Money saves in the bank or under the pillow which is not using urgently, can be a seed capital and potentially to grow. In business, seed capital is the initial equity capital used to start a new business or venture. The starting capital of a business is a seed being plant.
Give you an example. If the seed capital is $100, the business grows by 10% annually, after one year the capital grow from $100 to $110. In simple words, it is similar to your money put in the bank with the interest rate. If the initial saving is $100, the interest rate is 4% annually, after one year the saving grow from $100 to $104.
Global inflation is about 7.5% for the latest record. If the saving in bank is 4% for the fix deposit, this year the net capital is shrinking by 3.5%. This is why investors or company seldom put their money in bank. They do investment.
Besides putting money in the bank to get interest rate, investment of the capital can be either properties or equities. Properties can be free hold or lease hold land, house, apartment, condominium, office, factory, and warehouse etc. Equities can be mutual fund or unit trust, share, debenture, bonds, loan and derivative etc. Both of them have their similarities and differences. Before choosing the investment tools, better study and understand their advantages and disadvantages of each of them. This is because knowing little of knowledge can be kill by the market.
Give you an example. If the seed capital is $100, the business grows by 10% annually, after one year the capital grow from $100 to $110. In simple words, it is similar to your money put in the bank with the interest rate. If the initial saving is $100, the interest rate is 4% annually, after one year the saving grow from $100 to $104.
Global inflation is about 7.5% for the latest record. If the saving in bank is 4% for the fix deposit, this year the net capital is shrinking by 3.5%. This is why investors or company seldom put their money in bank. They do investment.
Besides putting money in the bank to get interest rate, investment of the capital can be either properties or equities. Properties can be free hold or lease hold land, house, apartment, condominium, office, factory, and warehouse etc. Equities can be mutual fund or unit trust, share, debenture, bonds, loan and derivative etc. Both of them have their similarities and differences. Before choosing the investment tools, better study and understand their advantages and disadvantages of each of them. This is because knowing little of knowledge can be kill by the market.
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