Definition of Capital

To an economist, capital refers to machinery, inventory and factories required to produce products. But, for an investor, capital can refer to their handheld cash and the financial assets which they have invested in market securities, home, or any other fixed assets.

Raising capital or capital investment in projects is a commonly heard term. The type of capital that is involved defines how a capital good is maintained or is returned to its pre-production state.

Points to remember

• There are multiple types of capitals - such as financial capital, natural capital, social capital, instructional capital, and human capital.
• As an investor you would be more interested in financial capital.