Meaning & use
net investment
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Meaning
noununcountabletechnicalbusinessfinance
the amount of money a company or country spends on new capital assets after subtracting the wearing out of existing assets.
Grammar: Used as an uncountable noun: net investment rose sharply. It does not take a plural.
Patterns
- net investment in something
- increase net investment
- net investment of an amount
The report shows that net investment in machinery fell last year.
Higher depreciation meant net investment was much lower than gross investment.
Economists use net investment to judge whether an economy is adding to its capital stock.
Common combinations
- net investment in
- Net investment in new technology grew by 4 percent.
- gross investment
- Gross investment includes spending that simply replaces old equipment.
- net investment income
- The fund reported net investment income of $2 million.
- falling net investment
- Falling net investment can slow long-term growth.
Synonyms and how they differ
- capital formation
- This is a broader term for adding to capital; net investment is the part that remains after depreciation.
Word family
- invest verb
- to put money into something to make a profit or gain.
- investor noun
- a person or organization that invests money.
- investment noun
- money put into something, or the act of putting it in.
Commonly confused: net investment or gross investment?
net investment vs gross investment
Gross investment is total spending on capital assets; net investment subtracts depreciation from that total.
Practice
A company spends $500,000 on new machines and its existing machines wear out by $200,000. What is its net investment?
Choose one answer.
Net investment is spending minus depreciation, so $500,000 − $200,000 = $300,000. $500,000 is gross investment, not net.
Make it your own
Write a sentence using “net investment”, then check it and compare it with the examples above.