7.0% actually 3.69%?

AmityNeon

I know even basic taxation wasn't taught during my compulsory education. My parents were financially illiterate and I grew up believing simply having money in your bank account would incur tax, so £10K would become £8K after one year. My mother was so scared of this she lent money to relatives and her reasoning was 'the taxman' (it had nothing to do with interest income). I recall randomly asking my history teacher about this, and she said it would be best to speak to a financial advisor about how taxes worked.

surreysaver

AmityNeon said:

I know even basic taxation wasn't taught during my compulsory education. My parents were financially illiterate and I grew up believing simply having money in your bank account would incur tax, so £10K would become £8K after one year. My mother was so scared of this she lent money to relatives and her reasoning was 'the taxman' (it had nothing to do with interest income). I recall randomly asking my history teacher about this, and she said it would be best to speak to a financial advisor about how taxes worked.

Probably a but like how medical staff don't like people looking things up on Google these days

RG2015

AmityNeon said:

RG2015 said:

AmityNeon said:

RG2015 said:

@AmityNeon, thank you for responding to my question.

However, it appears that my recollection of basic GCSE arithmetic and algebra differs from yours.

I much prefer to use Excel for simulating RS yield projections.

Spreadsheets were initially used to show projections using specific examples with precise rates and daily interest calculations, but they did not match all circumstances due to everyone’s varying number of months (and their individual lower easy access rates).

My recollection of GCSE arithmetic and algebra is hazy, but it was still more advanced than what was used to derive the full formula, which is just a logical extension of the more familiar (m * r * 6.5), which people seem happy to use for general approximations.

Just to be clear, can you confirm that saying the formula is a logical extension of m*r*6.5 does not mean you are deriving the formula from m*r*6.5?

I am sure you don’t mean that but that was my initial thought.

Why was that your initial thought?

Looking at it visually, the 6.5 of m * r * 6.5 is just the area of a large triangle: 78, which is divided by 12 (for monthly interest.

You said “The formula is an extension of m*r*6.5”

This implies that you started with m*r*6.5 and ended up with the formula.

And with respect, whilst I appreciate that you have posted a long explanation, I have no interest in reading it let alone attempting to critique it.

I feel bad saying this but felt I should be honest.

General_Grant

Doctor_Who said:

Your calculation assumes the whole £3600 is saved in month 1, but you actually only have £300 saved for 12 months, then £600 saved for 11 months, £900 saved for 10 months etc etc. The actual amount of interest paid is ~50% of £3600 @ 7%.

No, that's not it.
It is £300 for 1 month, plus £600 for 1 month, plus £900 for 1 month. and so on.
See the post by ForumUser7 above yours.

RG2015

General_Grant said:

Doctor_Who said:

Your calculation assumes the whole £3600 is saved in month 1, but you actually only have £300 saved for 12 months, then £600 saved for 11 months, £900 saved for 10 months etc etc. The actual amount of interest paid is ~50% of £3600 @ 7%.

No, that's not it.
It is £300 for 1 month, plus £600 for 1 month, plus £900 for 1 month. and so on.
See the post by ForumUser7 above yours.

You are both correct.

If you extend the @Doctor_Who sequence to the end it would be £3,600 for 1 month as is yours.

AmityNeon

RG2015 said:

AmityNeon said:

RG2015 said:

AmityNeon said:

RG2015 said:

@AmityNeon, thank you for responding to my question.

However, it appears that my recollection of basic GCSE arithmetic and algebra differs from yours.

I much prefer to use Excel for simulating RS yield projections.

Spreadsheets were initially used to show projections using specific examples with precise rates and daily interest calculations, but they did not match all circumstances due to everyone’s varying number of months (and their individual lower easy access rates).

My recollection of GCSE arithmetic and algebra is hazy, but it was still more advanced than what was used to derive the full formula, which is just a logical extension of the more familiar (m * r * 6.5), which people seem happy to use for general approximations.

Just to be clear, can you confirm that saying the formula is a logical extension of m*r*6.5 does not mean you are deriving the formula from m*r*6.5?

I am sure you don’t mean that but that was my initial thought.

Why was that your initial thought?

Looking at it visually, the 6.5 of m * r * 6.5 is just the area of a large triangle: 78, which is divided by 12 (for monthly interest).

You said “The formula is an extension of m*r*6.5”

This implies that you started with m*r*6.5 and ended up with the formula.

What's unclear? What needs clarifying?

RG2015

AmityNeon said:

RG2015 said:

AmityNeon said:

RG2015 said:

AmityNeon said:

RG2015 said:

@AmityNeon, thank you for responding to my question.

However, it appears that my recollection of basic GCSE arithmetic and algebra differs from yours.

I much prefer to use Excel for simulating RS yield projections.

Spreadsheets were initially used to show projections using specific examples with precise rates and daily interest calculations, but they did not match all circumstances due to everyone’s varying number of months (and their individual lower easy access rates).

My recollection of GCSE arithmetic and algebra is hazy, but it was still more advanced than what was used to derive the full formula, which is just a logical extension of the more familiar (m * r * 6.5), which people seem happy to use for general approximations.

Just to be clear, can you confirm that saying the formula is a logical extension of m*r*6.5 does not mean you are deriving the formula from m*r*6.5?

I am sure you don’t mean that but that was my initial thought.

Why was that your initial thought?

Looking at it visually, the 6.5 of m * r * 6.5 is just the area of a large triangle: 78, which is divided by 12 (for monthly interest).

You said “The formula is an extension of m*r*6.5”

This implies that you started with m*r*6.5 and ended up with the formula.

What's unclear? What needs clarifying?

I guess you just have to believe me when I say that it is unclear to me.

There is nothing more I can say if you choose not to accept this, even if you do not understand my explanation.

AmityNeon

RG2015 said:

AmityNeon said:

RG2015 said:

AmityNeon said:

RG2015 said:

AmityNeon said:

RG2015 said:

@AmityNeon, thank you for responding to my question.

However, it appears that my recollection of basic GCSE arithmetic and algebra differs from yours.

I much prefer to use Excel for simulating RS yield projections.

Spreadsheets were initially used to show projections using specific examples with precise rates and daily interest calculations, but they did not match all circumstances due to everyone’s varying number of months (and their individual lower easy access rates).

My recollection of GCSE arithmetic and algebra is hazy, but it was still more advanced than what was used to derive the full formula, which is just a logical extension of the more familiar (m * r * 6.5), which people seem happy to use for general approximations.

Just to be clear, can you confirm that saying the formula is a logical extension of m*r*6.5 does not mean you are deriving the formula from m*r*6.5?

I am sure you don’t mean that but that was my initial thought.

Why was that your initial thought?

Looking at it visually, the 6.5 of m * r * 6.5 is just the area of a large triangle: 78, which is divided by 12 (for monthly interest).

You said “The formula is an extension of m*r*6.5”

This implies that you started with m*r*6.5 and ended up with the formula.

What's unclear? What needs clarifying?

I guess you just have to believe me when I say that it is unclear to me.

There is nothing more I can say if you choose not to accept this, even if you do not understand my explanation.

To be clear, m * r * 6.5 was not the starting point; it's a simplified formula for calculating average RS interest. I demonstrated the underlying logic used to derive that formula, and the final notation is simplified to m * r * 6.5 to easily digest.

I extended the logic beyond one triangle of 78 contributions, to two triangles + one rectangle totalling 78 contributions. Finding the area of shapes is simple arithmetic; I applied that knowledge using logic to the concept of Regular Savers, using shapes to easily (and visually) represent growing contributions and calculate/compare total interest.

AmityNeon

RG2015 said:
And with respect, whilst I appreciate that you have posted a long explanation, I have no interest in reading it let alone attempting to critique it.

Just so we're clear, you asked for an explanation which I provided; you chose not to read it.

You did choose to read a one-sentence summary and chose to critique that instead, saying it was unclear.

RG2015

AmityNeon said:

RG2015 said:
And with respect, whilst I appreciate that you have posted a long explanation, I have no interest in reading it let alone attempting to critique it.

Just so we're clear, you asked for an explanation which I provided; you chose not to read it.

You did choose to read a one-sentence summary and chose to critique that instead, saying it was unclear.

The  only thing that I found unclear was the one-sentence summary. You have now clarified that.

Everything else is irrelevant.