An investor is somebody who allocates funds to benefit an asset and/or to earn a certain advantage from it, most times in the form of profit. In today’s real estate market, an investor can be anybody; it could be a wealthy individual who wants to diversify his portfolio. Usually, the investor purchases some specific species of real estate for a certain amount of money, then invests that money in many other assets, like foreclosed homes or corporate properties, etc. For this reason, most times the potential investor hires an investment management firm, which provides him with expert advice. Some of these firms provide the services of real estate attorneys, or even financial planners to help the investor in taking the right business decisions. See post
How Can I Find the Right Investor For My Business Needs?
Other times an investor might be an individual who has just decided to become an investor, such as a college student who plans to invest in stocks, bonds, real estate, or other assets to build up a portfolio over time. Whatever the case, an investor is an individual who looks at the big picture, meaning he or she looks at the long term effects of his investment decisions rather than the immediate short-term effects. However, with all types of investments, there are also risks to consider. Therefore, before making an investment decision, an investor needs to understand that risk can be managed through adequate knowledge of stock markets, investment types (i.e., safety versus reward), and strategies (i.e., use of leverage, and whether the investment is tax-deferred).
Some investors also hire a broker, who is not a licensed dealer, but instead serves as an intermediary between the investor and the seller or maker of the security or asset being traded. This broker serves as a connection between the investor and the seller so that the investor can be informed about the current price of the security being traded, as well as the future price movements. The most common types of brokerage firms include independent agents, hedge funds, and self-directed investors. An investor needs to carefully consider all these factors when deciding whether or not to hire a particular broker, and also when deciding where to buy and sell his or her stocks and bonds.