Understanding Capital Investment

Capital investments refer to any large or valuable assets that are acquired and used to make financial gains. To invest is to put money into an investment with the intention of either a direct benefit/ return in future or a guarantee for some sort of income in the near future. Simply put, to invest simply means to acquire or own an asset with the intention of producing an income or an advantage from the investment through the appreciation or increase of the value of that asset over a given period of time. This may be done by owning a property, investing in a business or buying shares in a company.

There are several different types of capital investments. Some common ones include fixed deposits, bonds, mutual funds, stocks and property. Some companies and individuals also purchase retained earnings from businesses and release them as capital gains. Residuals such as retained earnings are not liquidated but may be sold for tax relief purposes. Another common type of capital investment is in machinery, equipment or plant that have the potential to produce cash flows for years to come.

Some of the most common forms of capital investments include stocks, equities, derivatives, mortgages, commercial real estate loans and repossessed property. All of these can be purchased from a variety of sources at varying interest rates. These investments are considered long term and therefore, should be made with careful planning. When considering an investment in any one of these assets, it is important to identify the type of security that will provide the greatest degree of safety and should be able to offer the expected return on your initial investment. Most financial institutions offer a variety of financial vehicles through their portfolio, so you should not have much difficulty in finding the perfect financial instrument to meet your needs.