Basic capital, issued capital and paid-up capital

Basic capital, issued capital and paid-up capital

Everyone who runs a business definitely needs capital. Starting from the nominal capital, creativity to the capital of enthusiasm in carrying out its business.

Capital is an investment by the owner of the company, in the company, there are several types of capital.

What are the types of capital is first as basic capital, issued capital, and paid-up capital.

Basic capital

Basic capital is the entire nominal value of the Company’s shares, that write in basic the budget, we can calculate basic capital with multiplying shares that issued with a value per shares

Illustration of basic capital calculation:

A company issued 50,000 shares with a value per share of $ 1200, –

Value of the overall shares held by company A are: 50,000 x $ 1200 = $ 60,000,000

This value is then called the company’s basic capital A. if mentioned company has basic capital amount sixty million dollars.

Issued capital

Returning to company A, when they issue 50,000 shares, there are some of the shares that set aside as issued capital.

Issued capital is the number of shares set aside for owned by the founder or shareholder. The amount is at least 25% of the authorized capital or the total number of shares. The set-aside shares have been paid or unpaid, but are agreed to by the founder or founder of the shares to be repaid, and the shares have been handed over to him for ownership.

Illustration of Issued capital:
Company A is owned by Mr Jon and Mr Don. As is well known, company A then issued 50,000 shares at a price of $ 1200 per share.
From here, then Mr Jon and Mr Don decide that they take 70% of the shares as issued capital. So that 70% of the 50,000 shares are 35 shares.
  • So that the basic capital is 50,000 shares x 1200 = $ 60,000, whereas
  • Issued capital is 35,000 shares x 1200 = $ 42,000,000.

This issued capital must then be repaid by Mr Jon and Mr Don on time.

Paid in capital is the Issued Capital that has been fully paid by the owner.

Illustration of Paid-up Capital:

Company A is owned by Mr Jon and Mr Don who then decide that they take 70% of the shares as Issued Capital. So that 70% of the 50,000 shares are 35 shares.

  • So that the basic capital is 50,000 shares x 1200 = $ 60,000, whereas
  • Issued capital is 35,000 shares x 1200 = $ 42,000,000.

Mr Jon and Mr Don then paid the Capital Placed for $ 25,000,000 in the first term. This payment is called Paid Up Capital.

So that for the time being, the calculation of capital will be as follows

  • Issued Capital: $ 42 million
  • Paid-up Capital: $ 25 million
  • Remaining Deposited Capital: $ 17 Million

This unpaid capital must be repaid by Mr Jon and Mr Don when the establishment of the company is carried out.

Short, Medium and Long-Term Investments

Investing is one way to diversify income sources so that income more increase. This is because we cannot rely solely on funds that settle in savings, but rather how to turn these funds in to produce even more. But before starting to invest, we need to understand more about the investment itself and its types.

investment is a purchase or expenditure that is not intended for consumption or daily needs but as a form of production. This form of production means that the expenditures made aim to process and develop something to make a profit. Investment can be done by investing in business capital or investing in investment banking products such as stocks and mutual funds.

The outline investment is divided into three parts, namely short, medium and long-term investments. These three investments have differences grouped into three categories as follows:

Time

The first and most noticeable difference is of course in terms of time, where the name of the type of investment has shown a difference in the duration of each. Short-term investment is an investment made in less than 1 year, while the medium term is carried out in a span of 1 to 5 years. For long-term investments alone, it will be carried out in more than five years.

Advantage

From the difference in investment time, different levels of benefits can be obtained. Short-term investment has the smallest profit opportunity compared to the other two investments, but the amount is still more than just relying on ordinary savings. While medium-term investment allows you to get a passive income that is quite safe in that period. And for those of you who want to get a greater diversification of income and enjoy processing money that is owned so that it can be more, then long-term investment will provide the expected benefits.

Goal

The purpose of the three investments is also related to the needs that you have, whether for needs in the near future or preparation for longer needs. Short-term investments are usually carried out when someone needs funds in less than one year, for example, a plan to renovate a house.

While the purpose of the medium-term investment is to get a growth in the value of investments that can finance slightly longer needs, such as children’s education or buying a vehicle. And long-term investments are made in preparation for further time needs, such as plans to prepare pension funds.

Types of Short-Term Investments

If you intend to make a short-term investment in less than one year, then you might consider doing the following types of investments:

  • Deposit

There are still many people who think that deposits can only be done for a long period of time, around 10 years. Though deposits can be made starting from a span of 3 months and get a bigger interest profit than ordinary savings. You also cannot withdraw deposits before maturity, reducing the risk of taking money outside the original goal.

  • Stock

Buying shares from a company are one form of short-term investment, where you can get a share of the ownership of the company. Not all companies can buy shares, but only companies that are open (Tbk) or limited liability companies. You need to choose a company that has good credibility and healthy finance so that the sale value of the shares is high so that the profits obtained are large.

Type of Medium Term Investment

If you want to get a bigger profit than a short-term investment, this is the type of investment that you can do in a period of under five years:

  • Bond

Treasury bonds can be purchased by individuals in a variety of agents such as securities companies and commercial banks, with a minimum of a 4-year contract. The benefits from this investment are the interest paid regularly and calculated based on the percentage of the nominal value of the bonds purchased. In addition, the interest benefits from bonds commonly called coupons are guaranteed in the law so that they are safer and reduce risk.

  • Retail Sukuk

If you want to secure investment in sharia, you can buy retail Sukuk issued and sold officially by the government. This sharia-based investment product can be purchased by the public, with fixed-income fixed coupons each month. You can also benefit from selling on the secondary market in the form of capital gains. This investment is guaranteed monthly payment of payments by the government and the principal value at maturity which is within 3 years.

Types of Long-Term Investments

Here are the types of investments that you can do over a long period of time, and of course generate greater profits too

  • Gold

This one investment has been done for a long time by our parents, where gold is believed to have an investment value that provides big profits. However, it should be noted that gold which has an investment value is precious metal or pure gold, not gold jewellery. You also need to be more careful in storing this gold because there are risks in terms of security, especially if you keep it at home.

  • Mutual funds

By investing in mutual funds, you provide a capital amount starting from $10  which is then managed by the investment fund management company. Management is within the responsibility of an Investment Manager, where you can consult about the investment he wants to do. The benefits of mutual funds can actually be taken in the short term, but of course, the amount will be much greater if managed in the long run.

It is the discussion of basic capital, issued capital and paid-up capital, and also discusses short medium, and long-term investment capital and its types. Whatever investment you will choose, make sure you gather complete information and adjust it to your needs. Don’t hesitate to consult with financial experts to get the right investment. Hopefully, this information is always useful and successful!

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