by Maia Monell
There are a lot of different investors and investment vehicles out there. Let’s break some of the best known down by category.
Retail Investors
Retail investors: someone who buys & sells securities (equities, debts, hybrids) or funds (like ETFs or Mutual funds) for their own personal account. They #workforthemselves rather than for a big organization. They execute trades through traditional or online brokerage firms, or other types of investment accounts (see Robinhood).
Institutional investors
Institutional invests are Wall Street’s not-so-darlings. They are the groups who manage large-scale investments like a mutual fund or pension fund.
Let’s dive into some of these better known institutional investors:
- Hedge Funds (or ‘hedgies’) are all about that high life. Specifically, high returns. They leverage alternative investments into pooled funds (money of many individuals, pooled into one fund). They’re only open to accredited investors because there’s less SEC regulation surrounding these investment vehicles.
- Mutual funds. These too leverage a pool of money from investors, but they invest in securities like stocks, bonds, money market instruments and other assets. These give you, the individual investor, access to pro portfolio managers.
- Money managers. These lads and ladies work for themselves or for a financial firm and manage the securities portfolio of an individual or institutional investor. These folks have a team behind them to help make them makes informed decisions around each investment vehicle. Under fiduciary duty, they do thinks like craft an investment strategy and buy and sell to meet key objectives.
- Investment banks. You know them as JP, Goldman, Morgan, BofA, DB and Credit Suisse. These behemoths are the groups behind the bigggg deals. They cater to the big dollars too of the high networth.
- Private equity firms (PEs). These seek out strong returns in highly lucrative private companies. They’re also well known for play in taking a public company private. The low end of buy in for accredited investors hovers around $250,000, while many seek a few million for entry. The investment horizon for this kind of stake? Between four and seven years.
So how can anyone invest?
Say hello to the investment apps:
You’ve heard about Robinhood, but what are some of the other options?
SoFi
With SoFi you can self-direct your investments, buy trading individual stocks, buy fractional shares, or invest in ETFS. Or you can use one of their robo-advisors for a more hands off method. Their robo-advisors will auto-rebalance and diversify your portfolio.
Axos Invest
If just hearing the word “stocks” raises your blood pressure, you’re not alone. Axos gets it, and they’ve built an entire app for absolute beginners with one good-looking, easy-to-use interface. They’re also a robo-advisor, meaning their algorithms will do all the investing work for you while diversifying (a fancy way of saying “they won’t put all your eggs in one basket.”)
Betterment
Betterment is a robo-advising app with a few additional bells and whistles. It offers services like a traditional saving and checking account, but also portfolio options. You can pay a premium to have a human personally advise you, buy fractional shares, and shop the multiple portfolio options with customization
Public
Public is a free investing app that offers fractional investing with no commission fees or account minimums. The special thing about public? It has a built-in community. You can follow other investors and browse companies that inspire your investment.
M1 Finance
M1 turns investing into a piece of Pie (nope, not a typo!). Their focus is to help you diversify your investments by building what they call a Pie. It looks like a pie graph where any slice is a stock, ETF, or even another Pie. It’s customizable, so you can be super hands-on with your portfolio. Or if that sounds like your personal nightmare, they also offer pre-made Expert Pies.
There are a TON of options out there, navigators. The point is the build and generate wealth on YOUR terms. There’s nothing stopping you from being the next Warren Buffet, especially with the tools to trade at your fingertips. Just remember the importance of a few things: there are differences between short term and long term investments. Also, learn about risk, return, and diversification investing. It could save you.
Related Reads:
Investments for Long-Term Goals
Risk, Return, and Diversification
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