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Investing 101: A Primer for MBA Grads and Beginners

To quote the legendary investor Warren Buffet, investing is, “the process of laying out money now in the expectation of earning money in the future.” Investors use funds that are either their own or their clients’ to buy assets with the potential to grow in value over time. With investing, there is always the risk of losing money. However, this process will ideally create more money for the investor and their clients. The most common way to invest is to buy stocks, bonds or real estate, all of which can both appreciate in value and produce income.

It is common for working professionals to expand their investing knowledge while earning a Master of Business Administration. By choosing appropriate coursework, you can become familiar with the world of investing even as you identify the career path that is right for you.

What Are the 3 Types of Investors?

The three main types of investors are individual investors, portfolio managers and securities analysts. Ultimately, the right path for you will depend on your financial/life goals, skills and personality type.

  1. Individual investors work with their own money.

An individual investor is someone who invests their own savings in their free time. Most often, this person is not a professional investor. They also usually work full time in an industry not related to investing. For individual investors, managing their portfolios is more of a hobby. They invest their money as a way to build personal wealth and reach their financial goals.

The types of tools an individual investor has access to are limited only by their budget. These days, plenty of free investment apps can get the job done. A few of the most common platforms are Webull, Robinhood, and SoFi Invest.

  1. Portfolio managers invest money for others.

A portfolio manager serves in a professional capacity. The number of clients and assets varies greatly depending on the manager. However, portfolio managers are held to much stricter requirements than individual investors. In exchange for their services, portfolio managers charge a fee that is generally a small percentage of the portfolio’s total assets under management (usually around 1%).

Since they are full-time investors, portfolio managers tend to have access to more sophisticated tools such as Bloomberg terminals. They also usually use more complex investment strategies that involve stock options, futures, shorting and more.

  1. Securities analysts provide investing advice.

A securities analyst doesn’t necessarily invest money. Instead, they make a living by providing investment recommendations to clients. Securities analysts’ opinions can become very widespread since those opinions are commonly shared on TV or syndicated in the financial media. Analysts are therefore required to disclose whether they own an investment before recommending it.

Becoming a securities analyst typically requires a bachelor’s degree in a relevant subject like economics, finance or accounting. If your job requires you to sell securities, you may eventually need to become licensed as well, often with sponsorship from your employer.

Different Investors, Same Goal

Each of the above types of investors has different responsibilities. However, their end goal is ultimately the same. Through one strategy or another, they want to analyze investments and earn a profit. But, since the day-to-day lives of these investors are quite different, it’s important to pick the type that is the best fit for your personality.

Although it’s common to pursue an MBA after gaining some work experience, it can be beneficial for some to enroll in such a program or similar type of higher education directly after college. Doing so can help you establish your credibility upon graduating, unlock career opportunities that would otherwise be unavailable and save you from starting down the wrong career path.

In particular, the University of Illinois Springfield offers a fully online MBA program, with FIN 505: Investments being one of several electives that students can take. This course offers insight into the timing, instruments and choices available to investors and helps you gain an understanding of current market regulations and investor safeguards. Students interested in taking FIN 505 must complete the prerequisite FIN 502.

A detailed understanding of today’s investment landscape can help you make well-informed decisions about your own life and career. Regardless of the career path you end up choosing, pursuit of a program like the UIS online MBA can help you position yourself as a top candidate in the job market.

Learn more about the University of Illinois Springfield’s online MBA program.

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