Investment Demand

Investment demand is what it sounds like: demand for investment.

So...who’s demanding that investment? Businesses. They need you to invest in them so that they can expand, making both you and them money.

Some businesses might need computers and desks, while others need factory equipment and warehousing. Entities needing this kind of capital pay for your having invested in them in two primary ways: by writing debt to investors, i.e. selling them bonds (which are promises to pay back principal and then rent on that principal, i.e. interest, along the way), and selling equity to investors, i.e. a slice of ownership in that entity.

When investment demand is low, businesses aren’t currently in the business of expanding, but are either just trying to stay afloat, or are shrinking (which is generally bad for the economy and the stock market...especially in such a globally connected world).

When investment demand is high, it means businesses are doing the feel-good dance, because the economy is humming along swimmingly, allowing them to grow, which brings in more profits.