Question

Describe the major differences between individual and institutional investors.

Answer 1

An individual investor is an individual who is investing in the stock market.

The institutional investor is a mutual fund company, the insurance company, pension funds and banks or nay other such large institutes.

An institutional investor is a professional , who invests other people's money in the stock market. They trade in large quantities and they enjoy preferential treatment and lower fees.They are considers to be sophisticated investors and so they are subject to fewer regulations.

The retail/individual investor invests through brokerages or savings accounts and they can deal in large or small amounts.They have personal goals like retirement, education of children due to which they plan to invest in the market. The SEC considers retail investors unsophisticated investors, who are afforded certain protections and barred from making certain risky, complex investments.