As well as being important for an individual or household, investments are important for the broader economy.
There is interdependence between the household sector and other sectors of the economy, such as the corporate sector. For example, in the act of saving, households are not buying the goods and services that firms sell. However, by saving, households are placing money in financial institutions and this provides a potential source of funds for firms to expand and to invest themselves.
Governments also have an interest in household savings. One reason for this is that governments often spend more than the receipts they have from taxation – this was certainly the case in the aftermath of the 2007/2008 financial crisis which saw the UK government’s budget deficit rise to what was then a record level.