An investor allocates capital with the expectation of a future financial return. Types of investments include: equity, debt securities, real estate, currency, commodity, derivatives such as put and call options, etc. This definition makes no distinction between those in the primary and secondary markets. That is, someone who provides a business with capital and someone who buys a stock are both investors. An investor who owns a stock is a shareholder.
The assumption of risk in anticipation of gain but recognizing a higher than average possibility of loss. The term "speculation" implies that a business or investment risk can be analyzed and measured, and its distinction from the term "investment" is one of degree of risk. It differs from gambling, which is based on random outcomes.
Investors can include stock traders but with this distinguishing characteristic: investors are owners of a company which entails responsibilities.
Types of investors
There are two types of investors, retail investors and institutional investors: