Demand Note Investing Overview & Options for 2022

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Demand note investors typically can earn between 0.5% and 3% annual returns, and up to 5% or higher by agreeing to certain requirements such as a lock-up time period. Compare that to a traditional big bank savings account (note: Wells Fargo, Chase, and Bank of America all offer just 0.01% according to

Demand notes can potentially generate a 10x – 50x higher annual return than traditional savings accounts provide. However, it’s important to note there are substantial differences between investing in demand notes and depositing funds into a savings account, some of which are discussed below.

Demand notes are not new but are often an untapped opportunity for savvy investors.

In this Demand Note Investment Guide, EquitySlice will explain what a demand note is, how it works, how to use them in your portfolio, as well as their pro’s and con’s, and how to start investing in them.

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What Is a Demand Note?

A demand note is a flexible loan with no fixed term or repayment schedule. Funds can be recalled at any time if they have met the agreed requirements. Demand notes are used as flexible agreements among close acquaintances. Some corporations offer demand notes as an investment for qualified investors.

Many comparisons have been made between demand notes for companies and traditional money markets accounts.  For the context of this article, we’ll be focusing on corporate demand notes.

Key Facts About Demand Notes:

  • Demand notes do not have a set repayment schedule or fixed exit term. It doesn't have a specific end date, though a borrower is required to pay when payment is “demanded” by the issuer.

  • The demand note lender can request the funds back at any point.

  • A demand note can be either secured or unsecured.

  • Demand notes have a higher yield than money market accounts.

  • Demand notes are not FDIC-insured investments.  They carry risk and an investor can potentially lose money on them so research on individual demand notes is important.

Demand Note Example:

  • XYZ Corporation (the borrower) receives a loan from Jane Investor (the lender) at an agreed rate of return of 2% APY compounded daily (the rate) with the 24-hour minimum notice required to withdraw funds (the withdrawal terms).  As long as the investor leaves their principal invested with the corporation, they will continue to receive returns.  XYZ Corporation secures the demand note with assets in their company. For example, EquitySlice secures its demand notes with real estate-based assets and investments.

What are Rate Locks?

Demand note issuers may offer a higher rate of return to investors who commit to not demanding repayment of their note for a specified period of time - or a “Rate Lock;” typically 1 or 2 years.  While the investor will give up some flexibility if they can confidently invest in the demand note for a specified lock-up period they can earn higher rates of return.

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