Any 8%+ Reguler Savers

Dagobert

You will find a calculation for a regular saver gain in this thread: [thread=88658]when a regular saver is worth it:[/thread]. The calculations take into consideration the interest lost through transferring.

The formulae assume a 1-year period but could be easily amended to a different time-scale.

dano_3

hi all,

sorry if im missing the point of this (and please correct me if I am it is quite likely :-) but ive just knocked up a quick excel spreadsheet, most of these reg savers are max £250 a month,

so if I cant put in an initial sum I need an effective aer of 10.3 % when comparing it to the interest ICICI would pay (making the barclays one useless). If however if I can put in a starting amount (again ussually £250 max) then 12 months of £250 I need an AER of about 9%.

So for a reg saver to be worth doing either I need a high initial sum, a stunning aer interest rate or a longer term.

So as far as I can tell from a look around the web is that the only ones worth doing are the Lloyds 2 years or the Alliance and Leicester 12%. Does anyone else know of any ?

Please tell me I missed something as Id love to be earning more interest (wouldn't we all) and thats not even considering the extra .1% I can earn from HBOS with their 5.25% account.

if any one wants to see the working out id be happy to share the xls file.

dan

masonic

stphnstevey wrote:

I've then gone to six years, which gets even more complex!!!! Arrghhhhhhh!!!!!!!!!

I believe a LONG TERM saver might be better, I just need to prove it to myself.

The way I deal with that issue is to deal with the money in chunks. A one year saver will spit out the money after one year, at which point it can be put into a savings account paying say, 5%. In a 2+ year saver, that money will earn the full interest rate of the regular saver, for example 8%.

If you are happy with working out the interest in each case for the first year, I'll just label those figures X and Y. I'll also assume a £3000 annual investment.

So, for the short term saver:-
Year 1: X
Year 2: X + £3000 x 5%
Year 3: X + £6000 x 5%
Year 4: X + £9000 x 5%...

And for the long term saver:-
Year 1: Y
Year 2: Y + £3000 x 8%
Year 3: Y + £6000 x 8%
Year 4: Y + £9000 x 8%...

I think, working with the above concept, you should be able to factor in the effect of compounding relatively easily.

masonic

dano wrote:

Please tell me I missed something as Id love to be earning more interest

You are overlooking the fact that the money can be earning interest in a normal savings account before being paid into the regular saver. You need to consider the total interest you can earn, not just that of the regular saver itself. Read Martin's article on the subject here.

dano_3

Thanks Masonic,

My spreadsheet now suggests that anything as low5.5% with no initial payment and 5% with an initial lumpsum equivalant to the montly amount works out more positive than just using a savings account.

Right now to find and apply for these accounts :-)

dan

VeryTrying_2

RayWolfe wrote:

I'm so fixated that I don't even use standing orders but bank transfers so that I never lose out the weekend days. ;-)

I thought I might be alone in splitting hairs so finely! Yes, the rule is: transfer on a Monday, unless it's a bank holiday, or it's the end of the month and don't transfer on a Thursday, don't transfer at all when there are three Rs in the month, throw salt over the left shoulder, etc. etc.

s71hj

re losing interest in transit: all my s/os go from my lloyds current account, lloyds policy being that they pay interest on all s/os and dds for the day they leave the account and another 2 days.

stphnstevey

dano wrote:

Please tell me I missed something as Id love to be earning more interest (wouldn't we all) and thats not even considering the extra .1% I can earn from HBOS with their 5.25% account.

Which HBOS account is this?

Afahmaep

dano wrote:

Thanks Masonic,

My spreadsheet now suggests that anything as low5.5% with no initial payment and 5% with an initial lumpsum equivalant to the montly amount works out more positive than just using a savings account.

Right now to find and apply for these accounts :-)

dan

Try BIRMINGHAM MIDSHIRES
1 Year Fixed Rate Bond - Annual Interest Rate
£1 minimum investment Access not permitted for term Annual interest rate Gross/AER: 5.57%
Net: 4.46%


1 Year Fixed Rate Bond - Monthly Interest Rate
£1 minimum investment Access not permitted for term Monthly interest rate Gross p.a: 5.43%
Net: 4.34%
AER: 5.57%
Call our Telephone Savings Hotline:

0845 603 6601

Lines are open Monday to Saturday 8am-8pm

stphnstevey

I think I was making it too complicated. Thats why i couldn't get my head aroound it.

If you include the interest from your original account whilst you drip feed (eg around 5%), then the money will always have at least that rate being paid on it. It is then commen sense that the money you put into a account with higher rate than the original account (eg. 5.5%) would earn more interest than the original account.

As to the question of whether a LONG TERM monthly saver is better than a SINGLE YEAR monthly saver, IF THEY HAD THE SAME RATE:
Then it is best to think in simple terms again. If in the second year you are starting back at the 5% from your original account, rather than a higher rate from a pot of money built up in a monthly saver at a higher rate (eg 6.5%), then it is obvious that the LONG TERM saver would give more interest.

However,if the SINGLE YEAR monthly saver rate is substantially higher (eg. 10%) than the LONG TERM monthly saver rate (eg. 6.5%), then the SINGLE YEAR monthly saver, even if you do need to reinvest the money each year, does out perform the LONG TERM monthly saver.

In summary, building up a pot in a LONG TERM monthly saver is better than current normal savings accounts. However, still make use of good rates on the SHORT TERM monthly savers to gain that bit more interest above the LONG TERM monthly savers.