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First Direct's 7% Savings Account
Comments
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Do you have any alternative plans that would earn more than this?User36750 said:Thanks all.
Not sure it's really worth it for £135ish.
But thank you for showing workings out too!If you have £3,600 in an easy access account @ 2.85% you could drip feed it over the 12 months and earn £182 in a year.
https://www.moneysavingexpert.com/savings/regular-savings-calculator/4 -
surreysaver said:
I'm not sure how the calculator does its maths - I don't make it £135, I reckon closer to £126ColdIron said:
The calculator does an accurate maths calculation so is better than a rough calculation.surreysaver said:
A rough calculationColdIron said:
Have you just multiplied £1,800 by 7%?surreysaver said:
I'm not sure how the calculator does its maths - I don't make it £135, I reckon closer to £126ColdIron said:1 -
It's not the accuracy of the maths that is at issue here, it is the validity of the underlying assumptions. The end results depend on a number of factors, including which date the account is opened, whether it is a leap year, whether or not the date subsequent contributions is brought forward in the month (not relevant in this case), and if so whether a 13th payment can be made. A 'rough calculation' is likely to use less accurate assumptions than the MSE calculator (for example, calculating on the basis of an assumed average balance), but the MSE calculator will also make some assumptions that may or may not bear out in a real world example. It is possible for one to arrive at a closer answer through a rough calculation if you happen on a more valid set of input values. In this case £1800 is a poor choice of input value for the average balance.RG2015 said:surreysaver said:
I'm not sure how the calculator does its maths - I don't make it £135, I reckon closer to £126ColdIron said:
The calculator does an accurate maths calculation so is better than a rough calculation.surreysaver said:
A rough calculationColdIron said:
Have you just multiplied £1,800 by 7%?surreysaver said:
I'm not sure how the calculator does its maths - I don't make it £135, I reckon closer to £126ColdIron said:
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surreysaver said:
A rough calculationColdIron said:
Have you just multiplied £1,800 by 7%?surreysaver said:
I'm not sure how the calculator does its maths - I don't make it £135, I reckon closer to £126ColdIron said:Good enough to do in your head but not very accurate, this would get you closerMonthly amount * rate * 6.5300 * 0.07 * 6.5 = £136.506 -
I'm a fan of the above method, which calculates an average balance based on the formula for the sum of an arithmetic progression. The assumption is that there are an equal number of days between each payment and until maturity, which is clearly not quite right. However, to get more accuracy one must delve into months with different numbers of days, where they fall in the account year, and of course with payments that can't be made on non-working days, or otherwise distributed unevenly. If you've gone that far, you might as well input the whole series of cashflows and relevant dates in order to get a precise answer.
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I should have said more accurate. £135 is more accurate than £126.masonic said:
It's not the accuracy of the maths that is at issue here, it is the validity of the underlying assumptions. The end results depend on a number of factors, including which date the account is opened, whether it is a leap year, whether or not the date subsequent contributions is brought forward in the month (not relevant in this case), and if so whether a 13th payment can be made. A 'rough calculation' is likely to use less accurate assumptions than the MSE calculator (for example, calculating on the basis of an assumed average balance), but the MSE calculator will also make some assumptions that may or may not bear out in a real world example. It is possible for one to arrive at a closer answer through a rough calculation if you happen on a more valid set of input values. In this case £1800 is a poor choice of input value for the average balance.RG2015 said:surreysaver said:
I'm not sure how the calculator does its maths - I don't make it £135, I reckon closer to £126ColdIron said:
The calculator does an accurate maths calculation so is better than a rough calculation.surreysaver said:
A rough calculationColdIron said:
Have you just multiplied £1,800 by 7%?surreysaver said:
I'm not sure how the calculator does its maths - I don't make it £135, I reckon closer to £126ColdIron said:
The poster used a rough calculation and said they weren’t sure how the calculator did it’s maths.
The calculator clearly gave a more accurate answer than their admitted rough calculation.
I found their comparison and question illogical.0 -
Indeed, I don't know exactly what the calculator is doing either, but a quick glance at the official regulated figure from the provider should have indicated which answer should be treated with greater suspicionRG2015 said:
I should have said more accurate. £135 is more accurate than £126.masonic said:
It's not the accuracy of the maths that is at issue here, it is the validity of the underlying assumptions. The end results depend on a number of factors, including which date the account is opened, whether it is a leap year, whether or not the date subsequent contributions is brought forward in the month (not relevant in this case), and if so whether a 13th payment can be made. A 'rough calculation' is likely to use less accurate assumptions than the MSE calculator (for example, calculating on the basis of an assumed average balance), but the MSE calculator will also make some assumptions that may or may not bear out in a real world example. It is possible for one to arrive at a closer answer through a rough calculation if you happen on a more valid set of input values. In this case £1800 is a poor choice of input value for the average balance.RG2015 said:surreysaver said:
I'm not sure how the calculator does its maths - I don't make it £135, I reckon closer to £126ColdIron said:
The calculator does an accurate maths calculation so is better than a rough calculation.surreysaver said:
A rough calculationColdIron said:
Have you just multiplied £1,800 by 7%?surreysaver said:
I'm not sure how the calculator does its maths - I don't make it £135, I reckon closer to £126ColdIron said:
The poster used a rough calculation and said they weren’t sure how the calculator did it’s maths.
The calculator clearly gave a more accurate answer than their admitted rough calculation.
I found their comparison and question illogical.
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The amount invested increases from £300 in month one up to £3600 in month 12.Average amount invested is £300 + £3600 divided by 2 (£1950). So interest will be £1950 * 7% = £136.50.3
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Just to close off this section of the thread, the MSE calculator gives £135 and the FD example gives £136.50.masonic said:
Indeed, I don't know exactly what the calculator is doing either, but a quick glance at the official regulated figure from the provider should have indicated which answer should be treated with greater suspicionRG2015 said:
I should have said more accurate. £135 is more accurate than £126.masonic said:
It's not the accuracy of the maths that is at issue here, it is the validity of the underlying assumptions. The end results depend on a number of factors, including which date the account is opened, whether it is a leap year, whether or not the date subsequent contributions is brought forward in the month (not relevant in this case), and if so whether a 13th payment can be made. A 'rough calculation' is likely to use less accurate assumptions than the MSE calculator (for example, calculating on the basis of an assumed average balance), but the MSE calculator will also make some assumptions that may or may not bear out in a real world example. It is possible for one to arrive at a closer answer through a rough calculation if you happen on a more valid set of input values. In this case £1800 is a poor choice of input value for the average balance.RG2015 said:surreysaver said:
I'm not sure how the calculator does its maths - I don't make it £135, I reckon closer to £126ColdIron said:
The calculator does an accurate maths calculation so is better than a rough calculation.surreysaver said:
A rough calculationColdIron said:
Have you just multiplied £1,800 by 7%?surreysaver said:
I'm not sure how the calculator does its maths - I don't make it £135, I reckon closer to £126ColdIron said:
The poster used a rough calculation and said they weren’t sure how the calculator did it’s maths.
The calculator clearly gave a more accurate answer than their admitted rough calculation.
I found their comparison and question illogical.
The 6.5 method also gives £136.50 so all are pretty close.
£3,600 x 7% / 2 gives £126 but has the benefit of being an easier calculation for mental arithmetic.
All have their merits so the choice is personal.
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