Types of investors: institutional, private and foreign. Enterprise valuation for different types of investors

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

In the modern world, people have access to many different sources and ways of earning income. Someone prefers to choose the traditional path, getting hired. And there are those who find alternative options for themselves. For example, investing. This method allows you to receive passive income. However, for many, it still seems difficult.

What's the point?

Investing involves investing in a developing project, buying securities, and so on. Both an individual and a legal entity can act as an investor, the ultimate goal of which is to make a profit.

However, it is important to understand that financial investments never guarantee a 100% profit. In fact, all types of investors take some risk in engaging in such activities. However, it has nothing to do with playing the lottery when the resultunpredictable.

Before investing their own funds in any asset, investors carefully study it and establish the probability of making a profit. If the risk is too great, the deal can be abandoned. This approach is thorough and minimizes the likelihood of financial losses.

Who is an investor and what does he do?

If you believe the generally accepted wording, the above term refers to an individual or legal entity that invests its own funds in various projects for further profit or intangible benefits.

With a profit, everything is clear. This is a certain amount of money. With intangible benefits from investment activities, things are somewhat more complicated. This may be the achievement of certain strategic goals, increasing one's own authority, etc.

In accordance with the legislation in force in the Russian Federation, the following entities can become investors.

1. Broker.
2. Dealer.
3. Pension fund.
4. Credit or insurance company.

Features

It is important to understand that all types of investors work for the future. They cannot be 100% sure of the profitability of the project, acting solely, as they say, at their own peril and risk. That is why it is important to have a good understanding of the peculiarities of investment activity in order to reduce the likelihood of potential risks.

Situations in whichinvestors lose their own investments. It is better to be mentally prepared for such a turn of events, not to despair and perceive the current situation as an experience that allows you to draw some valuable conclusions and avoid mistakes in the future.

Investing is an activity in which you have to constantly learn and learn new features. Those who don't have to pay for the mistakes with their own money.

How to get started?

The start of investment activity requires not only a certain amount of financial resources, but also a reasonable approach. First of all, you need to think over the strategy in detail and evaluate your own strengths.

Some investors prefer low risk combined with similar returns. Others, on the contrary, are ready to take maximum risk in pursuit of huge profits.

All types of investors should understand that such activities do not bring fabulous profits in the first months. In some cases, it takes years and even decades to build a net worth.

Investing is a long process, during which the growth of invested funds is rather slow. Especially at first.

Investment risks

So, as mentioned above, investing your own funds in any project or securities carries not only the possibility of making a profit in the future, but also a whole range of potential risks. The main one is profit.below the planned level.

In addition, there are several other potentially dangerous factors for investors.

1. The change in the value of the assets of the company in which the funds are invested depends on the global economic situation. There is always the possibility of a downgrade.
2. Changes in the exchange rate also have an impact on investment activity.
3. If the company in which the funds are invested goes bankrupt, the investor has a risk of losing his own investments.

However, despite the presence of all kinds of risks, for some players, such activities are very successful and allow them to make significant profits.

Types of investors

There is a certain classification on the stock market that divides all the players present on it into several categories depending on the goals and methods of carrying out their own activities. Let's talk about the main ones.

1. Private. These include both beginners and experienced stock market players who operate according to general rules and use personal funds in their own activities.
2. Institutional. Similar terms are called investors who act as some kind of regulators. Their activity is reduced to the implementation of savings and subsequent transfers from private as well as public investors. In fact, such players manage other people's assets. They are hired by big companies. For example, those who carry out their own activities in the fieldinsurance.
3. Foreign. As the name implies, such players are engaged in similar activities on the territory of foreign countries.

So, let's discuss the classification of issuers and investors in more detail.

Private

The representatives of this category in the stock market include individuals or, in simple words, the most ordinary citizens. Curiously, they may not even have financial education.

Most private investors in Russia are active businessmen or co-owners of enterprises. As a rule, they prefer to invest in real estate, small projects and various banking products.

Income that private investors receive from their own financial activities is commonly called passive. With a competent infusion of funds, you can have a stable source of income. However, as a rule, for many, investing is not the main, but an additional activity.

It is not uncommon for potential investors to make the big mistake of believing that to enter the stock market, you need to have huge financial investments. However, this is not the case at all. What is important is not the amount of free funds available, but the ability to calculate risks and manage them wisely.

The easiest option available to most Russian citizens is opening a bank deposit. This method has a low return, but brings a guaranteed income.

There is a nationwidepublic association of private investors, which brings together those who are engaged in similar activities.

Institutional

Real estate, as well as securities and metals, are usually considered as profitable projects. These are quite large players that make up a significant part of the stock market.

Institutional investors are legal entities that get the right to manage other people's capital. These are various insurance and pension funds, as well as other large corporations. I must say that, as a rule, they are distinguished by the presence of professionalism and experience in conducting such activities.

It is worth noting that institutional investors have some restrictions regarding the conduct of their activities. For example, when talking about banking institutions, these would be the following items listed below:

1. You cannot redeem more than 10% of the number of shares owned by the company.
2. No more than 5% of shares should be included in the list of assets owned by the bank.

These are quite tough conditions that banking institutions are trying to circumvent legally. For this purpose, for example, subsidiaries are created. This allows you to trade on the stock market without the above restrictions, as well as invest your own funds.

Foreign

This category includes individuals and legal entities located abroad, as well as entire foreign countries.

How is it possible to invest inRussia?

1. Share in enterprises with citizens of the state.
2. Opening new businesses.
3. Purchasing real estate and securities.
4. Registration of rights allowing the use of natural resources, including land.

The activities of the above-mentioned stock market entities in Russia are regulated by the Federal Law “On Foreign Investments.”

It is worth noting that financial injections from abroad affect not only the stock market, but also the national economy as a whole. They make it possible to expand current economic processes, become an incentive for new financial injections, eliminate unemployment and have a positive effect on increasing the income of the population.

This is why attracting foreign investors and foreign investment should be welcomed by the state.

Evaluation Features

Any project requires careful consideration at the stage when a decision is made to make further financial investments.

Estimation of an enterprise for different types of investors has some peculiarities. For example, private players, managing their own funds, can afford a high level of risk in pursuit of maximum profit. Institutional investors manage other people's capital, so they try to choose the most reliable tools for increasing the funds entrusted to them.

However, there are some general indicators of investment activity that all types of investors pay attention to. For example, indicatorseconomic efficiency. This is the basic information that allows you to make a decision on the appropriateness of investments. In addition, for some stock market participants, compliance with the Federal Law “On Foreign Investments” is required.