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{{Short description|Person who allocates capital with the expectation of a financial return}}
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An '''investor''' is a person who allocates [[Social:Financial capital|financial capital]] with the expectation of a future [[Finance:Return on capital|return]] (profit) or to gain an advantage (interest).<ref name="Reasonable">{{cite journal |title=Reasonable Investor(s) |journal=Boston University Law Review |volume=95 |issue=461 |page=466 |first=Tom C.W. |last=Lin |date=2015 }}</ref><ref>{{cite dictionary |title=Investor |dictionary=Cambridge English Dictionary |url=https://dictionary.cambridge.org/us/dictionary/english/investor |publisher=Cambridge University Press |access-date=November 29, 2019 }}</ref> Through this allocated capital the investor usually purchases some species of property.<ref>{{cite book |first1=Jonathan |last1=Fisher |first2=Jane |last2=Bewsey |first3=Malcolm |last3=Waters |first4=Elizabeth |last4=Ovey |date=2003 |title=The Law of Investor Protection |edition=2nd |location=London |publisher=Sweet & Maxwell }}</ref> Types of [[Finance:Investment|investment]]s include [[Finance:Stock|equity]], [[Finance:Bond|debt]], [[Finance:Security|securities]], real estate, [[Physics:Infrastructure|infrastructure]], [[Finance:Currency|currency]], [[Finance:Commodity|commodity]], token, derivatives such as put and call [[Finance:Option|options]], [[Finance:Futures contract|futures]], [[Finance:Forward contract|forwards]], etc. This definition makes no distinction between the investors in the [[Finance:Primary market|primary]] and [[Finance:Secondary market|secondary market]]s.  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 [[Finance:Shareholder|shareholder]].

==Types of investors==
There are two types of investors: retail investors and [[Finance:Institutional investor|institutional investor]]s.<ref>{{cite web |last=Palmer |first=Barclay |date=August 11, 2023 |title=Institutional vs. Retail Investors: What's the Difference? |url=https://www.investopedia.com/ask/answers/06/institutionalinvestor.asp |website=[[Investopedia]] |access-date=October 5, 2023 }}</ref>

A ''retail investor'' is also known as an ''individual investor''.<ref>{{cite web |last=Hayes |first=Adam |title=Retail Investor Definition |url=https://www.investopedia.com/terms/r/retailinvestor.asp |website=Investopedia |access-date=December 17, 2020 }}</ref>

There are several sub-types of institutional investor:
* Pension plans making investments on behalf of employees
* Businesses that make investments, either directly or via a captive fund
* Endowment funds used by universities, churches, etc.
* Mutual funds, hedge funds, and other funds, ownership of which may or may not be [[Finance:Public company|publicly traded]] (these funds typically pool money raised from their owner-subscribers to invest in securities)
* [[Finance:Sovereign wealth fund|Sovereign wealth fund]]s
* Large money managers<ref>{{Cite web |title=Institutional Investor – Overview, Types, Investing Risks |url=https://corporatefinanceinstitute.com/resources/knowledge/trading-investing/institutional-investor/ |website=Corporate Finance Institute |access-date=December 17, 2020 }}</ref>

Investors might also be classified according to their [[Finance:Investor profile|profiles]]. In this respect, an important distinctive [[Finance:Behavioral economics|investor psychology]] trait is [[Risk aversion|risk attitude]].

==Investor protection through government==
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 {{wipe|United States}}.<ref name="Reasonable" />

Similar protections exist in other countries, including the {{wipe|United Kingdom}} where individual investors have certain protections via the Financial Services Compensation Scheme (FSCS).<ref>{{Cite web |title=Investments |url=https://www.fscs.org.uk/what-we-cover/investments/ |access-date=2023-11-11 |website=Financial Services Compensation Scheme Ltd. |language=en}}</ref>

==Investment tax structures==
Company [[Finance:Dividend|dividend]]s are paid from [[Finance:Net income|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 [[Finance:Internal Revenue Service|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).<ref>{{cite web |title=Investment Tax Basics for All Investors |url=http://www.investopedia.com/articles/investing/072313/investment-tax-basics-all-investors.asp |website=Investopedia |access-date=December 30, 2014 }}</ref>

==Role of the financier==

A '''financier''' ({{IPAc-en|f|ɪ|n|ə|n|ˈ|s|ɪər|,_|f|ə|-|,_|-|ˈ|n|æ|n|-}})<ref>{{Cite web|url=https://www.ahdictionary.com/word/search.html?q=financier|work=The American Heritage Dictionary|title= financier|publisher=Houghton Mifflin Harcourt Publishing Company}}</ref><ref>{{Cite web |url=https://www.ldoceonline.com/dictionary/financier |title=financier &#124; meaning of financier |work=Longman Dictionary of Contemporary English }}</ref> is a person whose primary occupation is either facilitating or directly providing investments to up-and-coming or established companies and businesses, typically involving large sums of money and usually involving [[Finance:Private equity|private equity]] and [[Finance:Venture capital|venture capital]], [[Social:Mergers and acquisitions|mergers and acquisitions]], [[Finance:Leveraged buyout|leveraged buyout]]s, [[Finance:Corporate finance|corporate finance]], [[Finance:Investment banking|investment banking]], or large-scale [[Social:Asset management|asset management]]. A financier makes money through this process when his or her investment is paid back with interest,<ref name="Freixas">Xavier Freixas, Jean-Charles Rochet, ''Microeconomics of Banking'' (2008), p. 227.</ref> from part of the company's equity awarded to them as specified by the business deal, or a financier can generate income through [[Finance:Commission (remuneration)|commission]], performance, and management fees. A financier can also promote the success of a financed business by allowing the business to take advantage of the financier's reputation.<ref>{{cite book |first=Hans |last=Landström |title=Handbook of Research on Venture Capital |date=2007 |page=202 }}</ref> The more experienced and capable the financier is, the more the financier will be able to contribute to the success of the financed entity, and the greater reward the financier will reap.<ref>{{cite book |first=Edwin H. |last=Neave |title=Modern Financial Systems: Theory and Applications |date=2009 |page=8 }}</ref> The term, financier, is [[Social:French language|French]], and derives from ''[[Finance:Finance|finance]]'' or ''payment''.

Financier is someone who handles money. Certain financier avenues require degrees and licenses including venture capitalists, hedge fund managers, trust fund managers, accountants, [[Finance:Stockbroker|stockbroker]]s, financial advisors, or even public [[Finance:Treasurer|treasurer]]s. Personal investing on the other hand, has no requirements and is open to all using the [[Finance:Stock market|stock market]] or by word-of-mouth requests for money. A financier "will be a specialized financial intermediary in the sense that it has experience in [[Finance:Liquidation|liquidating]] the type of firm it is lending to".<ref name="Freixas" />

===Perceptions===
Economist [[Biography:Edmund Phelps|Edmund Phelps]] has argued that the financier plays a role in directing capital to investments that governments and social organizations are constrained from playing:

{{blockquote|[T]he pluralism of experience that the financiers bring to bear in their decisions gives a wide range of entrepreneurial ideas a chance for insightful evaluation. And, importantly, the financier and the entrepreneur do not need the state's or social partners' approval. Nor are they accountable later on to such social bodies if the project goes badly, not even to the financier's investors. So projects that would be too opaque and uncertain for the state or social partners to endorse can be undertaken.<ref>{{cite web |url=http://www.europainstitut.at/upload/publikationen/publikation_39.pdf |title=Dynamic Capitalism |first=Edmund S. |last=Phelps |publisher=Europa-Institut |date=October 10, 2006 }}</ref>}}

The concept of the financier has been distinguished from that of a mere capitalist based on the asserted higher level of judgment required of the financier.<ref>{{cite book |editor-first=Sterling |editor-last=Elliott |title=Good Roads: Devoted to the Construction and Maintenance of Roads |date=1896 |volume=24 |page=366 }}</ref> However, financiers have also been mocked for their perceived tendency to generate wealth at the expense of others, and without engaging in tangible labor. For example, humorist George Helgesen Fitch described the financier as "a man who can make two dollars grow for himself where one grew for someone else before".<ref>{{cite book |last=Fitch |first=George |title=Vest Pocket Essays |date=1916 |page=123 }}</ref>

==See also==
* {{annotated link|Finance:Accredited investor}}
* {{annotated link|Compound interest}}
* {{annotated link|Finance:Financial literacy}}
* {{annotated link|Finance:Institutional investor}}
* {{annotated link|Social:Investor–state dispute settlement}}
* {{annotated link|Finance:Growth capital}}
* {{annotated link|Finance:Model audit}}
* {{annotated link|Finance:Philanthrocapitalism}}
* {{annotated link|Finance:Securities offering}}
* {{annotated link|Social:Socially responsible investing}}
* {{annotated link|Time value of money}}

==Further reading==
* {{cite book |last=Josephson |first=Matthew |title=The Money Lords: The Great Finance Capitalists, 1925–1950 |location=New York |publisher=Weybright and Talley |date=1972 }}
* {{cite book |last1=Graham |first1=Benjamin |last2=Zweig |first2=Jason |date=February 21, 2006 |orig-date=1949 |title=The Intelligent Investor: The Definitive Book on Value Investing |edition=Revised |publisher=HarperCollins |isbn=0-06-055566-1 }}

==References==
{{Reflist}}

==External links==

{{Stock market}}

[[Category:Finance occupations]]
[[Category:Financial services occupations]]
[[Category:Investment funds]]

{{Sourceattribution|Investor}}