Types of Capital Investment

Capital Investment simply put, is the process of creating and building wealth. Now, in simple terms this is equated to saving money. To save is to invest money into an entity with the intent of getting a return/profit in the future. Simply put, to save is to put your money into an investment vehicle with the intent of making a profit from that investment or the accumulation of your future return/profit. This is basically how the stock market works.

When you are talking about capital investment, there are two types of investments that one can make. One type of capital investment that one can make is through the purchase of long-term assets. These assets are generally used to produce goods and services that will be using for decades to come and will not be used in everyday business operations. Some examples of long-term assets that you could invest your capital into our fixed assets such as machinery, utilities, inventory, furniture, inventory and other fixed assets like plant and equipment. Another type of capital investment that one could make is through the purchase of short-term assets.

These assets generally will not be used for production on a daily basis but will be used during times of economic growth. Examples of short term fixed assets that one could invest capital into would be inventory, raw materials, machinery, trucks and other vehicles and machinery. With regards to fixed assets, there are many different types to choose from. Some examples of fixed assets include warehouses, plant and equipment, property and real estate, residential and commercial real estate, and infrastructure. Obviously capital investment in any of these areas will provide a return/profit in the long-term and will also provide security to your company during volatile economic times. Capital investment in any of these areas is considered a long-term investment and should be considered carefully when making investments.