Is it better for economic growth to invest in stocks or to purchase products? I've recently been interested in economics and I admit that my understanding concerning it is limited. However my question is if investing in stocks is good for the economy. From my understanding, it is just the redistribution of ownership and wealth from individuals. The businesses are not gaining money, and so profit can be gained there.  It seems that it would be substantially better for the economy to purchase products directly from the company, so that the businesses may gain money from consumer spending.
The means by which purchasing stock effects economic growth is not as clear as purchasing companies' goods.  Nonetheless, there is tremendous benefit for firms (and hence the economy at large) when one decides to purchase their stock, to help understand this I recommend Why Do Companies Care About Their Stock Prices?


First in their IPO, the capital gained they can invest in R&amp;D - as you will learn, some models posit technological shocks are the only effects on long-term economic growth
Second they continue to benefit from a high stock price in the secondary market with stronger financing and M&amp;A's, and can continue to issue more stock at a higher price will yield more value which they will hopefully use to fund further R&amp;D!