words, buy and rent. A tax burden appears, but under certain conditions it can be circumvented. Separately, it is worth noting this option - a person makes a down payment on a mortgage and rents out the apartment. The money he receives from rent is used to pay off monthly payments. This type of investment gives permanent results, but it becomes obvious after the entire mortgage is paid off. The more money there is initially, the faster such a process can move. Then the second apartment (or commercial real estate, premises) is taken and paid in the same way, then the third and so on.

More complicated options

This is where the simple schemes end. Next we have options that will require any investor to have some knowledge, attention, and search for information. This does not mean that they are not suitable for the general population, it will just be a little more subjective. It’s hard to imagine a retiree studying and assessing the ICO potential of a new cryptocurrency. However, anything can happen.

1. Business projects . This could be the opening of a shawarma eatery, or it could be a small retail outlet. Many people have probably wondered - why do people go to small grocery stores instead of going to some chain store? It’s difficult to answer, everyone has their own reasons. Popular destinations for novice investors also include car repair shops, car washes, grocery stores and many other options. They are attractive because you don’t need to be a master of marketing; a simple sign is often the best advertising. If you look at it as an investment, then the easiest way is to enter a share of funds into someone’s project, that is, in essence, do nothing to develop the business, just invest and receive your share of the profit.
2. The previously mentioned ICOs, Internet projects and other high-risk industries . The main difficulty lies in collecting information that still needs to be verified for accuracy. At the same time, the first to invest in such projects usually receive huge profits (as a percentage of the invested amount). This type of investment is attractive because an experienced investor can distribute a certain amount of money between various most promising projects, one of which will definitely give a good result. Here the linear relationship between risk and potential return is maximally manifested. From conservative to aggressive, there are plenty of options.

What we ultimately have is the opportunity to receive 3-5% per annum when investing in bank deposits on one side of the risk parameter, up to thousands of percent of possible income per year on the other side of the risk parameter. And between them there are many options from which the acceptable one is selected. As practice shows, it’s difficult to decide, but choosing is much easier.

“Sharing” or loan?

All private investment in business can be divided into two large categories:

• with the acquisition of a share;
• without purchasing a share (unexpected, right?).

In the first case, the purpose of investment for small businesses is as follows. The investor intends to receive income from the business. Moreover, the level of its profit directly depends on the level of income of the business owner. In this situation, the investor often becomes a co-owner of the business, because he is interested in the enterprise bringing in as much money as possible. Investors can also attract their own resources to successfully launch a new start-up or expand an existing business. It's not necessarily money. An investor can share connections with familiar suppliers, resolve difficulties with regulatory authorities using his name, negotiate with the “right people,” and so on.

In the second case, the investor simply gives money to the businessman with the condition of return, of course, at interest. In other words, the private investor acts as a lender, like a bank. The conditions for issuing and returning funds are specified in a special agreement. On the one hand, this form of investment is profitable: the investor has no right to interfere in the affairs of the business owner, who manages his funds as if they were his own and pays out the profits. On the other hand, the investor has little interest in the profitability of the enterprise: it is more important to him that the money be returned, and not that the business increase its momentum.

Alfa-Bank offers an interesting option. 3 years ago he launched the collective investment service Alfa.Potok. The bottom line is this:

• entrepreneurs contact the bank and are registered on this site;
• Alfa.Potok managers, analyzing the state of companies and their risk profile, create a balanced portfolio of company shares;
• private investors can invest in any chosen portfolio;
• Entrepreneurs who received financing pay interest on the loan once a month;

Alfa-Bank, together with private creditors, shares profits in a certain proportion.

As a result, a private investor can earn up to 30% per annum. The entrepreneur is given a loan at 45%, therefore the bank receives 15%. Real profitability minus commissions and losses from defaults (yes, some companies go bankrupt and drop out of the “game”) is about 22-25%. This is profitable - with fairly moderate risks.

And here’s another interesting article: How to invest in startups: a complete guide for beginners

Types and Types of Investors

From the above, a simple conclusion follows - investors are different . Two polar examples include Warren Buffett as a calm and balanced person, and George Soros, who is more of a speculator than an investor, but is very active and gets the maximum return in the shortest possible time from his financial actions.

Let's consider the main types of investors; this classification should help a potential investor understand what type he belongs to and in what direction he should move to achieve what he wants. To some extent, this depends on the mindset, character, and psychotype of the investor, since some are prone to risk, while others are supporters of stability, sustainability and systematic growth. So:

1. Passive investor. This is just the example above with investing in real estate. I invested money and forgot about the investment. As long as the lease term is in effect, the passive investor has nothing to worry about. The same applies to participating in someone else's business. You don’t need to decide anything, we just get income, business development is the task of its founder. As a rule, large investors have at least some portion of their investments in the form of passive investments. This is convenient primarily because there is no need to devote time to this matter. There are a lot of industries with passive income.

   
   Passive investor

2. Active investor. This is the opposite of the first type. It works on the principle “if you want it done well, do it yourself.” As a rule, those who simply invest receive less income when distributing profits. And those who actively take part in the matter receive more. In principle, everything is logical, every action must be paid. We just choose what we like best; sometimes it’s easier to invest as a passive investor and do other things at the same time. In other cases, especially if the investor is well versed in the issue, you can, on the contrary, be an active investor and, for example, work with passive ones.

   
   Active investor

3. Private investor. This is almost 100% of the total number of investors. Private investors, in simple words, are you and me, ordinary people of varying financial incomes, who decided to invest available funds to generate income. In fact, this type can be distinguished based on the amount of capital. People with substantial capital often become private investors in various projects. The creator of the idea has different options for action - you can take a loan from a bank, you can register a legal entity and take out a loan for it, or you can contact a person who wants to invest, who will act as a private investor in your business.

   
   Private investor

4. Institutional Investor. As a rule, such an investor is a large-scale organization (investment bank, fund), which considers many different industries as investment objects. For the most part this is the financial sector. A huge staff of employees studies promising areas, assesses environmental indicators, predicts risks and potential profits, in general, studies markets from all sides. After this, a decision is made to invest in the most attractive projects, financial instruments and even entire industries. We, as private investors, can invest money in such funds, and they, as institutional investors, are engaged in trust management of funds. True, it is not always effective.

   

5. Hidden investor. Everyone has probably heard about sanctions and measures aimed at preventing the financing of certain countries, companies, and individuals. That is, you cannot openly invest money in projects. But if they are attractive and promising, then no restrictions can deter those who want to invest money. This is how hidden investment manifests itself. In this case, front companies are created, intermediaries are introduced, in general, various kinds of tricks still make it possible to direct the money where it is needed. Or disclosing the names of investors for any other reason is undesirable. The point is to maintain anonymity.

   

Types of Investors

We looked at the general classification, which determines the entire investment structure. Now let’s look at individual categories that will help you understand which investment direction is best for a private investor to choose. It depends on your own preferences and character:

Profitability depending on the type of investor

1. Conservative investor . In simple words, this is an investor for whom the reliability of investments comes first. He will not invest money in HYIPs and other risky ventures. Typically, well-studied, proven industries are chosen as investment targets. One of the best examples is bank deposits and the purchase of government bonds. The risks are practically zero, the returns are not very high, often slightly higher than inflation. However, a qualified investor understands all this and chooses the optimal time for investments, redistributing financial flows depending on how the situation changes. Today one thing is most profitable, and tomorrow it will be another.
2. Aggressive investor. This is a risk-prone person (organization) who wants high returns. Anything that promises tens or even hundreds of percent profit attracts the attention of an aggressive investor. Some will say that prudence and such activity have nothing in common. But early Bitcoin investors will only laugh at such statements. To be successful, you must either have a natural flair for such matters, or constantly monitor the situation and look for opportunities. In general, it will take a lot of time and strong nerves. It's definitely not suitable for everyone. Success does not always accompany an aggressive investor, but the loudest takeoffs occur with them.
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3. Moderate investor . Maintains a balance between risk and possible profitability. In simple terms, a moderate investor is a cross between a conservative and an aggressive investor. This approach can be expressed both in the search for projects and options that are both profitable and with low risks, and in the form of dividing capital between different options. That is, such an investor can, for example, put half of his available funds on a foreign currency deposit with a low rate, and distribute the remaining half among HYIPs, cryptocurrency, shares of promising companies, investments in ETFs, and so on. That is, the word “moderate” fully reflects the essence; it is a kind of golden mean between the first two types.

Classification according to main characteristics

So, let's begin. And we will go from simple to complex.

First of all, investors can be classified according to their professional level:

• non-professionals. One or a group of people who do not have a clear investment strategy and procedure for making investment decisions. They are characterized by a lack of control over risks, a clear strategy and a plan for making a profit. They often do not invest on their own, but resort to the help of professionals competent in this matter, management companies and traders, etc.
• professionals. Both private and legal entities with knowledge and experience in making investment decisions. Such investors have sufficient qualifications in the field of investment management. They are also characterized by the fact that they invest and manage the funds of other participants in the transaction
• marauders. “Gray” investors, which are common in countries with weak legislation. Their goal is to withdraw the company's assets through bankruptcy proceedings.

We've dealt with the simplest ones, let's move on to the more complex ones.

Classification by organizational and legal form:

• state, as well as local governments and federal authorities
• association of groups of legal entities into large concerns, holdings, etc.
• association of legal entities and individuals on the basis of a joint activity agreement
• commercial and non-profit legal entities
• individuals.

Based on investment objectives:

• individual investors (persons managing their own capital and solving personal problems)
• institutional investors (they are an aggregator of funds from individual and private investors, and engage in large investments on their own behalf)
• financial (portfolio) investors (the goals are solely to make a profit and reduce the level of risks of their own investments)
• strategic investors (their task is to gain control and management of a third-party company, absorb and eliminate a competitor by purchasing it, etc.)
• venture investors (the priority is the development of a new innovative business or an original investment idea. Launching the production of a new product or service, developing new methods of labor organization)

General information about investing in the world

It is simply not possible to take into account everyone who rents an apartment or buys currency in order to increase their wealth. Some people hide it, others simply don’t fall into such statistics. In this regard, the population's interest in investing is usually assessed through indicators of participation in the stock market. And indeed, this most accurately reflects the tendency to add up and interest in making money in the financial environment.

Let's look at a few examples from countries, including both developed and developing:

1. USA . In the States, investing in securities is quite common. According to statistics, more than half of Americans over 18 years of age invest in securities in one way or another. Money should work - this is the principle that an ordinary American lives by.
2. Japan. Another developed country with a fairly large population. Here the percentage is smaller, about 40%, but it is still a very high figure. Considering that the country's central bank actively supports the market, the risks of investing in stocks are minimized.

   
   Indicators on the most popular exchange in Japan - Tokyo

3. Russia. In our country, less than a percentage of people participate in trading on the stock market. Let's chalk this up to the Soviet past. The dynamics of the number of participants shows that interest in stocks and bonds is growing, and there are also many who trade Forex. One of the most popular securities is Gazprom shares. The tax incentive program helps attract clients (individual investment account).

   

4. India . An example of a country with a huge population, huge GDP and low standard of living. The indicator of bidders is comparable to the Russian one - about 1.5% of the population.

Books on investing for beginners

Investment textbooks are written in boring language, with the right situations (as they should be). The reality is different, sometimes significantly. For beginners I recommend:

• “Stock trading for dummies”, authors M. Griffis, L. Epstein. Basic information is given, briefly and without gibberish;
• "The Peter Lynch Method. Strategy and tactics of the individual investor." The author, of course, financial manager P. Lynch, with subtle humor, leads to the ability to think like an investor;
• "Investor's Guide to Russia." Author Shlyaev A.V. recommends a book for residents of regions where there are fewer opportunities;
• “Principles of passive investing, or 5 simple rules for those who want to start investing, but don’t know where to start.” Roman Akentyev offers clear strategies for long-term investments.

Examples of successful investments

As an example of a successful investment, I would like to give Google. In 2004, the company's shares were worth $85. Within a few years, the company's investors became millionaires, and shares peaked at $700.

With the development of mobile communications, the little-known Finnish company Nokia became the market leader in the production of mobile phones, and those who invested in the company back in 1992 became millionaires.

Real investment failures

The most typical failed investment in our country is the story of MMM investors. The financial pyramid, positioned as an investment fund, created by Sergei Mavrodi, had branches in almost all major cities of Russia.

Investors brought almost their last money into the company. In an impoverished country, this was rather a gesture of despair. Advertising was of great importance in the promotion of MMM. Participation in commercials by famous actors and people whom people trusted played a role. Even after the collapse of MMM and the conviction of Mavrodi, thousands of supporters remained who believed that the state was to blame for the collapse of the pyramid.

What does it mean to be a qualified investor?

The category of qualified investors may include both individuals and legal entities that meet certain requirements and have passed the appropriate certification. Recognition of the status of a qualified investor can be carried out by brokers, fund managers and other authorized persons (in accordance with the Federal legislation on the securities market) upon a written application from a person applying for this status.

The main difference between a qualified investor and a private one is that he has access to work with a large number of financial instruments (FI). The fact is that not all FIs are available for trading to a wide range of people; among them there are certain categories available only to persons with the status of qualified investors. These include, for example: shares of venture investment funds or shares of certain types of closed mutual funds.

In addition, sometimes based on this criterion (having the status of a qualified investor), brokers provide the client with various additional services, for example, access to trading on international trading platforms.

As for trading on the stock market, in this case the status of a qualified investor does not provide practically any special advantages. Take, for example, the Moscow Exchange, out of more than one and a half thousand securities available for trading, only three are intended for qualified investors, while the rest can be traded by any private investor who has opened an account with one of the many brokers certified on the Moscow Exchange.

Requirements for an individual to obtain the status of a qualified investor

1. It is necessary to have an appropriate level of theoretical knowledge, confirmed by a state-issued document, that is, you need to have a diploma indicating higher economic education or one of the following documents:

• Qualification certificate of a financial market specialist, auditor or insurance actuary;
• CFA (financial analyst) certificate;
• CIIA (International Investment Analyst) Certificate;
• FRM (Financial Risk Manager) Certificate.

1. It is necessary to have certain practical experience in this field, namely:

• Experience in transactions with securities or derivative financial instruments over the past year, with the condition of concluding transactions at least 10 times a quarter and for a total amount of at least six million rubles;
• Or you must have at least three years of work experience in an organization whose main activity is concluding transactions with securities and derivative financial instruments. Moreover, if this organization has the status of a qualified investor, then two years of work in it will be enough.

1. The following requirements for property and assets owned by an individual applying for the status of a qualified investor must be met:

• An individual must own securities or derivatives contracts with a total value of at least six million rubles;
• In addition, funds located in bank accounts belonging to the investor can be taken into account.

Requirements for a legal entity to obtain the status of a qualified investor

To obtain the status of a qualified investor, a legal entity only needs to satisfy one of the following criteria:

1. Possession of a net worth of at least two hundred million rubles;
2. Availability of completed transactions totaling at least three million rubles over the last year (subject to the conclusion of at least five transactions per quarter);
3. The size of assets is worth at least two billion rubles;
4. Turnover for the last year of work amounted to at least one billion rubles.