How Saving Is A Profit Making Enterprise
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How Saving Is A Profit Making Enterprise

Interest does not add to the savings account because the money sits still in the account. A bank pays the saver for the opportunity to use their money.

Money saved in an interest bearing savings account never stops making money. Savings is an American enterprise.

Giving up the opportunity to spend the money is done at a price.

1. The saver gives a money manager an opportunity to invest their money. Managers that work for a bank or other financial institution can not undertake their investment plan without the money a saver puts in an account at their institution. Every account is added investment money.

Risks of investment are taken on by the manager and in return, the saver gives them control over how the money is used from a deposit date to a withdrawal date. For a length of time, the manager counts on the saver's money to keep up their business of investing.

2. The amount counts as capital for a profit making enterprise. Managers invest the money in enterprises that will make profit so their institution gets a larger amount of money than the invested amount in return. The money has practical worth to the enterprises that plan on using the funds to carry out their plans to produce and accomplish their goals.

The financial institution and the enterprises have a deal. We lend you the money and you pay us to use the money for a length of time.

3. While invested in the enterprise, the money gives the enterprise an opportunity to be productive, and increases by a percentage. The typical saver never sees their money at work. But, the enterprise pays for the money lending service to prepare for productivity and stay productive. Dollars and cents are used to keep the enterprise's productive work going forward day after day.

Without the money, the enterprise would not have the opportunity to make steady progress on average. They simply would not have the funds to move ahead.

4. The manager bears the cost of the money management and investing. Savers do not have to stay active and make decisions on the use of the money as long as it is in the account. They let the financial institution do the work. The manager takes a cut from the profit made by lending to the enterprise for the institution.

5. A share of the profit the money manager makes by investing is owed to the savings account owner. The payment is paid in interest.

The price for a practical use of the money is paid and the promise of profit for handing over the money is fulfilled.

Source:U. S. Labor Department, Savings Fitness: A Guide To Your Money and Your Financial Future (October 2010).

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