Are we today witnessing the most blatant insider trading of bank shares ever?

qpop

Wobblydeb wrote: »

Ugh. No, no, no, no. :wall:

If someone saves monthly, a 5% regular saver is better than a 3% instant access, so telling people that it's only "worth" 2.5% is just wrong.

You mis-understand.

It's not a feature of regular saver products specifically, it's a feature of ANY savings product when considering regular amounts rather than lump-sums.

Of course a 5% AER regular saver offers a better interest rate than a 3% instant access product. That goes without saying (and is the point of a mandated AER being displayed on savings products). The half-of-the-headline-rate calculation just gives you a rough idea of the return you're likely to receive (gross of tax).

Wobblydeb

I just feel it is more accurate to tell people trying to calculate the return that it is half of the amount saved multiplied by the headline rate.

That way it concentrates the mind on the fact that the return is dependent upon the time the money spends in the account, and NOT any notion that regular savers somehow only pay half their headline rate.

2sides2everystory

I think the problem as always in anything financial services related is one of knowledge, integrity and fluency.

To suggest that it takes more than a few minutes to knock up a spreadsheet that calculates the exact interest on something as simple as that FD regular saver indicates a certain lack knowledge and fluency which one might imagine a financial services person ought ideally not to be without.

Not everyone can be confident with this kind of maths I know, but if you are not, then perhaps do not throw stones in glass houses.

If anyone is interested in how I use use Excel to calculate compound interest examples of this type then let me know, and similarly if anyone believes I have calculated it incorrectly then again, let me know please..

As a taster (again only if you are interested) the formula I have used in the first month for monthly interest is (((1+I1)^((A2-A1)/365))-1)*B1 where A1 is the start and initial deposit date and A2 is the monthly anniversary and next deposit date, and B1 is the initial deposit.

To a large extent Excel then allows you to copy the formula for the first month and to drag paste it across the next eleven lines which takes moments.

I1 is the quoted regular saver % rate.

Aegis

Your calculation is wrong: the HSBC/FD regular savers don't pay monthly interest, so factoring in a monthly compounding effect is actually less accurate (even if more rigorous) than doing the correct calculation, which is simply the holding period return at 8% simple for the monthly deposits.

By my reckoning, the correct calculation therefore looks like this:

Month Paid In Balance Accrued interest
1 300 300 2
2 300 600 6
3 300 900 12
4 300 1200 20
5 300 1500 30
6 300 1800 42
7 300 2100 56
8 300 2400 72
9 300 2700 90
10 300 3000 110
11 300 3300 132
12 300 3600 156

I'm really not sure how the more sophisticated compounded calculation came up with a smaller total than the simple interest calculator, something must be wrong with your formulae.

brasso

2sides2everystory wrote: »

Ah yes, everyone except the fund managers on behalf of our pension funds you mean ? I am sure the fund managers themselves agree with you.

What's your point? Fund managers will be more aware than anyone of what has become a clear trend in bank share price movements. Those with the remit to be agile in their trading will doubtless have taken advantage, as have many small traders.

But most big fund managers simply don't have the freedom to jump in and out of positions on an hourly, daily, or even weekly basis. The major funds are severely conservative. It's actually their big selling point. No Nick Leesons there.

I don't have much to crow about. Like the big funds, I lost a lot of money on the banks in 2008. Up till that point, LLOY and RBS etc seemed rock solid, and paid decent dividends. I don't have my stats here but I think I remember paying 150p or more a share for RBS. They plunged to about 12p at one point, and even now are only around 27p. I lost a lot.

Since then, I've finally managed to get back most of what I lost. Almost certainly not the case for the big pension funds, for reasons stated.

2sides2everystory

Aegis wrote: »

Your calculation is wrong: the HSBC/FD regular savers don't pay monthly interest, so factoring in a monthly compounding effect is actually less accurate (even if more rigorous) than doing the correct calculation, which is simply the holding period return at 8% simple for the monthly deposits.

By my reckoning, the correct calculation therefore looks like this:

Month Paid In Balance Accrued interest
1 300 300 2
2 300 600 6
3 300 900 12
4 300 1200 20
5 300 1500 30
6 300 1800 42
7 300 2100 56
8 300 2400 72
9 300 2700 90
10 300 3000 110
11 300 3300 132
12 300 3600 156

I'm really not sure how the more sophisticated compounded calculation came up with a smaller total than the simple interest calculator, something must be wrong with your formulae.

Well as I said, there could be something wrong with my formula - and if it is wrong, there is none more pleased than I to be shown exactly how. I am not here to score points just to make observations I think some people may find useful and to improve understanding if I can.

You do seem very sure though

Your assertion that interest is not paid monthly but is paid on some holding period return basis like a regular stock dividend coupled with other capital value adjustments doesn't yet resonate with my loose understanding of how regular saver products work in retail banks.

Whether regular savers pay monthly interest or only on maturity surely makes no difference to my illustration and formulae if in both cases the interest is accruing on a daily basis ? Of course if it isn't, then I shall be very pleased to understand it and to comment further if indeed there is some obvious complexity that I didn't know about.

You've used the word simple to describe the interest accruing in the way you understand it, but at the moment at least, I find your suggestion of the way it works is more complex than expected !

Thanks anyway for the suggestion that FD/HSBC products are subject to some kind of HPR calculations - I will take a look at it if I get time sometime this weekend and see if I can compare it to any information I have on my own FD 8% Regular Saver which is nearing maturity. I think I have two or three others including the HSBC one and indeed I also had a clutch last year I might look at for clues.

I may yet be enlightened

qpop - are you learning anything or just glad someone else for the timebeing asserts that this occasional Savings and Investments outsider is wrong ? Do you think you can stand the suspense, or have you already backed a winner ?

Laters

PS brasso - the City exists for the benefit of those that work in it. Period. Big fund managers or small agile fry - they sure get to know stuff, but whether following rules or not following rules, they ain't there for you or me or for the well-being of our pensions.

Edit1: OK its the weekend proper so shouldn't really be here, and not wishing to skew the topic of the thread further I have come back to just edit this post about the regular saver interest calculation. I don't know if it is was the simple interest calculator Aegis was referring to but have just found HSBC's own here: http://www.hsbc.co.uk/1/2/personal/savings/regular-saver/calculator . It only allows up to a £250 per month investment to be tracked but at 8% that indicates £130.52 gross interest over the year and if you multiply that by 300/250 you get £156.62 which is very close to Aegis £156. So that's one more reason to check my formula! Will take a further look later ...
Edit2: First Direct also have a savings calculator online but you will get the wrong answer if you try £300 initial deposit, £300 monthly, and 1 year term at 8%. It gives you a total investment including gross interest of £4,060 which I think I recognise from earlier playing with my formula ... it is actually 13 (wrong) x £300 plus £160 interest.

So FD and HSBC might be the same enormous worldwide bank but they might both be as right or as wrong as some of us mere mortals when it comes to calculating interest and presenting it to punters

annie_tanks

Brasso..I too lost a heck of a lot of money in the 2008 crash from my pension fund, so I switched to all equities..I had to otherwise I would never had made what I did, when the ftsie was about 4300 and pulled out when it was about 5500. It was a scary run, but managed to recover. .. but with retirement looming I had to make money somehow, for my annuity.
I often wonder if pension funds have done a similar exercise to maximise their members funds, or even made people aware that they can switch..I doubt it..and you do not even have to worry if you are in a final salary fund cause it is massively subsidised whatever the stock does..!!

I have ISA investments and the bank I am with has shown no growth in any fund in the last year except bonds.I cannot afford to take another hit, so i AM pulling out my investments and putting this into an Isa.At least I will have a regular tax free income.
I cannot see how people can make money in the forseeable future on the stock market, with the current Euroland crisis..except maybe traders..who somehow have managed to pay them selves a whopping bonus recently.
Things will only get worse..and a few are making money..but who..and where..

opinions4u

annie_tanks wrote: »

Brasso..I too lost a heck of a lot of money in the 2008 crash from my pension fund, so I switched to all equities..I had to otherwise I would never had made what I did, when the ftsie was about 4300 and pulled out when it was about 5500. It was a scary run, but managed to recover. .. but with retirement looming I had to make money somehow, for my annuity.
I often wonder if pension funds have done a similar exercise to maximise their members funds, or even made people aware that they can switch..I doubt it..and you do not even have to worry if you are in a final salary fund cause it is massively subsidised whatever the stock does..!!

I have ISA investments and the bank I am with has shown no growth in any fund in the last year except bonds.I cannot afford to take another hit, so i AM pulling out my investments and putting this into an Isa.At least I will have a regular tax free income.
I cannot see how people can make money in the forseeable future on the stock market, with the current Euroland crisis..except maybe traders..who somehow have managed to pay them selves a whopping bonus recently.
Things will only get worse..and a few are making money..but who..and where..

Well a bog standard FTSE tracker will have made around 10% in the last month.

annie_tanks

Opinions4u..pls explain what ftse tracker, so I can look into this a bit more..ta..

opinions4u

annie_tanks wrote: »

Opinions4u..pls explain what ftse tracker, so I can look into this a bit more..ta..

Any fund that tracks the FTSE100 with any degree of accuracy should be around 10% higher than it was a month or so ago.

http://www.bbc.co.uk/news/business/market_data/stockmarket/3/one_month.stm

http://www.trustnet.com/Factsheets/Factsheet.aspx?fundCode=MDFTOD&univ=U&pagetype=performance