Letters to Liz - Telegraph

jamesd

The regular saver in conjunction with savings account is:

6.5 months of 250 = 1625 at 12.5% => 203.12
5.5 months of 250 = 1375 at 5%    =>  68.75
                     total           271.87
    (effective 9.06% on all 3000)

The 5% account alone is:

12  months of 250 = 3000 at 5%    => 150

The NS&I Direct ISA at 5.8% is (ignoring the 1000 opening for comparison purposes):

12  months of 250 = 3000 at 5.8% => 174
 equivalent to 7.25% at basic rate
 equivalent to 9.66% at higher rate. Higher than regular saver.

It could be foolish to use these instead of the ISA allowance because the ISA allowance provides long term benefits. Opening one now to mature in March 2008 and increase the amount you can save in the ISA at the end of the 2007/8 tax year may be interesting.

Secret_Wookie

Don't think anyone disagrees with the importance 0f using ISA's first. Standard practice for the people who know what they are doing and it's the advice given out from this website.

RayWolfe

Secret_Wookie wrote:

Can't say i've expected a journalist to give accurate or correct advice. They find it much more fun to right stories putting things in a negative light.

I wouldn't really know what to do with a nespaper article that was:

a) True
b) Helpful
c) Positive.

Ray ;-)

Mikeyorks

Innys wrote:

What I do have an issue with is the fact that she has got her sums wrong and implied that you will only get an extra £50 by taking one out.

In respect of the £50 this is what she actually wrote :-

As the bank itself admits, total interest on the maximum £3,000 balance will amount to roughly £200 – or around £50 more than I'd get by leaving my £3,000 in an account paying 5 per cent-plus.

...... which is wholly accurate! My highlight on the bit you've clearly missed / chosen to misinterpret.

Yes she has omitted that existing savings would be benefitting from the rate they were earning in their home account. And she's not comparing drip feed with drip feed. As the essence of the article (read her intro paragraph) revolves around the points she makes here :-

1)I can't see the point of going through the hassle of transferring your current account .... 2)I am vaguely tempted to put in some money myself, but only because I already have a Barclays current account.

- i.e there is no attempt to spell out the workings of a Reg Saver. She is simply stating that they involve a lot of effort, if away from your home Bank ........ for relatively slender rewards. It's a point of view I totally align with

Innys

Mikeyorks

I take your point, but if one were to interpret her text literally, she is comparing the interest on the average balance in the account, the interest on £3,000 (i.e. 3,000x5% = £150) with the interest on £1,500 (1,500x12.5% = £187).

To my mind that is comparing apples with pears and, is misleading. She is implying that you will only get an extra £50 odd, to use an RS, which is simply not the case.

If she were to compare apples with apples you would get an extra £112, approximately. That is what she should be stating and then let readers make up their own minds if they feel it is worth bothering with.

The point I am trying to make is, nothwithstanding her view on RS's, she should be stating the facts objectively and doing meaningful comparisons. This is clearly not what she has done.

Mikeyorks

Innys wrote:

To my mind that is comparing apples with pears ......

I agree with you .... but it's in the clearly stated context of 'do you really want this hassle?' Whereupon most people, not just journalists, tend to use the comparison that most proves their point?

Innys wrote:

She is implying that you will only get an extra £50 odd, to use an RS, which is simply not the case.......

It is accurate if ... continuing with the theme of comparing apples with pears ... the money deposited to the RS is new money with no shelf life elsewhere.

I don't think this article was intended as a balanced view of RSs per se. It was intended, as the opening para, to ensure her readers fully question the effort v the reward.

Innys

Would you Adam and Eve it??? Read this:

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/01/30/cmliz30.xml

Fame at last!

What's more, she's a woman who admits she made a mistake - I may find out if she's single.....:D

Mikeyorks

You're right - well done you. But don't get too carried away with visions of the red carpet and adoring crowds - as she hasn't exactly stood on her head? :-

But my memory is lousy and I’m concerned about forgetting to switch the money back into a better-paying account at the end of the year, risking wiping out much of the benefit of the higher rate.

I definitely don't think these high-paying, short-term accounts are worth switching current accounts for – and, if I were an existing Alliance & Leicester current account holder, I would strongly resent the fact that A&L's one-year regular savings account, which pays 12 per cent interest, is available only to new current account holders.

Most of these high-rate offers involve not only switching current accounts but also paying a fair whack into them each month to qualify for the higher rate on the savings account.

.... it doesn't exactly inspire one to contribute??

Innys

I only chose to read the first paragraph:

"You're right. I had forgotten about the interest earned on the £3,000 in an existing account. "

I ignored the rest. :rolleyes:

It's true that what she says doesn't inspire people to contribute. However, the subtle point I was trying to make was that she's not always correct and I like to think that has been accepted.

Incidentally, she chose to omit the last bit of my e-mail as follows:

"It is disappointing that you do not appreciate the fundamentals of these products especially as your readers will, no doubt, be placing reliance on your advice."

She obviously had a limit on the length of text she could include. :rotfl:

Mikeyorks

Innys wrote:

She obviously had a limit on the length of text she could include.QUOTE]


.... doesn't normally stop the female of the species from finishing their sentence / paragraph / book?