Looking for an ISA fix with a good rate where you can deposit monthly

singhini

i know what you mean, Good point

35har1old

jimjames said:

singhini said:

Putting money into an investment on a monthly basis "typically" yields around half of the advertised rate.  Since the first monthly payment is invested for the full 12 months while the last monthly payment only attracts one months worth of interest.

So you would be looking for a 1 year fixed ISA which allows monthly payments and attracts an interest rate of something like 8% for you to receive around 4% 

As per the usual posts on regular savers this is completely wrong. You receive exactly 8% on every penny in the account if that is the advertised rate. Not sure why you would expect to be paid interest on money not in the account. To calculate the approx amount of interest you might want to divide the total you'd get for the end balance by 2 if you've paid in the same amount each month but that's definitely not the same as getting half the advertised rate.

3000 x 8% = 240 divided by 2=120
3000 × 4%  = 120
Exactly half of the headline rate
3000 × 7% = 210 div by 2 = 105
3000 > 3.5 %= 105
Works evey time

friolento

singhini said:

Putting money into an investment on a monthly basis "typically" yields around half of the advertised rate.    

All accounts pay the advertised rate.

friolento

35har1old said:

jimjames said:

singhini said:

Putting money into an investment on a monthly basis "typically" yields around half of the advertised rate.  Since the first monthly payment is invested for the full 12 months while the last monthly payment only attracts one months worth of interest.

So you would be looking for a 1 year fixed ISA which allows monthly payments and attracts an interest rate of something like 8% for you to receive around 4% 

As per the usual posts on regular savers this is completely wrong. You receive exactly 8% on every penny in the account if that is the advertised rate. Not sure why you would expect to be paid interest on money not in the account. To calculate the approx amount of interest you might want to divide the total you'd get for the end balance by 2 if you've paid in the same amount each month but that's definitely not the same as getting half the advertised rate.

3000 x 8% = 240 divided by 2=120
3000 × 4%  = 120
Exactly half of the headline rate
3000 × 7% = 210 div by 2 = 105
3000 > 3.5 %= 105
Works evey time

It is wrong every time to say an account pays half the advertised rate.

clairec666

friolento said:

35har1old said:

jimjames said:

singhini said:

Putting money into an investment on a monthly basis "typically" yields around half of the advertised rate.  Since the first monthly payment is invested for the full 12 months while the last monthly payment only attracts one months worth of interest.

So you would be looking for a 1 year fixed ISA which allows monthly payments and attracts an interest rate of something like 8% for you to receive around 4% 

As per the usual posts on regular savers this is completely wrong. You receive exactly 8% on every penny in the account if that is the advertised rate. Not sure why you would expect to be paid interest on money not in the account. To calculate the approx amount of interest you might want to divide the total you'd get for the end balance by 2 if you've paid in the same amount each month but that's definitely not the same as getting half the advertised rate.

3000 x 8% = 240 divided by 2=120
3000 × 4%  = 120
Exactly half of the headline rate
3000 × 7% = 210 div by 2 = 105
3000 > 3.5 %= 105
Works evey time

It is wrong every time to say an account pays half the advertised rate.

Lost count of the number of times we've had to explain this to people...

The "half the advertised rate" thing is to stop people saying "I've got £3000 in my account, why haven't I got 7% of £3000 in interest?" It's because the £3000 wasn't in the account for the whole year.
Quite simply, if you've got some money and you want to get the best rate of interest (ignoring tax implications), look for the highest rate. Don't halve anything.

Bobblehat

I use 13/24ths for a closer prediction if I pay in the same amount over the 12 months, but halving is easier mental arithmetic 

Descrabled

Dudley BS offers a 1 year fixed ISA that allows unlimited payments until end of the tax year. Minimum opening balance £100, interest fixed @ 3.85%.

Dudley BS have similar 2y and 3y fixed rates.

Note that I do not have any ISAs with them

etienneg

The half the advertised rate confusion starts because we use quick shortcuts in speaking (and on forums!) rather than accurate descriptions. A rate is something per interval of time, not just something. Speed is a rate of travelling distance, so it could be in miles per hour. We would never say travelling at 30 miles, would we?

Unfortunately, an interest rate is often quoted as (say) 5%. But where in this is the interval of time? It should be 5% per annum, for example. Then it's clear that you get 5% return on money saved for a year. The return is the rate multiplied by the time in the account. Hence, just from an arithmetic point of view, you will get the right number by using half the rate or half the time. BUT it's WRONG to say this means you get only half the rate - bacause (as others have pointed out) it's actually because the money is there for only half the time.

slinger2

Normally rates quoted are AER (Annual Equivalent Rate). So if the rate is 5% AER you'll get 5%/365 per day, assuming that interest is paid annually, somewhat less if the interest is paid monthly or daily (to take account of compounding).

masonic

I've trotted this one out before, but if you are driving on a road with a 30 mph speed limit, you are not entitled to do 60 mph for a half hour journey and say you were only doing half the advertised rate.