when a regular saver is worth it:

Dagobert · 6 September 2005 at 11:11AM

XXXXXXXXXX

YorkshireBoy · 6 September 2005 at 11:59AM

Is it raining outside?

No, seriously, a lot of work there and some food for thought. I'll have to read it later when I've much more time to get my head round it! Thanks for posting.

grumbler · 6 September 2005 at 12:47PM

Just a small correction:

Dagobert wrote:

pd = (pr+ps)/2 - (d*ps/365)

pd=(6.5*pr+5.5*ps)/12- (d*ps/365)

This gives extra 0.05% to 5.28% in your example (equivalent to 3-4 days in transfer).
And, of course, assumption about 9 days is not always correct because transfers between a current and a saving accounts are often instant.

masonic · 6 September 2005 at 12:53PM

Looks like the perfect candidate for an excel spreadsheet.

grumbler · 6 September 2005 at 4:50PM

Dagobert wrote:

Eh?

Where do you pick the 6.5 and 5.5 multipliers from?

See for example:
Regular Savings Accounts discussion and/or Halifax 10% saving account

(1+2+3+...+12)/12=6.5 - average balance of regular saving account
(11+10+...+0)/12=5.5 - average balance of saving account

To express the number of lost days, one simply needs to enter the appropriate figure for d.

What I mean is that my correction is very small - just 0.05%. However, if 9 days of lost interest is important for you this correction is important too, because it is equivalent to 3-4 days of lost interest.

grumbler · 6 September 2005 at 7:36PM

Thank you for compliment.:beer:

Dagobert wrote:

The 0.05% figure which your weighting results in only fits with the example figures I used in my example and therefore it is not a generic value. It only happens to coincide with 3-4 days' worth of interest, but only if the interest rate is about 5%.

Yes, 0.05% and 3-4 days are only for your example. I didn't mean to make any generalization.

ericpode · 8 September 2005 at 8:55AM

I notice you divide the savings rate by 365.

Is it correct to do this? If the interest is calculated daily then youy are earning interest on interest on interest .... day by day. Shouldn't you be doing a 365th root or something? (This always confuses me!)

grumbler · 8 September 2005 at 9:36PM

ericpode wrote:

I notice you divide the savings rate by 365.

Is it correct to do this? If the interest is calculated daily then youy are earning interest on interest on interest .... day by day. Shouldn't you be doing a 365th root or something? (This always confuses me!)

I was sure too that daily interest should be 365th root ... until I lost the argument with MJSW in this thread: Bradford and Bingley e.savings account

:mad:

isasmurf · 8 September 2005 at 10:18PM

ericpode wrote:

I notice you divide the savings rate by 365.

Is it correct to do this? If the interest is calculated daily then youy are earning interest on interest on interest .... day by day. Shouldn't you be doing a 365th root or something? (This always confuses me!)

That is the correct way to do it. Although the interest is CALCULATED daily, it will only be paid MONTHLY or ANNUALLY. You only earn interest on the money in the account and not the accrued interest (the interest you have earned but not yet been paid)

Walletwatch · 12 September 2005 at 12:59AM

Dagobert wrote:

To recapitulate, here are the amended formulae and example as per the discussion with grumbler:

Calculation of the actual interest gained during the regular saver period:
pd = (6.5*pr+5.5*ps)/12 - (d*ps/365)

Excellent formula, Dagobert. Would like to add my two bits here - what I target doing (and have done successfully with two of my three Reg savers) is have overdrafts with each of the banks I have regular accounts with, and have my SO for the RS accounts from my curr a/cs with the respective banks. This ensures that I reduce my d to zero, thereby maximising the gain factor and minimising be.

This ensures that the money is sitting in a high interest earning web saver, which I transfer on the SO due date into the current account, in time to cover the overdraft. The only time when d does come into picture is when the SO due date comes over a weekend, in which case, I play safe, and fund the account on the Friday itself.

deemy2004 · 12 September 2005 at 5:09AM

One thing your forgetting in all the equations.

That is the time it takes to open and maintain an account.

For instance the halifax child saver thta has a limit of £100 per month, is just not worth the hassle !

It is a complete and utter waste of time chasing after the useless branch staff with regards this product !

You spend hours and hours for what ? About £20 more interest ? Is it worth it ? Taking time off work to trapse to the branch yet again cos the idiots are still waiting for detauls even though they have been provided fifteen billion times already ... :rolleyes:

when a regular saver is worth it:

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