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I'm Bab Cline with the VOA Special English Economics Report.
Saving money is a first step toward wealth. Putting money away for the
future also supports the banking system. Banks need a supply of savings to
provide money for loans. In the United States, people who want to start a
savings account have many
choices. Banks, savings in loans and credit unions are traditional places
to open an account.
Credit unions are cooperative for people who are linked in someway. For
example, the members may work for a university or a government agency.
Most credit unions are non-profit organizations. Savings are protected up
to a limit if a federally guaranteed bank, savings association or credit
union ever fails. Savers have their money guaranteed up to one hundred
thousand dollars.
Banks and other financial organizations pay interest on savings
accounts. But the interest rates are low. Certificates of the deposit are
another way to save. They pay higher interest rates. With a certificate of
the deposit, a person agrees not to withdraw an amount of money for a
period of time. The term could be three months or it could be several
years. Longer terms and larger amounts pay higher interest. People can
withdraw their money early but at a cost.
Another way to save is through a money market fund. This is a kind of
mutual fund. Mutual funds invest money for many people. Money market funds
pay higher interest than savings accounts. The money is usually placed in
short term government securities. Money market funds, however, may not be
federally guaranteed like other kinds of savings.
In a number of countries including the United States, people have been
saving less and less. The organization for Economic Cooperation and
Development is a group of thirty industrial countries. A report from the
OECD shows that in nineteen ninety Americans had a health hold savings
rate of seven percent. This year, it is expected to be one half of one
percent. That is below the other members except Australia, Denmark and New
Zealand. Next year though Americans are expected to save more than one
percent of unspent earnings.
In Japan, the second largest economy, the savings rate in nineteen
ninety was fourteen percent. The estimate for this year and next is five
percent.
This VOA Special English Economics Report was written by Mario Ritter.
I'm Bab Cline. | 
