What’s the main difference between Money Market and Capital Market?

What’s the main difference between Money Market and Capital Market?

Nowadays, more and more people begin to work on increasing their passive income. However, it’s not so easy to become successful in this field because one needs to always improve his skills and read some specialized books in order to get more information about different types of floaters and investment. Sometimes even experienced individuals who have already become experts get confused when they need to determine the difference between Money and Capital Markets.

Money Markets: What is it?

These are unorganized markets where participants such as banks, some financial corporations, investors and brokes peddle all types of Asset Classes which are aim to bring incomes for a short period of time. These instruments include trade credits, commercial papers, deposit certificates. Their main advantage that they are highly liquid.
Processes in this kind of markets are conducted over the counter.

Capital Markets: what is it?

This’s is also one of the financial markets in which different financial instruments including Fixed incomes, Equities are peddled during a long period of time. Such a kind consists of two groups:

  • Primary category. That is a platform where some new securities are demonstrated to the audience.
  • Secondary category. Here investors trade their securities and purchase them.

The main differences

If a person wants to become a successful investor, he ought to be aware of the most significant differences between these two categories. The most essential of them are in the list below.

  • The second type is more organized than the first one;
  • You need to choose the first position if you want to trade during a short period of time;
  • Liquidity in Capital exchange is lower than in Money one;
  • Risks are lower for those who choose securities from the first group;
  • The majority of financial organizations trade via the initial position;
  • Capital ones are aimed to stabilize the economic situation while Money types prove the liquidity;
  • To get a higher return on investments never choose the initial option.

To sum up, if a person is eager to become a successful investor, he should understand the difference between these two kinds of marketplaces. Only those individuals who have chosen that type which is aimed to help them achieve their goals will be able to make a fortune via trading. Otherwise, there’s a high risk of getting a bankrupt.

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