Just augmenting other replies a tiny bit: > Money sitting on a bank ledger can't do nearly as much as money in a venture capital fund. You have to be careful

Just augmenting other replies a tiny bit: > Money sitting on a bank ledger can't do nearly as much as money in a venture capital fund. You have to be careful with taxes to make sure you don't dis-incentivize investment too much. Money never sits around, especially in banks. (And when "it does" it's because they are playing games with the government.) For every dollar in your account, you can bet they are lending "3 dollars", (see https://en.wikipedia.org/wiki/Fractional-reserve_banking https://en.wikipedia.org/wiki/Fractional-reserve_banking). It is important to realize that a bank's liabilities are your deposits. You deposit $2000, they write down liabilities $2000. Their assets are their loans, credit card revenue, derivatives owned etc. That's why you are owed an interest. Their job is to use your money to make money. Insurance companies (health, car, ...) and retirement funds work the same. Their advantage over you is that they manage a big sum of money, which gives them access to better-term investing deals, full-time (and knowledgeable supposedly...) personnel for investing etc. Thus, despite what any of the above institutions, might want you to think, they really want your money; the problem is you don't see any part of the capital gains produced practically. "The only way that money sits, is if it is under your bed or you burned it."