Capital Growth
Categories: Investing, Managed Funds, Index Funds
When capital (that stuff you invest)...grows. And it doesn't on trees. Unless you're a professional walnut grower. Or a wizard.
Why is this term even a Thing? Because invested capital comes in many flavors. That is, capital can grow simply in the form of reinvested interest payments in bonds. Like...a bond pays 7 percent, and that interest gets loaned out to more hungry cash eaters and, over time, that bond portfolio throws off massive amounts of cash.
Think about dividend reinvestment in the same zone. A stock pays a 4.5% divvy, and that divvy goes to buy more shares of that stock...so it then grows at an increasingly large-based-compounding nut.
Capital can also grow in the form of, say, real estate. You buy a building. All of its "throw" from its rent and usurous parking fees goes to pay off the loans on the building, maintenance, and insurance...yet over the 25 years you owned that building, its asset grew massively. and the capital you initially put into it...did too.
