We are independent & ad-supported. We may earn a commission for purchases made through our links.

Advertiser Disclosure

Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.

How We Make Money

We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently from our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What Is an Initial Investment?

By C. Mitchell
Updated May 16, 2024
Our promise to you
SmartCapitalMind is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At SmartCapitalMind, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

An initial investment is the starting amount of money that it takes to either open an account or establish a buy-in relationship. The term “initial investment” is primarily used in two distinct but related sectors: banking and long term investment brokering. In banking, an investment in the form of an initial deposit is usually required to establish ownership of an account. The same initial deposit in investing also establishes ownership, but is usually put down in the hopes of using it to spurn later growth down the line.

In most cases, an initial investment is the first of many more payments and deposits that will happen over the lifetime of the account or investment vehicle. It is often seen as a way of securing something. More money is usually added or invested over time, and the capital is most often intended to grow. The first deposit is what kicks things off.

Where bank accounts are concerned, an initial investment is usually little more than a primary deposit. Most financial institutions will only issue checking, savings, or other accounts to customers who are committed to keeping at least a little bit of money in them. A deposit is usually required along with the application materials.

In nearly all cases, bank deposits belong to the customer at all times. Once the account has been successfully opened, the deposit credits to the account and is money that the customer can spend, delegate, or withdraw. Many banks have minimum account balances that must be maintained, but the money in the account is always the customer’s.

The same is not always true with initial investments in business or stock and bond trading. In these settings, the initial payment is more like a buy-in: the consumer puts up a certain amount of money to get access to investment materials or to a specific financial instrument. The hope is usually that the initial investment will return more money than was actually put in.

Franchising and small business ownership is one place where initial investments are common in the business world. A person interested in purchasing a franchise or setting up a small business must usually make an initial investment that will cover the purchase of basic supplies, employee training, and advertising, among other things. If the owner manages the store or business well and turns a profit, that initial investment is likely to be made back, often several times over. Otherwise, that money is usually lost.

In more traditional investing, the initial payment is the amount of money that someone uses to purchase stocks, bonds, or mutual funds. These instruments all tend to fluctuate in value based on market shifts. An initial investment can appreciate or depreciate over time. Once invested it can normally be shifted around, but there is rarely ever a guarantee of a full return.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.

Discussion Comments

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.