Investor
An investor is a person who allocates financial capital with the expectation of a future return (profit) or to gain an advantage (interest).[1][2] Through this allocated capital the investor usually purchases some species of property.[3] Types of investments include equity, debt, securities, real estate, infrastructure, currency, commodity, token, derivatives such as put and call options, futures, forwards, etc. This definition makes no distinction between the investors 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 stock is a shareholder.
For the Swedish investment company, see Investor AB.
There are two types of investors: retail investors and institutional investors.[4]
A retail investor is also known as an individual investor.[5]
There are several sub-types of institutional investor:
Investors might also be classified according to their profiles. In this respect, an important distinctive investor psychology trait is risk attitude.
Investor protection through government[edit]
Investor protection through government involves regulations and enforcement by government agencies to ensure that market is fair and fraudulent activities are eliminated. An example of a government agency that protects investors is the U.S. Securities and Exchange Commission (SEC), which works to protect reasonable investors in the United States.[1]
Similar protections exist in other countries, including the United Kingdom where individual investors have certain protections via the Financial Services Compensation Scheme (FSCS).[7]
Investment tax structures[edit]
Company dividends are paid from net income, which has the tax already deducted. Therefore, shareholders are given some respite with a preferential tax rate of 15% on "qualified dividends" in the event of the company being domiciled in the United States. Alternatively, in another country having a double-taxation treaty with the US, accepted by the Internal Revenue Service (IRS). Non-qualified dividends paid by other foreign companies or entities; for example, those receiving income derived from interest on bonds held by a mutual fund, are taxed at the regular and generally higher rate of income tax. When applied to 2013, this is on a sliding scale up to 39.6%, with an additional 3.8% surtax for high-income taxpayers ($200,000 for singles, $250,000 for married couples).[8]