Question

Difference between individuals investor and institutional investor? ( simple words)

Answer 1

Institutional investors are unlike individual investors such as hedge fund investors, pension fund investors, insurance companies, banks, financial institutions etc. A university can be considered as an institutional investor since the investment horizon is pretty much longer duration and invest in endowment funds. Whereas an individual can be an employee, student, or a house wife who's investment could be from long to short trading from a trading terminal via laptop or with the brokerage help. The investment cannot be as big as an institutional investor can invest. Qualified Institutional investors more likely to buy IPO's in the primary market and individual investors are more interested in buying small stake of equity in secondary market. Risk and liability of an individual is high where as the same is equally or proportionately shared by the institutional investors.