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I'm curious what it means to say that savings must be invested. I have an account with an online broker/trading platform in which I put a portion of my money ea
by claudiawerner 6y ago
I'm curious what it means to say that savings must be invested. I have an account with an online broker/trading platform in which I put a portion of my money each month (most goes into stocks, some into ETFs). I think that counts as investing, but I also save money in the bank for paying bills, rent, food, and emergencies. That's not invested, and it makes up a large portion of my 'wealth'.
- gjulianm 6y agoI think that in that context, investing means putting money back in circulation. For example you invest in a company and that money goes to pay providers, salaries, taxes, etc. It gets back into circulation straight away. But I don't think that's the case with most stocks and ETFs, most of that money just circulates in the stock market for speculation, maybe a small part of it goes back with comissions and brokers and taxes, but it doesn't do that much good in the overall economy.
- everybodyknows 6y ago>save money in the bank This money is effectively lent to the bank, which will then re-lend it. A small share to the Federal Reserve, the rest to mortgage holders, businesses trying to meet payroll and so on.