Capitalization is application for accumulation of capital.
It is when capital is invested and an interest rate is applied, which ends up accumulating more capital.
It is a term used in economics to relate the ways to gather values, also called capitalization of interest.
For example: 100 reais are applied, and on this amount there is a 5% interest rate on the investment per month. At the end of the first month of application, the capitalization totals 105 reais.
Simple and Compound Capitalization
Simple Capitalization and Compound Capitalization are concepts from financial mathematics. In accounting terms, simple capitalization starts from a formula that does not consider the initial value to calculate the interest on what was capitalized.
The compound capitalization, on the other hand, considers interest as part of the overall capital, with interest being levied on interest.
Capitalization Title
Capitalization bonds, or capitalization plans, are a banking application, but they work like a game.
The bank account holder buys the bond, pays it monthly, and competes for cash prizes. These awards actually anticipate the amounts saved from regular payment of the bonds. That's why the application is a mix between programmed savings and the lottery.
If it is in the account holder's interest, at the end of a certain period he can recover part or all of what was spent.
Investments are generally low, but the payment is not fully capitalized, as in the case of a savings deposit, for example. Part of what is paid for title and capitalization goes towards game costs. So, as much as the profitability is greater than the savings, on the whole it ends up being inferior because a smaller amount is profitable.
See also the meaning of Capitalize.
