Working out interest....?

Saver-Rob

Well I have a bit of a question for you all. I have the Halifax Regular Saver @ 6% fixed. You can pay in £500 a month into the account (which I will be doing) but am having trouble working out what the interest would be as obviously the payments will be staggered throughout the year.

I made a £250 deposit and there will be 12 payments of £500 throughout the year, so I will be taking home next year £6250 + interest (whatever that turns out to be).

Is there a simple formula or could somebody show me how this calculation would be done? It really isnt my strong point. Thanks to all.

YorkshireBoy

The conventional formula (for equal monthly deposits, and only 12 of them) is

Closing balance x gross p.a. rate / 12 x 6.5 x 0.8

However, because you've deposited an initial £250, and will get 13 payments in, you'll have to use a spreadsheet, calculate each day's interest*, sum them up, and then deduct tax for an accuate figure.


* Will accrue at 'daily balance x gross p.a. rate / 365'

Saver-Rob

Wow...

Even that is too much for me to understand. Thanks for your effort though. Could you show me an example of the formula using my own figures, ie 12 payments of £500. I will forget the 250 for now and add that on after.

Thanks for your time, it is appreciated.

Lokolo

£6000 * 0.06 / 12 * 6.5 * 0.8

= £156 interest after 20% tax.

Saver-Rob

Thanks Lokolo. You dont happen to be doing something maths related @ Uni do you?!

Lokolo

Saver-Rob wrote: »

Thanks Lokolo. You dont happen to be doing something maths related @ Uni do you?!

lol no, did A Level but thats as far as it goes.

Saver-Rob

I barely managed GCSE maths! Well done!

Thanks again.

Saver-Rob

Good Lord! Well at least I have a ballpark figure. Thanks.

Saver-Rob

Thanks. I havent a clue really, but I can see that it will be somewhere in the area of £160 though, which is very helpful.

sloughflint

To explain the calculations above posters used:

Imagine the RS had started on 1st January and ended on 1st January.
£500 in account for 12 months, then another for 11 months, then another for 10 months etc
Total months is 78 (12+11+10+...+3+2+1)

So it's rather like saving a single £500 for 78 months or 78/12ths of a year (78/12=6.5;that's where the 6.5 came from in previous posts)
500*6.5*0.06*0.8=£156 approx

However your RS ends 12 days before January 1st so you lose 12/365*6000*0.06*0.8=£9.47
but this is offset by your extra £250 which gets a full 12 months so 250*0.06*0.8=£12

£156+£12-£9.47= £158.43 net approximately.

Alternatively for a spreadsheet version:
http://spreadsheets.google.com/pub?key=pLv5pWbQddSKQ6lhHTNq8SA

Saver-Rob

Thanks alot and for trying to explain. Unfortunately, as my old maths teacher would agree, it goes in one ear and out the other. Its always been one of my weakest points.

Thanks again though. That helps me work my finances out a little better!