Capital investment refers to a “invested” funds or the amount of money used in a business operation or in an investing activity. Without capital, an individual can’t start a business nor even invest in any types of instruments. When an individual release a capital investment, he expect a return or an income generated by the things or assets he bought or acquired.
In investing in the stock market, mutual funds, bonds and unit investment trust funds, the capital refers to the money used when purchasing a unit or shares.
Related: Total Investment Meaning and Definition
Importance of Capital Investment
It is important to know your total investment to easily track your return. Whenever you used money aside from you initial investment, you must know the total money invested. Mostly, the total investment can easily be calculated by just analyzing your expenses for your business operation.
Capital investment can be calculated easily by analyzing the expenses. If for example, an entrepreneur will buy a new equipment for his business expansion.
Capital Investment Sample Calculation
Maybe you will ask; what types of purchases would be considered capital investments? Assuming an entrepreneur wants to start his own bakery business;
- Oven: $3,000
- Baking Tools and Materials: $2,000
- Store Set Up: $10,000.00
- Other: $500
Use Capital Investment in a Sentence
- The required investment capital for that business franchise is $200,000.00 (two hundred thousand dollars).
- Even if you only have small investment capital, you can start your own business.
- For as low as $100 as your investment capital, you can open a stock brokerage account online and start buying stock shares.
Capital simply means the “wealth in the form of money or other assets owned by a person or organization or available or contributed for a particular purpose such as stating a company or investing”. It also refers as money, finances, wherewithal, means, assets, wealth, resources, investment.
Related: What is Capital Gains?
The Investors Capital
The capital loss simply means the investor didn’t make any money out of his investment, instead he lose money. The investors capital should always be protected against any loss.
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