To cash in or not - Help!

Mandragorin

I have been putting away £25 a month in a savings bond since 2000 with another 10 years before it matures
I have worked out I've invested £4475. This is now worth £5747, an increase of 28.42%

What I want to work out is whether I have actually made any money. On the face of it, it looks like I have made £1272 but I'm not sure how I should account for inflation on the money I have invested to compare whether in fact I have made any money or not.

I'd be really grateful for any help with the math!

Thanks

YorkshireBoy

Loads of calculators from a quick google search. Here's one off the first page...

http://www.thisismoney.co.uk/money/bills/article-1633409/Historic-inflation-calculator-value-money-changed-1900.html

You're not going to be happy!

veryintrigued

YorkshireBoy wrote: »

Loads of calculators from a quick google search. Here's one off the first page...

http://www.thisismoney.co.uk/money/bills/article-1633409/Historic-inflation-calculator-value-money-changed-1900.html

You're not going to be happy!

Not sure any of those are fit for purpose for a R.S?

Heres another:

http://www.thisismoney.co.uk/money/saving/article-1633419/Monthly-lump-sum-savings-calculator.html

However remember you have only saved for 14.92 years (14 years 11 months) so its ish at 3.16% on this one for 15 years.

YorkshireBoy

veryintrigued wrote: »

Not sure any of those are fit for purpose for a R.S?

Have I misunderstood the question?

veryintrigued

YorkshireBoy wrote: »

Have I misunderstood the question?

I think maybe I have!!

We've both directed the OP to calculators that maybe give him a bit of his answer.

'Mine' certainly doesn't take into account inflation (pure annual % increase)

Yours will hopefully help now they have that figure.

Mandragorin

Thanks guys.
That first link certainly does help to give me a idea of how much my yearly investment from 2000 would be worth.

So on a straightline basis it should be over £6k just to keep up with inflation. On a compound basis it'll probably be more.

I think I will take the money out, even if the company are saying that it's performing really well!!

Thanks again

jimjames

You'd certainly have far more flexibility and visibility if you cashed it in and put the money in a S&S ISA instead as well as probably much lower charges.

bigadaj

Mandragorin wrote: »

Thanks guys.
That first link certainly does help to give me a idea of how much my yearly investment from 2000 would be worth.

So on a straightline basis it should be over £6k just to keep up with inflation. On a compound basis it'll probably be more.

I think I will take the money out, even if the company are saying that it's performing really well!!

Thanks again

You are right that compounding would require a larger sum, however probably more important is the drip feeding element of regular savings, the average pound invested has been there for less than 8 years. Therefore whilst you have lost a little in this time it may not be as bad as it appears. It's done slightly worse than cash savings over that time, and dramatically less than any stock market investment, such as a result monthly saver to a large investment trust for example.

You'll need to check your terms and conditions for ability to withdraw the money and any penalties, probably fine after 10 years but these are old fashioned policies with some odd conditions and it may be that you have to time closing it to a certain anniversary to reduce or eliminate any charges or clawback.

atush

What will you do with it when you take it out?

Dont spend it, put it into a S&S isa. Drip feed it into a fund, along with your 25 per month.

p00hsticks

YorkshireBoy wrote: »

Have I misunderstood the question?

I don't think you've necessarily misunderstood the question, but I also don't think that the OP is necessarily asking the right question.

They seem to be taking the simplistic view that they have had £x invested for y years which has earned £z interest. However, as bigadaj has pointed out, it's not as simple as that, because the OP has been drip feeding money in over the whole £15 years. So whilst £25 has been invested for 15 years, £25 has only been invested for a month, and all the other £25's for various times in between.

So it's not trivial to work out how he's doing in relation to inflation over those varying timescales......