Retail Investor

Retail investors are ordinary people saving and investing for goals such as retirement, education or buying a home. They typically buy shares, bonds, mutual funds and exchange-traded funds through online brokers, banks, financial advisers or workplace pension plans.

Compared with institutional investors, retail investors usually invest smaller sums, have less access to professional research and may pay higher costs per trade. However, technology has narrowed the gap, with low-cost index funds, commission-free trading and robo-advisors making investing more accessible.

For example, a teacher contributing 300 a month to a pension and holding a few index funds in a personal account is a retail investor.

Retail investors receive greater regulatory protection than professional investors. Rules typically require clear disclosure of fees and risks, restrict the sale of complex products and require advisers to consider suitability.

Retail investors can sometimes influence markets collectively, as when large numbers coordinate through social media to buy particular shares. They can also be more prone to behavioural biases, such as chasing recent performance or selling in panic during market falls, which can harm long-term returns.