The investment phases typically include the planning phase, the accumulation phase, the distribution phase, and the legacy phase. Most of the cash inflows into the investment pool happen during the accumulation phase.

When budgeting, businesses of all kinds typically focus on three types of capital: working capital, equity capital, and debt capital.

14 Examples of Capital Investment

• Land & Buildings. The purchase of land and buildings for your business.
• Construction. Any costs that go into constructing a building or structure is a capital investment.
• Landscaping.
• Improvements.
• Furniture & Fixtures.
• Infrastructure.
• Machines.
• Computing.

A capital investment is defined as a sum of cash acquired by a company to pursue its objectives, such as continuing or growing operations. A capital investment can be made via several sources including using cash on hand, selling other assets, or raising capital through the issuance of debt or equity.

Step One: Put-and-Take Account. This is the first savings you should establish when you begin making money.

The capital investment cycle starts during the annual planning process and ends with the project closeout and post implementation review.

As we mentioned above, two types of investors invest capital into companies: creditors (“loaners”) and shareholders (“owners”). Creditors provide a company with debt capital, and shareholders provide a company with equity capital.

Capital reduction is the process of decreasing a company’s shareholder equity through share cancellations and share repurchases, also known as share buybacks. The reduction of capital is done by companies for numerous reasons, including increasing shareholder value and producing a more efficient capital structure.

Capital is an asset that is used to produce goods and services. Financial or investment capital is the money used to purchase the needed capital goods. Sources of investment capital can be grouped into debt and equity. Debt includes bank loans and corporate bonds.

Five basic investment concepts that you should know

• Risk and return. Return and risk always go together.
• Risk diversification. Any investment involves risk.
• Dollar-cost averaging. This is a long-term strategy.
• Compound Interest.
• Inflation.