September 27, 2021, Monday, 01:17 Hrs

A beginner’s Guide: Type of Investors.

Request a Call back

Indian stock market has around 2.78 crore domestic citizens investing in the stock market

With the recent lockdown and work from home conditions, people looked for new investment options. With more time to spare, the stock market was one of the favorite places where investor’s numbers surged to a new high. Many major investing and trading platforms saw a huge influx of new investors looking to utilize their free time in investing as an opportunity that lockdown has provided them.

So do these people come in active investors or passive investors’ category?

There are different types of investors based on their investing patterns and trading characteristics. It depends on the risk that you are ready to face and the stock management processes. Each investor has certain goals in mind with profit as the common denominator. All these unique and distinct styles come up to make some broad categories, which would be defined in this article.

Do you know which type of investor you are? Let’s find out.

Types of Investors in the Stock Market  

There are broadly four types of stock investors based on their investment pattern. Those are listed below.

  1. Active-Investors: As the name suggests, an active investor is someone who invests in the stock market quite frequently. Irrespective of their investment size; active investors are always looking to invest and grow with their stocks. They are the ones who follow short term investment plans based on the advice of pioneering brokers like HTPL.

Like any other investor, an active investor is also looking for maximum gains in the least time frame by following the market very closely.

  1. Passive Investors: Contrary to active investors, passive investors have their primary source of income separate from the stock market. They tend to have little knowledge about market trends and hence often require the expertise of an experienced stockbroker like HTPL to guide them through to their financial goals. Passive investors are not looking for quick and significant gains; rather they leave their investment to grow with time.
  2. Speculators: Due to recent vaccine announcements, pharmaceutical companies like Pfizer, Moderna trended up. These are times where speculators work. Speculators are the trained group of investors who look for making a profit based on some big news theory that has the potential to hype up the market shares. Any stock goes up if they have a merger, any acquisition, any speculative deal, or some positive effects. For example, Reliance stocks were up due to a deal between them and Google. These are speculative moments that can be predicted before hands.

Speculators tend to look for these opportunities and invest at this time when market sentiment is captured with ongoing news. They buy the stock of interest before the deal and sell it after the stock goes up to generate profit. This process can be repeated with a small pool of money and generate a good surplus over time with recurring profits. Speculators are good market analyzers and are profoundly equipped with vast market knowledge.

  1. Retirement Investors: As the name suggests, these people are investing for their retirement fund. Most people want to have a fixed pool of money before retirement or even a fixed monthly income. Retirement investors look for low-risk investment options as they approach near to the retirement age.

Apart from these investor types, we can also classify investors based on their chosen instruments for investment. For example, people preferring mutual funds are mutual fund investors. Similarly like this, we get six broad types of investors based on their investment options, such as:

  1. Individual Investors
  2. Partnership/ HUF investors
  3. Companies Investors
  4. Mutual Fund Investors
  5. Societies and Trust Investors
  6. Financial Institutions and Foreign Institutional Investors

Any investor having a basic knowledge of stocks can start their investment. If you want high returns in a short time, then you should be willing to take more risks. Equity stocks are considered a high-risk investment option that can provide a good return with time. People preferring safe options can go with the debt market. HTPL provides both equity and debt trading options to you. Along with these stock options, you also get other instruments such as IPO (Initial Public Offering), OFS (Offer for Sale), currency derivatives, and other investment options. Put your trust in experienced professionals when it comes to investing in the volatile stock market. HTPL provides you the latest technology framework to ensure trust and security for your investments.