This article outlines the possibilities and related problems of long-term capital formation in the capital market of Latvia. The capital is being accumulated, concentrated and invested inti financial markets, e.g., the stock market, bank capital market, exchange market and pension and insurance funds market. The stability of returns on investments directly depends on the term of investment. The authors present an insight into the Latvian stock market, the bank capital market and the pension funds market, the situation and problems related with these areas. The target of Latvia is to develop a competitive, liquid and effective capital market that could provide local companies with alternative forms of financing. In addition to that, private savings could also be mobilized through joint investment organizations, such as investment funds and private pension funds.