Drip feeding.

sixtytwo

Hi,
If I drip feed an account with £500 per month with an interest rate of 10 per cent........how do I work out the return on the savings,for one year.

sloughflint

How much does your drip feed account pay?
The amount in the 10% account will earn approx:500*6.5*0.1*0.8=£260 net interest

but this doesn't include the interest while your money is sitting in the drip feed account
If your drip feed account pays 6% say, that interest would be approx
500*5.5*0.06*0.8=£132 net

Aegis

It's about 6.5/12 of the overall interest rate before tax. About 5.42% overall in this case.

sloughflint

Aegis wrote: »

It's about 6.5/12 of the overall interest rate before tax. About 5.42% overall in this case.

I thought my post was confusing enough lol.
You mean 5.42% gross of the full £6000, don't you?
The interest rate is still 10% gross.

Aegis

That's exactly what I mean, yes. Thanks for clarifying it in case anyone else was confused!

SiuLoong

Try the calculator at the bottom of this article for both normal regular savings and drip feeding to work out amounts. Useful for avoiding calculations!! I appreciate some people like to know exactly how and why things work though...

http://www.moneysavingexpert.com/savings/best-regular-savings-accounts

LongTermLurker

Aegis wrote: »

It's about 6.5/12 of the overall interest rate before tax. About 5.42% overall in this case.

Who taught you to mix decimals and fractions? Surely that should be 13/24 :rolleyes:

Aegis

LongTermLurker wrote: »

Who taught you to mix decimals and fractions? Surely that should be 13/24 :rolleyes:

Oh, like there's a rule that says you have to use the lowest denominator that leads to an integer numerator!

bigbloke45

sixtytwo, do you have access to a spreadsheet like MS Excel?. Also, do you want the answer or do you want the calculation. Plus, how accurate do you want the result to be?

Even more, are you feeding the plan from another interst bearing account? If so you also need to factor in the amount of interest you have earned on your declining balance.

Simple!

LongTermLurker

Aegis wrote: »

Oh, like there's a rule that says you have to use the lowest denominator that leads to an integer numerator!

Didn't understand the context of that but if you're not careful I'll start denoting it in hex - that's as far as I go I'm afraid (and then slowly!) My old maths teacher would have given me a right slap for mixing decimals with fractions - glad you didn't put it down as 6 1/2/12 or something

sixtytwo

Hi bigbloke45 I am feeding the plan (as you put it) from a web saver at the Halifax.
I just want to be able to work it out and understand it.
Yes I do have MS Excel.