Save £1 a day, for 10 years... how much?

intranix

I've been trying to work this out, I read a small article about saving 1$ a day, for 10 years, you obvioulsy save 365x10 = 3650. Only problem with that calculation is monthly interest and tax?

for instance, no-one is likely to walk into a bank with £1 a day. More likely say £30 a month, to keep things sensible, and you'd probably transfer it online.

Now lets say the money is in a 5% interest account, and you put in £30 every month, obviously the amount of interest earnt every month will increase as the balance builds up.

What is a reliable calculation for this, to work out how much interest would be earnt, and what balance you would end up with doing this for 1 year, 2 years etc with a target of 10 years.

If anyone can help, :beer:

adam

Baldur

Plug your figures into the savings calculator - don't forget to select the appropriate tax rate.

intranix

ah brill, just what i was looking for!

rb10

I've tried this on Excel, I've used the assumption of annual interest paid on the anniversairy of opening the account, also assumed that all months are of equal length, you pay in £30 on the same day each month and that the interest rate is fixed at 5% for the duration.

I make it:
1 year - £338.25
2 years - £724.91
3 years - £1130.91
...
5 years - £2004.81
...
10 years - £4601.81

I may have done this wrong, but those are my answers!

The way I worked it out is as follows:

Column 1: Date (i.e. 1/1/09, 1/2/09, 1/3/09, ... , 1/1/19.
Column 2: Balance (first row 0, then cell B3 has formula = B2 + 30 + D2 where B2 is the balance of the previous month, 30 is the money paid in, and D2 is any interest paid that month - see later)
Column 3: Interest earnt (but not necessarily paid) in that month, (i.e. =(0.05/12*B2). Could change this to 0.04 for a taxpayer.
Column 4: Interest paid in this month, so, for example, D13 (1/12/09) has formula =sum(C2:C13) which is the interest earnt in Jan-Dec '09. This figure is added into column 2 (balance) in the following month.

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Having just worked all this out, I see Baldur has done it the easy way! I didn't know about that! Ah well, I was less than £50 out which is probably just from my assumptions!

Baldur

rb10 wrote: »

Having just worked all this out, I see Baldur has done it the easy way! I didn't know about that!

I've never believed in reinventing the wheel......

intranix

I found a nice balance, saving 300 a month (10 a day), for 10 years, will bring you nearly 300 a month in interest at that point, eventually paying for itself

Lokolo

intranix wrote: »

I found a nice balance, saving 300 a month (10 a day), for 10 years, will bring you nearly 300 a month in interest at that point, eventually paying for itself

Another thing to aim for is to get so much money into Cash ISAs that you can get 2 a year (£3600 yourself, £3600 in interest). Although getting £3600 in interest will need £72k (at 5%)

intranix

my best mates mother-in-law earns 32k in interest, sickening