Opened reg saver with barclays today

lkmc01

right, bearing in mind that the account was opened today with 250 going in straight away is the best thing to do then -

(250 on 19th December)
250 on 1st Jan 2009
250 on 1st Feb 2009
250 on 1st Mar 2009
250 on 1st Apr 2009
250 on 1st May 2009
250 on 1st Jun 2009
250 on 1st July 2009
250 on 1st Aug 2009
250 on 1st Sep 2009
250 on 1st Oct 2009
250 on 1st Nov 2009

and then the account will close on 19th December.

Was the 19th a good date to open the acount then?

thanks

oldfella

Was the 19th a good date to open the acount then?

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I reckon so. You need to open the account as close to the end of the month as you can, as long as you can be sure the money is transferred before the end of the month. The period starts from opening, not the first deposit. My calc says you receive £124 gross opening on the first, and £136 gross opening on the 19th. Opening on the 31st you would get £142 gross.

lkmc01

thanks alot. think its all clear now

oldfella

my calcs are on the old 7.49% rate, for the existing rate you will get less, but the principle is obviously the same

lkmc01

how did you work out 136 for opening on the 19th please

oldfella

how did you work out 136 for opening on the 19th please

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with a spreadsheet. Calculate the interest paid each month based on the number of days money is deposited each month.
so Amount x interest rate(gross) / 365 x no of days in month
then add the interest to the principal, and repeat for the next month

remember its £136 for 7.49%

lkmc01

I don't suppose you got £106.89 gross for the dates in my previous post at 6% fist deposit today?

oldfella

at 5.84% its £105

Tibbledom

I think I have answered the original question already, it’s not worth messing with dates for extra interest. If you want to change dates for other reasons then you just need to check the terms and conditions.

Purely for fun I’ll have a go at justifying my calculation

Let’s assume maturity date is fixed at 18/12/09

If you work out how much 12 payments of £250 on 1/12/08, 1/1/09, 1/2/09….1/11/09 earns in interest at 7.75% to 18/12/09 you should agree this is around £135.42 gross. (In practice the first contribution has to be 18/12/08 but it is easier to work with 1/12/08 and it makes no material difference).

If you work out what 12 payments of £250 on 18/12/08, 18/1/09…18/11/09 earn at 7.75% interest to 18/12/09 you should agree this is around £124.55 gross.

The difference of £10.87 is the additional gross interest you have earned by investing the money early by 17 days.

However under the second scenario you could have invested each of the £250 contributions in a separate account for 17 days at the beginning of the month at (say 4%), earning total additional interest of

0.04 x 17/365 x 250 x 12 = 5.59.

So the additional gain in net interest is 0.8 x (10.87 – 5.59) = £4.22 which agrees my original figure of £4.

oldfella

If you work out what 12 payments of £250 on 18/12/08, 18/1/09…18/11/09 earn at 7.75% interest to 18/12/09 you should agree this is around £124.55 gross.

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I think this is where we are missing each other - I am purely trying to prove that you maximise your interest by making the first deposit at the end of the month, with subsequent on the 1st.

you might reduce this gain as you suggest - but in my case I deposit into the RS straight out of income received not a savings account, so there is no arguement for a reduction. I dont see the value in receiving 4% when I could have got 7.5% ?