7.0% actually 3.69%?

zagfles

AmityNeon said:

zagfles said:

Do you not think children should be taught how to add up, should they just be told to work it out logically?

Where did I give that impression? Just because arithmetic can be logically deduced without learning doesn't mean I advocate for not teaching children arithmetic; in fact, the teaching of basic arithmetic is conducted through logic, purely because it's logical, i.e. it simply makes sense and is easy to grasp. This is unlike other disciplines where specific facts must be remembered to form part of accumulated knowledge and wisdom.

zagfles said:

Personal finance can involve some complicated maths. How much will you have in 10 years if you save £100 per month at a growth rate of 4%? How much will you need in your pension pot to be able to draw £500 a month for the next 30 years assuming a growth rate of 2% above inflation?

You could work it out from first principles using "logic", you could use a spreadsheet, or you could look up the geometric progression formula.

Do you have a problem with logic? Logic is the basis for those first principles and a spreadsheet simply helps crunch the numbers. What I don't expect the average person to do is derive the formula themselves solely through logic, as that requires an interest in maths.

Err, well maybe we're talking at cross purposes then. You seem to be saying people don't need teaching maths or be shown mathematical techniques because they should be able to work it all out themselves.

AmityNeon

zagfles said:

AmityNeon said:

zagfles said:

AmityNeon said:

zagfles said:

There are other examples. Eg

x^2 = y^2.

So logically, x = y, right? Same operation both sides?

No, because the concept of a double negative is still logical. If I owe three people a negative debt of £3 each, it equally means three people each owe me £3. I can go up uphill forwards, or turn my body around and walk backwards (whilst still moving uphill).

That's certainly logical. But I was talking about the general "logical" principle of applying the same operation to both sides of the equation.

What about it? You must apply the same operation to both sides of an equation; that has no relation to forcing logic to somehow deduce that x = y.

OK, using your logic, work out the amount of energy your solar panels would generate on a sunny day. I guarantee you won't be able to do it without using calculus. If you can work out how to use calculus from first principles without being taught it or looking it up, I'll be mighty impressed!

I'm not sure what point you think I made for you to steer this conversation towards calculating the amount of energy solar panels can generate on a sunny day, or how that is relevant to applying the same operations to both sides of an equation to maintain logical consistency.

You seem to be under the impression I believe logic renders maths useless, or something. Logic is simply the basis of maths; you cannot study maths successfully without being a logical and critical thinker. You also don't need to like or study maths to use basic arithmetic and logic to understand personal finance at the consumer level.

AmityNeon

zagfles said:
You seem to be saying people don't need teaching maths or be shown mathematical techniques because they should be able to work it all out themselves.

Really? Where did I say that?

zagfles

AmityNeon said:

zagfles said:

AmityNeon said:

zagfles said:

AmityNeon said:

zagfles said:

There are other examples. Eg

x^2 = y^2.

So logically, x = y, right? Same operation both sides?

No, because the concept of a double negative is still logical. If I owe three people a negative debt of £3 each, it equally means three people each owe me £3. I can go up uphill forwards, or turn my body around and walk backwards (whilst still moving uphill).

That's certainly logical. But I was talking about the general "logical" principle of applying the same operation to both sides of the equation.

What about it? You must apply the same operation to both sides of an equation; that has no relation to forcing logic to somehow deduce that x = y.

OK, using your logic, work out the amount of energy your solar panels would generate on a sunny day. I guarantee you won't be able to do it without using calculus. If you can work out how to use calculus from first principles without being taught it or looking it up, I'll be mighty impressed!

I'm not sure what point you think I made for you to steer this conversation towards calculating the amount of energy solar panels can generate on a sunny day, or how that is relevant to applying the same operations to both sides of an equation to maintain logical consistency.

You seem to be under the impression I believe logic renders maths useless, or something. Logic is simply the basis of maths; you cannot study maths successfully without being a logical and critical thinker. You also don't need to like or study maths to use basic arithmetic and logic to understand personal finance at the consumer level.

Yes you do. That's the point. I've given enough examples where you really do need to have done some study of maths or at least have been taught or looked up mathematical techniques. Unless you really are Einstein and can work all these things out from first principles. How much energy your solar panels generate is a personal finance issue. To work it out, you need calculus. It's an extreme example, but other stuff like drawdown etc does need mathematical techniques which can be taught or looked up. There's no point reinventing the wheel.

OceanSound

Albermarle said:

Basically if you have £3600 to save as a lump sum, you would be better just to put it a normal savings account for a one year fix. This FD account is more for people who are regular monthly savers.

Using the drip feed method where you deposit the £3600 in a current account like Kroo then drip feed the monthly payment of £300 in to First Direct Current Account then in to Regular Saver (RS) brings in a higher profit than saving it as a lump sum. 

I checked the moneyfacts website for the highest interest paying place for a 1 year Fixed deposit for £3600. It is Hampshire trust Bank paying 4.91%. So this would be ---> 3600 x 0.0491 = £176.76

However, if using the drip feed method. First Direct RS will pay £136.50 (source: https://www.firstdirect.com/savings-and-investments/savings/regular-saver-account/ ) notice though, if you scroll down the page under key product info it says:

• total deposit at the end of 12 months: £3,600....

• balance at the end of 12 months: £3,726.50

£3,726.50 - £3600  is £126.50. So there appears to be a discrepancy. 

Anyway if we use Kroo current account which pays 3.33%, then for the 12 months the interest works out to be  £58.29. I calculated this figure month by month. e.g. staring off with £3300 (because £300 of the £3600 will be paid in to FD to start with), then every month deducted £300 from the £3300 and worked out the interest every month for the 12 months then added the figures together. 

Now, we add £58.29 to £126.50 (interest from FD RS) and the combined total is £184.79 - which is more than the profit from the 1 year fixed rate. Note this is using the FD RS interest of £126.50 not £136.50. If we use the latter, the profit will be even more. 

BTW, I've a spreadsheet where I use this formula:

=SUM(12*E10)*C10/12*6.5

to calculate the interest from a regular saver. When I plug in the values. i.e. the interest divided by 100 (in this case 0.07) and the monthly deposit amount (in this case 300), it gives me a result of 136.50. 

As another check I then visit: https://www.moneysavingexpert.com/savings/regular-savings-calculator/

and plug in the values, and the result is £135. So, the £136.50 or £135 figure seems correct, not the £126.50. Probably a typo, and the 'balance at the end of 12 months: ' should state £3,736.50.

zagfles

AmityNeon said:

zagfles said:
You seem to be saying people don't need teaching maths or be shown mathematical techniques because they should be able to work it all out themselves.

Really? Where did I say that?

"It's not a case of they 'should' be able to solve everyday maths problems with innate logic; they can do it. "

RG2015

RG2015 said:

TheBanker said:

Nobody has answered my question.

If showing the rate as 7% AER is deceptive, how should the bank describe the interest?

I did say earlier that to show a rate of 3.69% as per the thread title would be equally as wrong, (if not even more “deceptive”).

I haven’t read the whole thread in detail, however I think the consensus is that the word deceptive is inappropriate.

What I believe is that showing the headline rate as 7% without any “headline” caveat, can lead to some people misunderstanding the expected yield.

We need a simple, concise way of making it very clear that the nature of a 12 month RS meant the yield would only be about half of a simple 7% x £3,600.”

I did say concise, so it would require the skills of a mathematical wordsmith to achieve this more successfully than is currently the case.

Cue for forum wordsmiths to enter the fray (if they ever get this far in such a varied and  “booooring” collection of posts).

Apologies for deviating from the maths/logic/complicated formula paradoxes side topic....

This is what the main MSE staff say on their Regular Saver page. I am sure there is a better (more concise) way to get this message across in the banks' RS page headline.
(Although the bold bit in blue is a start.)

5.You'll earn what looks like half the headline interest rate

On regular savings, the interest you get will be about half the interest rate of the account. But don't worry, it's not a con – it's just how the maths works out. It's all down to the money being saved monthly rather than in one lump sum.

This has caused confusion and disappointment in the past, with some complaining that they've received less interest than they thought they would. Yet that's because they expected the wrong amount, not because they were underpaid. Here's an example (though for ease we've used an unrealistic interest rate)...

https://www.moneysavingexpert.com/savings/best-regular-savings-accounts/

AmityNeon

zagfles said:

AmityNeon said:

zagfles said:

AmityNeon said:

zagfles said:

AmityNeon said:

zagfles said:

There are other examples. Eg

x^2 = y^2.

So logically, x = y, right? Same operation both sides?

No, because the concept of a double negative is still logical. If I owe three people a negative debt of £3 each, it equally means three people each owe me £3. I can go up uphill forwards, or turn my body around and walk backwards (whilst still moving uphill).

That's certainly logical. But I was talking about the general "logical" principle of applying the same operation to both sides of the equation.

What about it? You must apply the same operation to both sides of an equation; that has no relation to forcing logic to somehow deduce that x = y.

OK, using your logic, work out the amount of energy your solar panels would generate on a sunny day. I guarantee you won't be able to do it without using calculus. If you can work out how to use calculus from first principles without being taught it or looking it up, I'll be mighty impressed!

I'm not sure what point you think I made for you to steer this conversation towards calculating the amount of energy solar panels can generate on a sunny day, or how that is relevant to applying the same operations to both sides of an equation to maintain logical consistency.

You seem to be under the impression I believe logic renders maths useless, or something. Logic is simply the basis of maths; you cannot study maths successfully without being a logical and critical thinker. You also don't need to like or study maths to use basic arithmetic and logic to understand personal finance at the consumer level.

Yes you do. That's the point. I've given enough examples where you really do need to have done some study of maths or at least have been taught or looked up mathematical techniques. Unless you really are Einstein and can work all these things out from first principles. How much energy your solar panels generate is a personal finance issue. To work it out, you need calculus. It's an extreme example, but other stuff like drawdown etc does need mathematical techniques which can be taught or looked up. There's no point reinventing the wheel.

I only have a GCSE in maths, which the vast majority of adults also have (or equivalent), and I managed to derive the Regular Saver formula for myself. I just remembered the basic arithmetic and algebra I was taught in school decades ago; I didn't look anything else up, and there was no calculator either. I am no Einstein or child prodigy, or even academically gifted. My career does not involve a related discipline. What I did have, was the attitude that I could probably do it.

RG2015

AmityNeon said:

zagfles said:

AmityNeon said:

zagfles said:

AmityNeon said:

zagfles said:

AmityNeon said:

zagfles said:

There are other examples. Eg

x^2 = y^2.

So logically, x = y, right? Same operation both sides?

No, because the concept of a double negative is still logical. If I owe three people a negative debt of £3 each, it equally means three people each owe me £3. I can go up uphill forwards, or turn my body around and walk backwards (whilst still moving uphill).

That's certainly logical. But I was talking about the general "logical" principle of applying the same operation to both sides of the equation.

What about it? You must apply the same operation to both sides of an equation; that has no relation to forcing logic to somehow deduce that x = y.

OK, using your logic, work out the amount of energy your solar panels would generate on a sunny day. I guarantee you won't be able to do it without using calculus. If you can work out how to use calculus from first principles without being taught it or looking it up, I'll be mighty impressed!

I'm not sure what point you think I made for you to steer this conversation towards calculating the amount of energy solar panels can generate on a sunny day, or how that is relevant to applying the same operations to both sides of an equation to maintain logical consistency.

You seem to be under the impression I believe logic renders maths useless, or something. Logic is simply the basis of maths; you cannot study maths successfully without being a logical and critical thinker. You also don't need to like or study maths to use basic arithmetic and logic to understand personal finance at the consumer level.

Yes you do. That's the point. I've given enough examples where you really do need to have done some study of maths or at least have been taught or looked up mathematical techniques. Unless you really are Einstein and can work all these things out from first principles. How much energy your solar panels generate is a personal finance issue. To work it out, you need calculus. It's an extreme example, but other stuff like drawdown etc does need mathematical techniques which can be taught or looked up. There's no point reinventing the wheel.

I only have a GCSE in maths, which the vast majority of adults also have (or equivalent), and I managed to derive the Regular Saver formula for myself. I just remembered the basic arithmetic and algebra I was taught in school decades ago; I didn't look anything else up, and there was no calculator either. I am no Einstein or child prodigy, or even academically gifted. My career does not involve a related discipline. What I did have, was the attitude that I could probably do it.

Can you share this simple GCSE formula please. Apologies if you have already done this.  

zagfles

AmityNeon said:

zagfles said:

AmityNeon said:

zagfles said:

AmityNeon said:

zagfles said:

AmityNeon said:

zagfles said:

There are other examples. Eg

x^2 = y^2.

So logically, x = y, right? Same operation both sides?

No, because the concept of a double negative is still logical. If I owe three people a negative debt of £3 each, it equally means three people each owe me £3. I can go up uphill forwards, or turn my body around and walk backwards (whilst still moving uphill).

That's certainly logical. But I was talking about the general "logical" principle of applying the same operation to both sides of the equation.

What about it? You must apply the same operation to both sides of an equation; that has no relation to forcing logic to somehow deduce that x = y.

OK, using your logic, work out the amount of energy your solar panels would generate on a sunny day. I guarantee you won't be able to do it without using calculus. If you can work out how to use calculus from first principles without being taught it or looking it up, I'll be mighty impressed!

I'm not sure what point you think I made for you to steer this conversation towards calculating the amount of energy solar panels can generate on a sunny day, or how that is relevant to applying the same operations to both sides of an equation to maintain logical consistency.

You seem to be under the impression I believe logic renders maths useless, or something. Logic is simply the basis of maths; you cannot study maths successfully without being a logical and critical thinker. You also don't need to like or study maths to use basic arithmetic and logic to understand personal finance at the consumer level.

Yes you do. That's the point. I've given enough examples where you really do need to have done some study of maths or at least have been taught or looked up mathematical techniques. Unless you really are Einstein and can work all these things out from first principles. How much energy your solar panels generate is a personal finance issue. To work it out, you need calculus. It's an extreme example, but other stuff like drawdown etc does need mathematical techniques which can be taught or looked up. There's no point reinventing the wheel.

I only have a GCSE in maths, which the vast majority of adults also have (or equivalent), and I managed to derive the Regular Saver formula for myself. I just remembered the basic arithmetic and algebra I was taught in school decades ago; I didn't look anything else up, and there was no calculator either. I am no Einstein or child prodigy, or even academically gifted. My career does not involve a related discipline. What I did have, was the attitude that I could probably do it.

Well, exactly! You didn't use "innate logic", you remembered techniques you were taught. That was my point.

I did A-level maths, and I could do more advanced stuff like work out the energy solar panels generate in a day using calculus, because I was taught it, not through "innate logic".

Anyway, best not clog the thread up further, I think other people want to get back on topic!