Institutional investors are organizations that have huge amounts of money available and invest it in businesses, bonds, stocks, real estate and other assets. Institutional investors differ from retail investors as they have different needs and goals. Individual investors usually invest to increase their income or build wealth for the future. Institutional investors, on the other hand, invest to fulfill their clients' goals, such as providing insurance, funding pensions or managing funds.
The most common types of institutional investors are:
- Banks: Banks invest their customers' funds in various investments, such as bonds, stocks and real estate.
- Insurance companies: Insurance companies invest the funds they collect from the insurance they sell. These funds are used to pay policyholders' claims, but also to build wealth for the company's future.
- Pension funds: Pension funds invest the funds they collect from employee contributions. These funds are used to pay workers' pensions when they retire.
- Hedge funds: Hedge funds are investment schemes that use more complex investment strategies, such as taking on more risk to achieve higher returns.
- Mutual fund companies: Mutual fund companies pool money from many investors and invest it in a wide range of assets.
Institutional investors play an important role in the economy. Their investments contribute to the development of businesses and the provision of jobs. In addition, institutional investors contribute to the stability of the markets, as their investments are usually large and long-term.
