Answer
Because if people invest today, they will have more future consumption and less money today because they have to use up their money to invest for their future. If they don’t invest today, they will have more money now but less in the future because they didn't save up and invest for the future. Saving is related to investment because investment must be funded by savings, which will reduce current consumption. Banks and financial institutions help people to convert their household savings to investment by taking the household savings and lending it to corporations and businesses that wish to make investments. Example: these banks collect savings from people and reward them with interests, dividends and sometimes capital gains then they lend the funds to businesses to invest in equipment, factories and other capital goods.
Work Step by Step
Because if people invest today, they will have more future consumption and less money today because they have to use up their money to invest for their future. If they don’t invest today, they will have more money now but less in the future because they didn't save up and invest for the future. Saving is related to investment because investment must be funded by savings, which will reduce current consumption. Banks and financial institutions help people to convert their household savings to investment by taking the household savings and lending it to corporations and businesses that wish to make investments. Example: these banks collect savings from people and reward them with interests, dividends and sometimes capital gains then they lend the funds to businesses to invest in equipment, factories and other capital goods.
