What is capital accumulation?
capital accumulation is the process of purchasing or otherwise obtaining more assets than needed for usual operations and which have the opportunity to appreciate the value over time. This general idea can be used to create a stock portfolio for the general activity of household or business. The accumulation of capital provides convenience to the ability to effectively manage everyday expenses while creating a bank of resources that can be called for unexpected expenses.
Investors can use the allocation of capital by gradual acquisition of other shares. With this model, the idea is to obtain these shares using profits from other investments. The actual purchase of shares is for a certain period of time, which allows the investor to make purchases in smaller land, and therefore does not start the answer from other investors who then control the unit price up because they are trying to buy any currently available stock. Ov time, this strategy allows the investor to collect a significant percentage of the shares issued and thus create a solid freezing for a long timeJ Revenue.
Businesses are involved in capital accumulation using part of their profits to purchase capital. This may include the purchase of real estate or other assets that have adequate expectations of appreciating value over the years. These purchases can also focus on the future expansion plans of the company and eventually allow you to move forward with these plans with minimal load. For example, if the company uses some of its profits to buy a land tract, later on this soil builds a device, the cost of starting for this new device will be reduced. At the same time, the now developed land is likely to appreciate value, which only helps to increase the total net assets of the and provides other resources to assist in the ongoing process of capital accumulation.
Even for individuals, the concept of capital accumulation is useful. Households may decide to buy a weekend house and pay for a house from an income that is not sweatto manage all other household expenditure. Over the years, the main residences and weekend home appreciate value. When the house owner leaves, he can sell primary residence or weekend home, usually with considerable profit, and use these resources for a comfortable life. If there is an emergency situation over the years, one of the properties may be sold, so the homeowner will leave the house instead of life and resource to restart an accumulation capital investment.