A retail investor or private investor is a person or entity which invests their own capital for their own profit. This sets retail investors apart from institutional investors – which invest capital on behalf of third parties.
Some stock exchanges cater directly to retail investors, but most exchanges require that trades be made by participating brokers on behalf of retail and institutional investors.
The term is also used to denote private investors who invest relatively small amounts of money or engage in relatively few investments. In Switzerland, a clear legal distinction is made between retail investors and institutional investors. Retail investors are not required to pay capital gains tax, while institutional investors are taxed on their capital gains.