Companies and business owners such as mortgage broker Ivanhoe rely on investors to help them business to grow They finance their business and they provide resources for the company to upgrade equipment, expand operations and introducing a new product.
Who is an Investor?
These are entities or people who invest in a business with the expectation of getting financial returns. This helps them to grow their money. Therefore, every investor has objectives governing his investment. This includes -liquidity which can be converted to cash when the need arises, profitability which can be through capital appreciation, dividends, and interest. They also need the safety and security of the amount of money invested.
Who can be an investor in a company?
When we talk of being an investor people might think that they are special people who have been accorded that opportunity. Therefore, it is important to know that anyone can be an investor in a certain company. The following can be investors:
A shareholder of the company?
A shareholder is anyone who buys stocks from and the company. Therefore, a shareholder may also decide to be an investor within the same company.
An individual can also be termed as a small investor. He can invest in various companies depending on his ability.
A company is allowed to invest in other companies to secure their future earnings. This will establish relationships and partnerships with other companies in an attempt to have specific assets that can be in the form of their products and services.
A foreign individual can also be an investor in certain companies. They can invest in equity shares.
Types of investors
Investors can be classified into two main categories. These are the institutional investor and the retail investor.
A retail investor is also known as a non-professional or individual investor who can buy and sell securities, exchange-traded and mutual funds using investment account or other brokerage firms. They make smaller investments and fewer trades compared to institutional investors Normally, they pay higher fees on their trades, commissions, and marketing because of their purchasing abilities.
This is an investor who invests on behalf of the members. It can be described as an organization that trades securities in large quantities. They have a diverse knowledge of investment options because they can influence the prices of securities and perform major trades.
Additionally, both the institutional and retail investors invest in stocks, contracts, and bonds. The major difference is that institutional investors make independent exchanges on every transaction that they perform. On the other hand, retail investors pay distribution costs, marketing, and brokers fees because of the smaller volume of trades.
The investors can also be further classified into three. These include:
Active investors lay a foundation for passive investors by utilizing their wealth. They make money irrespective of market conditions because they understand that return capital is what brings more money.
This is a basic play for financial security and that is why most financial institutions recommend it for people who are busy with their jobs or entrepreneurs. This type of investor delegates most of their responsibilities to experts such as money managers, brokers, and financial planners. Therefore, their return depends largely on other people’s expertise.
A woman walks through the viewing area at the Australian Stock Exchange in Sydney, Australia, Wednesday, May 1, 2019. Financial markets were mostly closed in Asia on Wednesday for holidays after Wall Street capped a wobbly trading session with meagre gains. Australia’s S&P ASX 200 rose 0.8% after ANZ reported a 2% increase in its profit, kicking off the earnings season for the country’s Big Four banks. (AP Photo/Rick Rycroft)
They are known for their minimal financial investment. They do lots of consumptions that investing. They are concerned about the pay that they decide to solve their financial problems. Lifestyle is important to them and that is why when they receive more money they will spend more to live a luxurious lifestyle. They are newbies in the investment world.
How can find an investor?
After starting a business you would want to have an investor who is reliable right? Well, locating an investor is easy and you can find them through the following ways:
- Through mentors-Your mentors can help you find investors or they can commit themselves to be your first investors.
- Apply for accelerator programs that are offered by established entities, seed and investment funds.
- Do the research and compile a list then you make a follow-up.
- Crowdfunding platforms which target various companies.
- Angel investor networks
- Online platforms
- Through business schools with strong entrepreneurship programs
These investors play a very crucial role in the growth and success of a company. Therefore, as a business owner, it is important to build a good relationship with the investor and your business will expand.