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help with calculatation please

mrseyes
Posts: 302 Forumite


Please someone calculate this for me.
I have £6000 but not sure whether to put in the bank that provides,
a) 6.00% Gross / AER invest (between £20-£500 per month) over a 12 month period
or
b) 2 year fixed rate bond at 5% gross
How much interest will i get at the end of 1yr and 2yr?
Thanks in advance
I have £6000 but not sure whether to put in the bank that provides,
a) 6.00% Gross / AER invest (between £20-£500 per month) over a 12 month period
or
b) 2 year fixed rate bond at 5% gross
How much interest will i get at the end of 1yr and 2yr?
Thanks in advance
0
Comments
-
No contest. Fixed bond.In view of interest rates dropping drastically for the feed account and loss in transit while sending the funds.
When is the interest on the bond paid? On maturity or annually?
For calculation:
If you were feeding the 6% with a maximum £500 per month from say a 3% paying instant access account, the overall rate would be (6.5*0.06+5.5*0.03)/12=0.04625 ie 4.625% gross for one year and then you'd be looking to place funds somewhere else for year 2.
For the bond:
After year 1: 6000*0.05*0.8=£240 net
year 2: 6240*0.05*0.8= £249.60 net
if gpa is 5% and interest paid annually.0 -
sloughflint wrote: »No contest. Fixed bond.In view of interest rates dropping drastically for the feed account and loss in transit while sending the funds.
When is the interest on the bond paid? On maturity or annually?
For calculation:
If you were feeding the 6% with a maximum £500 per month from say a 3% paying instant access account, the overall rate would be (6.5*0.06+5.5*0.03)/12=0.04625 ie 4.625% gross for one year and then you'd be looking to place funds somewhere else for year 2.
For the bond:
After year 1: 6000*0.05*0.8=£240 net
year 2: 6240*0.05*0.8= £249.60 net
if gpa is 5% and interest paid annually.
a) Interest is paid after 12 months, providing you don't miss a payment or make a monthly payment of under £20 or in excess of £500, or make a withdrawal following account opening.
b) With bond Interest automatically repaid at the end of year one0 -
I take it my post did not make sense to you in view of your reply.
Don't be taken in by the 6%. You won't get 6% on the full £6000
See this:
http://spreadsheets.google.com/pub?key=pLv5pWbQddSKWBLDYhhLQWA
and this discussion:
http://forums.moneysavingexpert.com/showthread.html?p=17267977
Interest for the 5% bond as in previous post.0 -
sloughflint wrote: »I take it my post did not make sense to you in view of your reply.
Don't be taken in by the 6%. You won't get 6% on the full £6000
See this:
http://spreadsheets.google.com/pub?key=pLv5pWbQddSKWBLDYhhLQWA
and this discussion:
http://forums.moneysavingexpert.com/showthread.html?p=17267977
Interest for the 5% bond as in previous post.
Actually, the Google spreadsheet is incorrect as it assumes that the monthly interest rate is the annual rate/120 -
Actually, the Google spreadsheet is incorrect as it assumes that the monthly interest rate is the annual rate/12
The values will be close enough for Op's purpose to decide between a bond or a RS.
Unnecessary for this situation I think but for a daily interest spreadsheet calculation for a RS :
http://spreadsheets.google.com/pub?key=pLv5pWbQddSKQ6lhHTNq8SA0 -
Mrseyes, have you made a decision then? I notice you posted about the principality RS yesterday afternoon.
It would certainly be a good home for new money but not your £ 6000 ( unless you happened to have a feed account guaranteed to pay well above 3.85% and even then you'd have to rehome the 6k at the end of 12 months at possibly lower rates than 5%)
Do you see where I am coming from?0 -
sloughflint wrote: »Mrseyes, have you made a decision then? I notice you posted about the principality RS yesterday afternoon.
It would certainly be a good home for new money but not your £ 6000 ( unless you happened to have a feed account guaranteed to pay well above 3.85% and even then you'd have to rehome the 6k at the end of 12 months at possibly lower rates than 5%)
Do you see where I am coming from?
Thankyou. I know where you are coming from. Yeasterday i was exploring/researching etc, also went to see FA at the local abey who offered me one of their account where he suggested that i could put £3000 (fixed 5.5% interest for 1yr), equal amount in their product for 3-5 yrs (i could use £3000 isa allowance for this yr in stocks and share).
I am more confused where to put my money now.0 -
If you can find a fixed rate isa bond paying higher than 4% you would be slightly better of, nationwides is currently 4% so there is bound to be better out there.Norn Iron Club member No 3530
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