What does the term ‘retail investor’ refer to?

The term 'retail investor' specifically refers to an individual investor who purchases securities for their personal account. This type of investor typically operates in the stock market or other investment markets with their own funds rather than on behalf of institutional investors or other clients. Retail investors are key participants in the financial markets, and their activities can range from investing in stocks and bonds to investing in mutual funds or ETFs for personal financial goals, such as retirement. This distinction is essential because retail investors usually have different regulations, access to information, and investment strategies compared to institutional investors, who handle larger amounts of capital and may engage in different types of trading strategies and activities. Understanding this concept is vital for grasping the dynamics of the investment landscape and the various categories of investors within it.