What Is Capital Market And How Is It Different From Money Market

Capital Market

It is the market where long-term funds such as securities issues of government and business are traded between demanders and suppliers through securities exchanges.         The main securities traded are bonds and stocks. Bonds are long-term debt securities issued to raise funds across various sections of investors. Stocks include both common stocks and preferred stocks offered as equity or ownership rights.

Bonds issued by businesses known as corporate bonds follow a semi-annual mode of interest payment to the investors at a predefined coupon interest rate.

When an investor purchases a common stock, he gets an equal unit of ownership in the company. The stockholders get their returns from the company or corporation in the form of dividends as per the dividend policy of the issuer. The key is that the share price should increase and thereby the cash flow.

Preferred stocks get priority in the payments over common stocks and the stakeholders of preferred stocks get dividend periodically prior to the common stockholders.

Bonds are issued for a large span of time, for example, 20 or 30 years and have a face value at the time of initial maturity.

Both are markets and both of them deal with money. Then, how are they different? Money Market and Capital Market are different in terms of the type of money involved, the purpose of money-handling, the securities rotating, mode of operation and the duration.


Vs Money Market

The money under limelight here are the funds operated through short-term financing. These include bank loans, debt finances, commercial papers, US treasury bills, certificates of deposits etc. Unlike capital market, the debt securities in money market have a maturity period of one year or lesser and are offered by a lot of variety of businesses, governments, agencies, financial institutions, individuals etc.

While traders use capital market for long-term funding, they enter money market to make some quick money or temporary funding as well as to extract some interest or earnings on currently idle funds. These debt-funding instruments do not give any ownership rights to the buyer.

The operation of the money market is carried out either through stock brokerage firms or directly between sellers and purchasers in rapid transactions. Since the rotation rate is faster than the capital market, it is easier to identify any frauds like Crypto Code scam, whereas the long maturity years of capital market securities do not show this trend.

Both the markets allow securities to be resold before the maturity period, with different terms and conditions and value change.


5 Habits To Attain Financial Freedom

Although this technologically growing 2018 might provide you with too many opportunities to grow your income to attain the much-needed financial freedom, not without following these 5 habits the desired result is achievable and therefore, do start practicing them from right today to soon achieve the financial freedom, satisfactorily!

  • Say ‘No’ To Joneses

Competing and comparing with our neighbors and friends are two things we have to completely avoid if financial freedom is the desire. It’s because when we do so we unnecessarily spend on things that are of no use to us in any way! Remember, live to please yourself and not to attract others or satisfy others unnecessarily, which will help you spend cautiously and lead you gradually towards the path of financial freedom!

  • Save first spend next

It doesn’t matter how much you earn as long as you save so much out of it. Yes, make it a practice to allocate resources for your savings and only then start thinking about spending on various other things to satisfy your trivial needs, as this can help you abundantly in securing and growing your money to achieve the desirous financial freedom!

  • Keep investing

Saving doesn’t mean securing your money in the cupboard; it means you have to invest it in the right ways to ensure it is both secured and growing to offer you the much-needed financial freedom. If you are looking for suggestions, try investing in the latest cryptocurrency investment practice, as it not only seems futuristic but also seems uncomplicated due to the availability of automated crypto investment platforms like the Crypt VIP Club that can appropriately benefit even the beginners, beyond any doubt!

  • Restrict Consumer Debt

It is indeed cool to make your purchases and payments using the credit card but, not so cool when you keep on adding to your debts by failing to make your payments on time. Not only credit-card balances, even car-loans and other consumer debts are threats to your financial freedom, as they provide an opportunity for the relevant financial institutions to grow their money while yours keep on diminishing, unfortunately. Hence stay away from these consumer debts by repaying them on time or if possible pay-off them sooner to boost your financial situation and attain the exciting financial freedom.

  • Maintain a journal

Always maintain a journal of your spending to ensure you are spending only on things that are necessary and relevant to you. By this way, not only your money is saved, you are also making the significant step towards the fabulous financial freedom, undoubtedly!