Drip feeding.

sixtytwo

Oops forgot to say thankyou for trying to help!

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

Did my post number 2 not make sense?
the 6.5 is for the total number of months each £500 is in the account ie 78..... so 78 /12 made 6.5
the 0.1 calculates 10% and the 0.8 deducts tax at 20%.
This gave £260 net in the RS

then for your websaver account, repeat the calculation with that particular rate of interest ( I guessed at 6%-in red)
the 5.5 is again for the number of months each £500 is in the websaver ie 66 so 66/12=5.5.
Any clearer?

edit if it's a websaver reward @5.8%
500*5.5*0.058*0.8=£127.60

so total net interest on your £6000 is £127.60+£260=£387.60 net

Edit:
Bad explanation for the 6.5 and 5.5 bit. I'll try again:

First £500 in RS account for 12 months, the next one 11 months and so on until the last one only for one month.

12+11+10+9+8+7+6+5+4+3+2+1=78
78 months is 78/12ths of a year ( the 10% being a yearly rate) so the proportional interest rate is 78/12ths of 10% or in other words 6.5*0.1

drip feed account funds ie websaver
11+10+9+8+7+6+5+4+3+2+1=66
66 months is 66/12ths of a year so proportionl interest is 66/12ths of WS rate or in other words 5.5*0.0585 ( if WS rate is 5.85%)

Any better?

nicko33

Aegis wrote: »

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

I don't know about it being a rule, but that is what is called the "simplest form".

6.5/12 is useful because it matches with 12 months

54% is probably close enough though.

LongTermLurker

nicko33 wrote: »

I don't know about it being a rule, but that is what is called the "simplest form".

6.5/12 is useful because it matches with 12 months

54% is probably close enough though.

Heheh, if the original formula wasn't clear, what confusion will reign when you start talking about 54% then lol :rotfl:

I can see it now...

bigbloke45

sloughflint, that is a really "neat" way of calculating the answer. Are you a mathematician or just a lateral thinker?

Sixtytwo, I wrote a little spreadshet that shows how much interest is generated by each months deposit and the answer is £325 gross, £260 net.

But I must say sloughflints' method is much more elegant and can be done with pen and paper anywhere.

I don't think you'll ever be able to be totally accurate as Halifax will be compounding on a daily basis and their version of the AER will be mind boggling.

Send me a message if you want a copy. It's very basic.

sloughflint

Thanks bigbloke45.I suppose it is quite bizarre to liken the situation to a single £500 saved for longer than a year (no compounding!!!) rather than the reality of adding further blocks of £500 within 12 months.

It works as a close approximation but for an accurate calculation, daily interest would be needed and so would the precise dates that the money hits the account.Spreadsheet material.

I'm sure I've seen the more conventional explanation dotted about on this forum. Perhaps someone can direct to the right place. I can do the Maths but struggle to explain.

oldfella

the exact answer should be to work out how many days in each month the amount saved is in the account, then accumulate over the year

so for August it might be - 500 / 365 * 31 *.1

and so on

then for September add - 1000 / 365 * 30 *.1

the only extra info needed is when Halifax apply interest to new savings, so if a standing order arrives on the 1st, do they apply interest from the 1st or the 2nd.

sloughflint

oldfella wrote: »

the exact answer should be to work out how many days in each month the amount saved is in the account, then accumulate over the year

so for August it might be - 500 / 365 * 31 *.1

and so on

then for September add - 1000 / 365 * 30 *.1

the only extra info needed is when Halifax apply interest to new savings, so if a standing order arrives on the 1st, do they apply interest from the 1st or the 2nd.

Still only an approximation, oldfella depending on starting month and funding dates. I've got a daily version in a spreadsheet and it comes fairly close in value to the monthly approximation of 6.5:
If start in August and assuming ability to always fund on the first of each month:2371/365=6.496
Sep start: 2378/365=6.515
Oct start: 2385/365= 6.534 etc

Exact answer needs dates that funds hit the account ( eg if plan to fund on 1st and some are weekends) and daily interest calculation.

Edit. Sorry Oldfella.I now see what you mean by your post. I interpreted the wording differently looking at your examples and thought you were just month by month doing a daily approximation and accumulating.

sloughflint

For a spreadsheet for exact values, something like this would work :

Column A= dates funds reach account being careful to add an extra entry at the bottom (the day after after the saver matures)
Column B = Balance
Column C= see below
Cell D1 contain the net interest rate (eg 0.08 for the regular saver or 0.464 for the websaver)
Cell E1 contains the return

Formula in each cell in C:
for C1

---

> =(A2-A1)*B1/365 and copy down the column

formula in cell E1 =SUM(C:C)*D1

01/08/2008 500 45.20548 0.08 £259.51
03/09/2008 1000 76.71233

01/10/2008 1500 131.5068

02/11/2008 2000 158.9041

01/12/2008 2500 212.3288

01/01/2009 3000 254.7945

01/02/2009 3500 268.4932

01/03/2009 4000 339.726

01/04/2009 4500 369.863

01/05/2009 5000 424.6575

01/06/2009 5500 452.0548

01/07/2009 6000 509.589

01/08/2009

Repeat for the websaver account and add the two values.
Care needed though if interest rate is variable and whether the interest is paid annually or monthly.I've assumed annually.
01/08/2008 5500 497.2603 0.0464 £127.89
03/09/2008 5000 383.5616

01/10/2008 4500 394.5205

02/11/2008 4000 317.8082

01/12/2008 3500 297.2603

01/01/2009 3000 254.7945

01/02/2009 2500 191.7808

01/03/2009 2000 169.863

01/04/2009 1500 123.2877

01/05/2009 1000 84.93151

01/06/2009 500 41.09589

01/07/2009 0 0

01/08/2009

oldfella

Exact answer needs dates that funds hit the account ( eg if plan to fund on 1st and some are weekends) and daily interest calculation.

---

I think thats what I said ... "the exact answer should be to work out how many days in each month the amount saved is in the account, then accumulate over the year"