There are various reasons why people save. Short-term goals can include saving money for holidays, purchases or renovating a house. In the long term, the most crucial reasons for putting money aside are related to the need for covering costs of children's education or ensuring financial stability in retirement.
Saving is closely related to investing. Once a certain amount of money is put aside, questions about the possibilities of letting it grow arise. Hiding the money under a mattress is not a solution as inflation will eat up the savings. There are many financial instruments available on the market which can meet the needs of both prudent and risk-loving investors. Money can be placed in savings deposits to earn modest interest, for instance. The value of savings deposits in the United States grows from year to year, reaching 9.65 trillion U.S. dollars in 2019. For longer-term savings, money market instruments or bonds are more appropriate as they too are low-risk investment options but offer a higher return rate than savings deposits. Savings can also be entrusted to professional fund management companies. The share of American households owning mutual funds reached 46.4 percent.