Tsb 555 offer

Herbalus

FreddieFrugal wrote: »

Yeh whoever said c £13 for a basic rate tax payer was correct.

The exact amount is £13.16.

You must have missed the earlier point that any regular saver opened now will have interest paid in a years time, which will be after April 2016, and therefore any basic rate taxpayer will have £1000 interest allowance before they pay tax. So £13.16 is only accurate if the basic rate taxpayer has more than £1000 in interest, which considering they're only investing £50 per month is quite unlikely.

FreddieFrugal

Herbalus wrote: »

You must have missed the earlier point that any regular saver opened now will have interest paid in a years time, which will be after April 2016, and therefore any basic rate taxpayer will have £1000 interest allowance before they pay tax. So £13.16 is only accurate if the basic rate taxpayer has more than £1000 in interest, which considering they're only investing £50 per month is quite unlikely.

Yeh big difference...

£13.94 then... woo an extra 78p a year!

Ballard

FreddieFrugal wrote: »

Yeh whoever said c £13 for a basic rate tax payer was correct.

The exact amount is £13.16.

It's easiest to work this out using a spreadsheet.

A1 = £50 x ((4%/12)+1))
A2 = (A1 + £50) x ((4%/12)+1))
A3 = (A2 + £50) x ((4%/12)+1))

Etc. Until you get to 12 months

I set up a spreadsheet to work out interest on mortgage, and to predict the balance change over the life of it, per month. And impact of overpayments. (Gives a much more accurate picture than the MSE overpayment calculator)

Did same thing with savings, so I know (assuming nothing disastrous happens) how much money we'll have in the bank in 6 years time.

Good to do seperate cells for the interest rate so that you can vary them and see what affect it has.

May not be worth going to the bother for £13.16 but if you have lots of accounts and a mortgage and you're looking into savings I can well recommend doing a spreadsheet. Will save time in future when you just want to check something like the question you asked.

This would work out very accurate but I don't think that it'd be exact as it assumes a year of 12 months of identical length. I think that if you wanted it exact you'd need to take that into consideration. Another two things to think about would be leap years and whether the standing order to fund the account is always on the same day each month and not affected by weekends.

masonic

FreddieFrugal wrote: »

Yeh big difference...

£13.94 then... woo an extra 78p a year!

No, if the interest is part of the tax free allowance it would not be £13.94, but £16.13 (or thereabouts), so about £3 more than the taxed figure you calculated.

masonic

Ballard wrote: »

This would work out very accurate but I don't think that it'd be exact as it assumes a year of 12 months of identical length. I think that if you wanted it exact you'd need to take that into consideration. Another two things to think about would be leap years and whether the standing order to fund the account is always on the same day each month and not affected by weekends.

It also assumes interest is paid and compounded monthly, which it is not. This will probably have an even greater impact on its accuracy.

YorkshireBoy

FreddieFrugal wrote: »

It's easiest to work this out using a spreadsheet.

The "easiest" way to work it out is to use the formula...

(£50 x 12) x 5% / 12 x 6.5 = £16.25 (gross)

But it depends how accurate you want your answer. I'd suggest that for most people the above basic formula would be good enough. The only way to be 100% accurate is to do 365 (or 366*) daily interest calculations of...

Closing Balance x 5% / 365 (or 366*)

And then sum them up.


* The banks are allowed to use either 365 or 366 days in a leap year. What do TSB use?

Ballard

masonic wrote: »

It also assumes interest is paid and compounded monthly, which it is not. This will probably have an even greater impact on its accuracy.

You're right. I hadn't looked into the formula deeply enough to realise.

FreddieFrugal

masonic wrote: »

It also assumes interest is paid and compounded monthly, which it is not. This will probably have an even greater impact on its accuracy.

Yes that's true. Used to dealing with ones that pay monthly. My error.
Compound interest on that amount makes a difference of pennies though with such a relatively small sum.

SaveSomeMore_2

It's not a whole lot, but better than nothing.

Back when I was saving for a deposit I did the £300 a month into First Direct's 6% regular saver (4.8% post tax). I believe it worked out at about £95 interest at the end of the year. Nothing stellar, but more than I would have got if those funds were sat in an ISA at the time's rates (1.5-2% tax free), and as they say, every little helps.

I believe you can time it so that it drip feeds from another savings account to get a couple more percent interest (a few more pounds a year), don't think I could do that with mine though.

Archi_Bald

SaveSomeMore wrote: »

I believe you can time it so that it drip feeds from another savings account to get a couple more percent interest (a few more pounds a year), don't think I could do that with mine though.

You can drip feed but it will not amount to a couple more percent interest. The max you can make with a TSB Monthly Saver is 5% AER, and 6% AER with FD/HSBC/M&S Regular Savers, regardless of whether you drip feed or not.