capital
Capital is money put to work, whether it funds a business, buys an asset or produces more money than it started with.
In plain English
Money in your pocket is money. Money doing a job is capital.
The distinction sounds academic and it changes how you see everything. The ₦2 million sitting in a current account is money. The same ₦2 million buying stock for a shop, funding equipment, or purchasing shares in a company is capital, because it has been given work to do and it is expected to come back with more.
Every business runs on it. Somebody put money in before any of it existed. Sometimes that is the founder's savings, which is called bootstrapping. Sometimes it is an investor's money in exchange for ownership, which is equity. Sometimes it is borrowed, which is debt. Each has a different price and a different cost, and choosing badly between them is how founders lose companies.
For an individual, the question is much simpler and rarely asked. How much of your money is currently working, and how much is sitting? Money that sits does not stay still, because inflation walks it backwards while you are not looking.
Wealth is not accumulated money. It is money that has been sent to work and never called back.
You have ₦3 million. Left in a savings account it is money, and inflation quietly reduces what it can buy. Put into stock for a business that turns it over three times a year, or into a fund, it is capital, and it has a job.
Questions people ask
What is the difference between capital and cash?
Cash is simply money you hold. Capital is money deployed with the expectation of a return. The same naira can be either, depending entirely on what you do with it.
What is working capital?
The money a business needs to run day to day, covering stock, staff and bills before customers have paid. Businesses fail from a lack of it while being perfectly profitable.
Is debt capital?
Yes. Borrowed money put to work is still capital, it simply comes with a repayment schedule and a price attached.
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