The Definition of Capital

Basic ideas about capital..............

The added value that is charged while selling the product is called as the profit or the capital.


All important facts you should know about capitals


All people on this earth need to do some work for their survival. Now a day, for a better living and for maintaining the social standard, survival is not the only means for which people earns. There are also another reason for which people wants to earn something extra. It is to build up assets and leave something for the future generation. Money is not important for only securing your survival. It is also important for you to assist in acquisition of some properties or assets. People also call these properties as capitals. Various financial expertises have provided definition of this capital. Some even went on giving up theories on these capitals. This discussion will be focused on the kind of loans that helps people to build up capitals or assist in acquisition of capitals in the form of properties or assets. Before going to that discussion, let's get to know about the various forms of definition of the capital.

The definition of capital:

The financial experts have defined capital in various forms. Some forms of definitions are given below:

Capital in the form of business investments:

Some people define capital as the amount of investment that is invested in business projects or in industries for increasing production and for the maximization of profit. In other words, the amount of money that are used to start up a business or for investing up in a business initiative or business project to increase the process of production and thus to increase the profit making procedure is called as capitals. In most cases, the financial experts call them as business capitals.

Capital in the forms of business profits:

In some cases, the outstanding profit that remains after the total spending of the production of a means is called as capitals. In a business project, you need to invest some amount of money as investments. You invest the money for production of any means or service. Now, the service or products are used to be sold in the market with an added price that would ensure the profit of the owner as the selling price would be more than the production cost.

Capitals in the form of outstanding amount of earning after assuring all means of consumption:

There are other financial experts who calls capitals as the outstanding amount of money or assets that remains to people even after the assurance of their daily expenditure or survival. In these cases, the capital might mean a savings deposit, a property like a house or cars or jewelry etc. the capitals are simply the assets or properties of deposit amounts of people that remains after completing their regular expenditure and that does not gets liquidated regularly for the daily expenditures of the people.

Capital meaning as the money provided by lenders towards the borrowers:

In the lending market, the capital gets another definition and it is the amount that is lent by the lenders towards the borrowers. for example: if you have asked for a $10,000 amount of loans, then the lenders would provide you the same amount as loan if you get qualified for the loan. Though while repaying the loan, you will not repay the exact amount of $10,000. Rather you will pay an amount that would come with added loan fees and interest rates with the actual amount of $10,000, which was provided by the lender. In the loan market, this actual amount of money or the amount of $10,000 is understood as the capital of a loan. You can also define in the way like, in a loan the outstanding amount that is obtained by the borrower or the actual amount agreed to be provided by the lenders are called as the capital.

Why people does property acquisition:

In this discussion, the definition of capital that explains the acquisition of properties after maintaining the daily expenditure of an individual would be used. The acquisition of properties is needed for various reasons.

It ensures the future money back up:

First of all, the acquisition of properties secures the future life of the individual. If any kind of emergency arrives, the individual will be able to liquidate the properties and thus use the money to cover up the emergencies. The property acquisition of the capital maximizations makes people rich and thus improves their status in the society, at the same time the property acquisition increment will improve the regular lifestyle of the individuals as well.

It can help up in more profit maximization or capital acquisition:

Secondly, the assets are not idle things. At least, not all properties are idle assets. Some properties are used for acquisition of more money or capital. Thus, when you acquire properties, it ensures your maximization of income. For example: if you have a saving deposit, you will be able to invest it for a new business venture or for buying shares in the stock exchange market. If you invest it in any new business project, then the investing money will be used to producing any means or service. This product of the service will be sold in the market and it would bring more money towards your account. Thus, when you use capitals to invest in the business in creates the opportunity of profit maximization.

The same things happen when you invest your asset capitals. For example: suppose you have two houses. Now, among these two houses, you use one house for you and your living. Since this house is being used for consumption, this house will not be defined as the capital house. Though by some economists, it would be granted as a capital as if you did not own this house, then you had to rent a place or you had to make some expenditure every month or after a periodical time to manage your living. This amount is saved by your acquisition of a house and uses it for living. That is why; this house is also defined as capital to some economists, but not all of them. However, the second house can be used for renting towards other people. When you rent the second house you own and maximize your regular income with the rent paid by the tenants, then this second house is called as capitals.

It helps to transform the liquid money in to solid assets and also some property for the future generation:

Third, if you spend all the money, then you have nothing left to use in your emergencies or you cannot leave anything for your future generation. On the other hand, money is too liquid to keep on acquisition of these forms of capitals. If someone wants to transform the money into properties and keep the money for a long time, then he or she acquires properties with the money and thus ensures the longevity of the turnover of the outstanding balance of regular earning and also ensures that he or she will be able to leave some property for his or her future generation. That is why, acquisition of properties is considered as so important for the people.

It helps to obtain cheap loans:

Last but not the least, the real estate properties are also used for obtaining third party assistance for capital acquisition when an individual needs to make an expenditure that is not covered by his or her regular expenditure. When you see that you need to make a transaction or a purchase of products that is much bigger than your regular income or you cannot afford to make the purchase on your own with your income scale, then you need third party money assistance to ensure the transaction. Loans are the third party money assurance for you to ensure the transaction. Now, there are two types of loans, provided by the lenders.

One of them is the unsecured loans, and the second is the secured loans. Secured loans are kind of loans that are provided towards the borrowers in exchange of collateral towards the lenders. That means that by taking the loan, you keep collateral towards the lenders or you provide the authority of one of your properties towards the lenders. Through using the authority, the money lenders will be able to liquidate the property, if a borrower fails to repay the loans. The secured loans provide the repayment guarantee of the money provided by the money lenders. That is why the secured loans are less expensive for the borrowers than the unsecured loans. One can use the house, other real estate properties, cars or jewelry to keep as collaterals towards the lenders. In other word, one can use outstanding capitals to acquire such kind of loans.

Sidebar Menu


Content Heading

  • All important facts you should know about capitals
  • The definition of capital
  • Capital in the form of business investments
  • Capital in the forms of business profits
  • Capitals in the form of outstanding amount of earning after assuring all means of consumption
  • Capital meaning as the money provided by lenders towards the borrowers
  • Why people does property acquisition
  • It ensures the future money back up
  • It can help up in more profit maximization or capital acquisition
  • It helps to transform the liquid money in to solid assets and also some property for the future generation
  • It helps to obtain cheap loans