How are Institutional Investors different from Individual Investors?

Institutional And Individual Investors

In the current digitized world, the old investing tools in the investment management industry are slowly diminishing due to the emergence of advanced technologies like AI helping both the individual and institutional investors to make accurate investment decisions.

The ability to understand the differences between individual and institutional investors in vital for novice players in the investment space to evaluate the strategies that are applied by them to generate maximum returns and achieve optimal market performance.

So, let’s understand this quickly.

An individual investor is a single, private person, who buys and sells equity, debt, or other kinds of investments by taking help of a broker, bank, and so on in order to generate returns.

In this way, such investors manage their own money and are driven by personal goals.

On the other hand, an institutional investor is an organization or a larger entity that takes the investment responsibility on behalf of its members. Such entities pools money for making investments.

Some popular types that qualify for institutional investors include pension funds, mutual funds, hedge funds, insurance companies, commercial banks, money managers, and commercial trusts.

Talking about differences, institutional investors certainly have advantages when it comes to negotiating better fees in investments and accessing investing that normal or individual investors can’t due to lack of resources.

However, if we compare both the investors on other aspects like the decision-making process, resource availability, taxes, cost, and benchmarking, then both faces certain pros and cons.

The investment decision-making process is often long and complex for institutional investors as the appointed investment team require to discuss everything with the overseeing committee, whereas individual investors enjoy a free ride when it comes to decision making.

Continuing with differences, institutional investors are levied with high taxes; thus efficient tax management is something that needs to be properly handled by institutional investors for providing maximum return to members.

In the case of individual investors, tax efficiency is a huge advantage, but as they grow in the investment space, it becomes complex for them too.

When it comes to operating costs, institutional investors due to their sheer size and resources can ask for lower fees from the banks and trading platform, unlike individual investors, who suffer due to lack of capital.

Resource availability like access to financial professionals is high for institutional investors due to economies of scale, whereas individual investors are in the water when it comes to having access to financial expertise.

However, recent technology advancements like Robo-advisory, in the investment space have opened up ways for individual investors to maximize their returns and improve market performance.

For institutional investors too, technology solutions have been a blessing in terms of better assessment of the portfolio, and market risk and conditions.

For example, DCI Ecosystem in the investment industry is helping both the individuals and institutional investors in terms of having a 360-degree of their overall investment portfolio and optimizing it properly.

DCI is a finance preferred eco-system that leverages advanced technologies like Artificial Intelligence (AI), ML, DLT, and Robo-advisory for helping investors in portfolio creation, optimization, and management by offering calculated investment advice and information of share market trends.

The other features of DCI that make it a go-to-choice of both traditional investors include cross-chain transaction capability, third-party API support, portfolio risk-rating & assessment, and multi-currency wallet facility.

How can Technology help with the issues of Investing In Today’s World?

investing problem technology

In past years, the statement like “buy low and sell high” was a common metaphor that was generally used by the investors while buying or selling assets. The “buy low and sell high” principle is true in every sense, but the investing mechanisms have changed now and became a bit more complicated in the modern world.

Why are we saying this? Let’s understand it briefly.

In the modern world, with the technological advancements in the finance sector, managing the speed and large volume of investment related data is a major challenge for investors. Earlier limited number of finance-related publications were available like the Wall Street Journal, who was trustworthy in terms of making investment decisions.

Now, obscure sources publish a whole bunch of financial information, i.e., stock announcements, currency fluctuation news, which lets information flood in troubling investors in terms of picking the important financial data.

Talking more about modern investment difficulties, finding the right information source or filtering irrelevant information is also a challenging task for investors. It is important for investors to figure out a pool of reliable sources that match their investing taste to avoid any ambiguity while making investment decisions.

Continuing with the investment difficulty, the reactionary market that becomes hyperactive after receiving inaccurate financial information or uncertainty due to honest mistakes, malicious rumours or even financial fraud is somewhat a challenge for investors in terms of keeping their composure and making false investment decisions.

In the emerging cryptocurrency investment space, the situation is more or less similar. It is now becoming extremely difficult for the crypto investors to figure out a suitable exchange for trading of digitized assets due to the availability of a vast amount of crypto-investment related information, which mostly confuses them while making investment decisions.

Advertisement in the financial space is also a double edge sword for the investors. At one end, it familiarizes investors with a variety of investment vehicles, but on the other hand, it can also misguide them leading to the selection of wrong investment platforms.

Further, a vast array of investment choices is offered to investors in the financial world, which often lead investors leaving out better options in an attempt to shrink down their options to choose among the few choices.

For instance, a variety of blockchain technology-based investment platforms are now available in the crypto space, helping investors to overcome the challenges of the traditional financial market. But, some of the investors generally fail to choose a suitable platform due to misguided advertisements or lack of information related to cryptocurrency.

Therefore, it is important for the investors in the crypto space to choose a platform which is simple, safe, secure, transparent and utilizes advanced technologies like AI for offering investment assistance.

For instance, DCI Ecosystem is one such upcoming finance preferred ecosystem that aims to overcome the problems of the existing financial market by integrating advanced technologies like Artificial Intelligence (AI), ML, Robo-advisory and Distributed Ledger Technology (DLT) or simply blockchain to provide a trustworthy and transparent financial ecosystem to investors. DCI, unlike other blockchain platforms, allows the investors offers 360-view of the investment portfolio, cross -chain transaction capability, Robo-advisory, and risk assessment & rating services.

In this way, DCI minimizes the investing challenges that are faced by investors in the modern world by offering calculated investment advice and support.

So from the overall decision, it can be concluded that investors in the past like Warren Buffett has achieved tremendous success in the financial world by relying on traditional methods of investing while shutting their doors against the modern world. The golden trick here for investors in the modern day is to figure out a right balance while analysing the financial information and taking it for action. Voila!!

What is Cross Asset Investment Ecosystem?

Cross Asset Investment Ecosystem

Global Economy has undergone a tectonic shift since the last US Presidential Elections. This has been further escalated by rising geopolitical tensions which are equally reflected in Global trade and economy policies. The prime weapons of trade war have been unleashed and terms like ‘Tariffs’ and ‘Economic Sanctions’ have entered mainstream vocabulary. Unlike previous years, today the principles of free trade are being revisited for significant updates.

The investment landscape will also be affected significantly from this global economic policy reshuffle. Amidst the escalating tension, global investment strategies are bound to take a more prudent minimum-risk approach that not only offers sustainable profit returns but also absorbs the immediate after-effects of any unforeseen market downturns in future. This makes Cross Asset Investment strategy both a safety net and a long term fishnet for investors.

Of Late with rapidly changing geopolitical trade relationships, multiple-asset class or multi-asset funds have enjoyed investor confidence. A major reason for this can be attributed to the explosion in the numbers of the global middle class which has enjoyed a stable increase in its income. This increase has opened opportunities unseen before them. But despite the increase in income, middle class still adheres to its principal of choosing longterm security over promises of immediate short term capital gains. This has resulted in a demand for an investment solution that appeals both to the pockets and security needs of these set of people.

The DCI Ecosystem

DCI offers a blockchain powered comprehensive investment solution which is accessible to one and all. It puts into place a Cross Asset Investment Ecosystem that benefits all participants irrespective of their investment size and scale. Its key features include:

  • Using Artificial Intelligence Tools to design a robust and optimized multi-asset investment portfolio for platform users.
  • Robotic Advisory for analyzing and evaluating investment risks.
  • Single Point Access to classical and digital asset classes i.e facilitating investments in traditional stocks, funds as well as in new-age digital adssets like Tokens etc.

Nervecentre of the DCI Solution is its distributed digital ledger that enables investors and token owners to have one-click access to all information on investment executed via the platform. Further cross-chain or seamless compatibility with other blockchain ecosystems enable investors to trade token on other exchanges/blockchains.

Traditional investment platforms have been time and again found guilty of incepting hyper-expectations among investors forcing them on an investment overdrive. The DCI Ecosystem with its Cross Asset Investment Strategy fosters trust-less 360 Degree investment practices that sponsor piggy bank investment strategy over the typical slingshot investment moves.