How do you Calculate my ISA yearly Interest ££/amount, for £5000, at a rate of 4%

Danny_G

Can you please calculate the amount of interest I will earn, per year
with £5000 in my isa account, at a rate of 4%

(I wont be adding any more into it)

so 4% isa rate, what is the Yearly interest i will be earning on it? (if £5000 is in it)

I don't know how to calculate it. Please show me the formula/equation...and work it out

(rather than show me a link to a interest calculator lol)

oldvicar

£5000 times 4 divide 100 = £200


If the whole amount wasn't put in at once, or if the interest payment date comes around less than a full year after account opening then the first year's interest will be less than £200.

unimaginative_user_name

Won't the interest be compound though? Old vicar is right about year one if the capital is invested foe a full year. In the second year surely the interest would be 4% of the original investment plus first year's interest and so on.

So at the end of the second year the total balance would be £5000 plus £200 interest for the first year plus £204 interest for the second year. giving a total of £5404 at the end of the second year.

This all depends as old vicar said on whether the initial sum was invested all at once and on the date the interest is applied - the anniversary of the account opening or a specific date which means that the first interest payment may be less than a year's worth.

Pollycat

Danny_G wrote: »

Can you please calculate the amount of interest I will earn, per year
with £5000 in my isa account, at a rate of 4%

(I wont be adding any more into it)

so 4% isa rate, what is the Yearly interest i will be earning on it? (if £5000 is in it)

I don't know how to calculate it. Please show me the formula/equation...and work it out

(rather than show me a link to a interest calculator lol)

Is this a fixed term ISA? i.e. over 2 or more years?

If not, which financial institution have you invested with?
Just curious.

thenudeone

Most accounts only add interest annually, so compounding isn't an issue if you're only in for 1 year.

If you're planning to invest for less than 1 year you are slightly better off with an account that only adds interest once a year, because the interest rates are usually slightly lower for monthly interest accounts so that the AER (which assumes 1 year of investment and includes the effect of compounding) is the same whichever option is chosen.