Investor definition

An investor is a person, company, or institution that commits money to an asset, business, or fund in the expectation of earning a return. Investors range from individuals to pension funds, mutual funds, and other large institutions.

An investor usually aims for capital growth, income, wealth preservation, or diversification, and spreads money across assets such as shares, bonds, funds, property, or commodities. Returns can come from rising asset prices, from income such as dividends or interest, or from both.

An investor is not the same as a trader. An investor usually holds for the longer term and weighs fundamental value, income, and long-run performance, while a trader concentrates on shorter-term price moves and market timing. The same person can do both, but the time horizon and the basis for each decision are what separate the two roles.

Investor Example

You buy 100 shares of a company at USD 50 per share.

The total investment is:

100 shares √ó USD 50 = USD 5,000

If the share price rises to USD 60, your holding is worth USD 6,000, an unrealised gain of USD 1,000.