Regular savers explained

Mikeyorks

Al_Mac wrote:

Some one said I should write an idiots guide to regular savers, so I did:D To the best of my limited knowledge:o They may have been being funny.

No, I wasn't being funny. I thought you did so well with your incremental sticky over on Budgeting & Current Accounts etc .. that you should keep going whilst the mood was upon you (that's what the OH says to me .. don't know what she means;).)

http://forums.moneysavingexpert.com/showthread.html?p=4159743#post4159743

But the 'my Regular Saver interest is wrong' ... is such a favourite, I thought you'd do a good job on it.:D I've replied to a few and used various permutations on the theme. But the Questions keep coming .. so clearly my answers are incomprehensible / crap (delete as appropriate?).

Been a bit tied up .. but will have a good look at the committee output tomorrow (always did prefer horses with 8 legs!). The style of your original was OK as it clearly (without offence to the people who ask) needs to be concise / simple phrasing and as devoid of arithmetic as possible. Off to consult Noddy for ideas.

PS

Doesn't help the flow when someone posts 'my Reg Saver doesn't work' ...... in the middle of the meeting!!

MarkyMarkD

Mikeyorks wrote:

But the Questions keep coming .. so clearly my answers are incomprehensible / crap (delete as appropriate?).

No, clearly your answers (and mine and many others, and (as now revealed a few posts ago) Martin's original article all very clearly explain that anyone posting "regular savers are a con" is a few marbles short of a game, but those who post these posts appear to be incapable of reading more than three words into any sentence.

RayWolfe

tom188 wrote:

It beggars belief how misguided some people appear to be, and the chorus of "its misleading" that often follows one of these posts is nothing more than depressing.

And, of course, it's not just this subject where this sort of thing happens!
We seem to be living in a society where if things are not spelt out in words of one syllable then "Compensation needs to be paid for misleading me!"
Welcome to the Internet. Do I detect that I am becoming a Grumpy Old Man? ;-)

derrick

RayWolfe wrote:

Go to EDIT and follow the prompts.

Done it now, it would not work yesterday!!

stphnstevey

Could anyone design a spreadsheet for this (I know some people like the challenge of this)- that way you could easily work this out.

Just need to input RS payment, rate and term and then input feeder account details and perzazz! the amount of interest you get!

tom188

You could do a basic spreadsheet quite easily. To do it accurately is much more difficult as you have to consider transfer times, lengths of months, rate changes etc.

Mikeyorks

Al_Mac wrote:

That's about it. Any questions, so this can be refined

I think (User requirement = totally simplistic, but giving insight to the most frequent misconception i.e the interest calculation ) you've got the style / 'user mentality' just about spot on. No computations / more or less words of one syllable etc = best chance of success?

Just one suggestion if I may? Where you say :-

But please read the site article HERE first

.. expand to read :-

But please read the site article HERE first .. in particular the paragraph headed 'Regular Savers Really Do Pay These Top Rates'

Well done ... clearly the right man for the job.;)

stphnstevey

tom188 wrote:

You could do a basic spreadsheet quite easily. To do it accurately is much more difficult as you have to consider transfer times, lengths of months, rate changes etc.

I guess the fine details would only make a few pounds difference, so a basic spreadhseet would work

MarkyMarkD

Now, that's a challenge that I like.

Even better, I don't think you need a spreadsheet. I think I can come up with a simple formula.

I'll have a go and BRB.

Hmm, ok I've had a go. Unfortunately a simple formula doesn't work because of the lost interest whilst the money's in transit.

But, as an approximation, the extra interest you gain by using a regular saver account is worth about £6.30 per £100 of regular savings, over a full year, per % of rate differential.

So, as an example:

If your "normal" savings account pays 5%, and your regular saver pays 12% with a maximum of £250 per month, using my approximate formula you would gain:

2.5 (which is £250/£100) x 7 (which is 12% - 5%) x £6.30 = £110.25.

The actual benefit is £111.25 - but I think that's close enough.

If the differential was just 5% (based on a 10% regular saver account), the approximate formula gives:

2.5 (which is £250/£100) x 5 (which is 10% - 5%) x £6.30 = £78.75.

The actual benefit is £79.11.

The assumptions for the formula are that:

- you lose an average of 3 days' interest per month, due to the BACS transfer time (allowing for the odd weekend intervening - you can reduce this marginally if you transfer the funds by manual BACS payment rather than a standing order but it really isn't worth the hassle);
- the standing orders leave your account on the 1st day of each month;
- the account lasts for a calendar year;
- both the funding account and the regular saver pay interest annually in arrears.

regularsaver1

I've had people shouting in the bank saying that regular savers are mis-leading, when they are in black and white surely!?