The importance of investing is repeated over and over again, but who is eligible to invest? Can anyone invest in anything? Not quite, but at the same time, the world of investing has never been easier to access. Depending on the type of investor you are will determine which products are available to you.
In the world of investing, certain restrictions and requirements are in place to protect those without the knowledge or accreditation from investing in products that are considered high risk. Specific restrictions will vary depending on the country. These restrictions are in place to protect and safeguard individuals, or more commonly referred to as retail investors. The European Securities and Markets Authority (ESMA) and other regulatory bodies are “committed to a high level of harmonized protection for investors by ensuring good conduct from firms that sell or advise consumers to buy financial instruments.”
These policies are typically put into place by regulators in the interest of protecting the general public from making uninformed investments and putting their money at risk. Agencies are always looking to broaden their oversight as new methods of investing become popular, such as real estate crowdfunding. For example, in the European Union, new regulations on investment activity related to crowdfunding go into effect at the end of 2021.
Generally, investors can be divided into two types: retail and institutional. When it comes to unlisted financial products and alternative investments such as real estate crowdfunding though, the third type of classification is needed: accredited investors. This is due to the structure of the investments and the regulations in place around them.
Continue reading to learn more about the differences between retail, accredited, and institutional investor classifications and their definitions.
Retail
Retail investors are non-professional investors who do not need certification, prior experience, or who do not need to meet any specific requirements to invest. They typically have much less money to invest and therefore invest smaller quantities than accredited or institutional investors.
Retail investors are the smallest part of the financial world, but they are not inconsequential. Retail investors are being given more access and freedom than ever before as investing becomes more and more popular. Platforms such as Robinhood have given retail investors direct access to investing in an easy and attainable way, unshackling thousands from the constraints and fees of typical brokerages.
In real estate crowdfunding, retail investors can begin investing in real estate on dozens of platforms all across the world, with amounts starting as low as €100.
To read more about what type of investor you are, read the full article at Brikkapp.com here: https://brikkapp.com/learn/what-type-of-investor