3 ms·

The Europeans I know seem to save in actual bank savings accounts, whereas the Americans I know seem to invest their money. Maybe I'm not looking hard enough, b

The Europeans I know seem to save in actual bank savings accounts, whereas the Americans I know seem to invest their money. Maybe I'm not looking hard enough, but I can't find a description of "savings" on those charts, so I think it might be ignoring American investments. To me, they are both types of investment, one a super safe option with a low return, and the other a more risky option with a higher return. From that Draghi paper a year ago or so, I believe part of Europe's innovation problem seems to stem from a lack of private investment by individuals in this way, so that would also align with this different philosophy on dealing with savings.

4gotunameagain 9mo ago
When private individuals have their money in savings accounts, aren't the banks investing that money anyway ?
- clickety_clack 9mo ago
  Practically, yes. But in economics they often classify “savings” only as being in a bank account. So if you “save” money in a 401k, where it’s invested in stocks, bonds or ETFs or whatever, then it’s not recorded as savings because they consider that “investment”. So when someone says EU saving is 18.79% vs US saving of 3.50%, most of the wealth saved by Americans isn’t showing up in that comparison because it’s not in a bank account.
  - 4gotunameagain 9mo ago
    If it is just a matter of classification, then why would part of the problem lie on lack of private investment, when private savings are invested by the banks themselves ? I think a big a part is that a lot of EU money is invested in the US instead, and I am looking forward for that to stop..
    - clickety_clack 9mo ago
      There’s a whole lot of regulation around the types of investment a bank can make with the money. Most of it has to be low risk mortgages, loans and high quality bonds.
      - 4gotunameagain 9mo ago
        Makes sense, thanks !
torginus 9mo ago
Isn't it a huge issue for Europe, that stock revenue is heavily taxed, while pensions accounts (which make the same investments) are not? Which means it makes more financial sense to put the money into pensions accounts?
Havoc 9mo ago
I’d be very surprised if that site wasn’t counting stocks as savings.

4gotunameagain 9mo ago

When private individuals have their money in savings accounts, aren't the banks investing that money anyway ?

clickety_clack 9mo ago
Practically, yes. But in economics they often classify “savings” only as being in a bank account. So if you “save” money in a 401k, where it’s invested in stocks, bonds or ETFs or whatever, then it’s not recorded as savings because they consider that “investment”. So when someone says EU saving is 18.79% vs US saving of 3.50%, most of the wealth saved by Americans isn’t showing up in that comparison because it’s not in a bank account.
- 4gotunameagain 9mo ago
  If it is just a matter of classification, then why would part of the problem lie on lack of private investment, when private savings are invested by the banks themselves ? I think a big a part is that a lot of EU money is invested in the US instead, and I am looking forward for that to stop..
  - clickety_clack 9mo ago
    There’s a whole lot of regulation around the types of investment a bank can make with the money. Most of it has to be low risk mortgages, loans and high quality bonds.
    - 4gotunameagain 9mo ago
      Makes sense, thanks !

torginus 9mo ago

Isn't it a huge issue for Europe, that stock revenue is heavily taxed, while pensions accounts (which make the same investments) are not? Which means it makes more financial sense to put the money into pensions accounts?

Havoc 9mo ago

I’d be very surprised if that site wasn’t counting stocks as savings.