Understanding the Role of an Investor An investor is an individual or entity that allocates capital with the expectation of a financial return. Investors play a critical role in the economy by funding businesses, real estate, stocks, bonds, and other assets, driving innovation and growth. The primary goal of an investor is to generate profit, either through capital appreciation (the increase in the value of an asset over time) or income (such as dividends or interest). investor Types of Investors There are various types of investors, including individual investors, who manage their own money, and institutional investors, like mutual funds, pension funds, and insurance companies, which pool money from many individuals to invest on a larger scale. Investors can also be categorized as active or passive. Active investors frequently buy and sell assets to capitalize on short-term market movements, while passive investors take a long-term approach, focusing on steady growth. Risk and R...