Regular savings vs easy access..?

clairec666

exel1966 said:

B0bbyEwing said:

Specifically First Direct at 7%.

I get that you don't get 7% on everything all the time. Only the first amount gets it for the full year, so on & so forth so in a roundabout way the account works out at an overall percentage less than 7.

So I ran the MSE calculator to see what would be better - this fixed rate regular saver or an easy access account.

Put the numbers in, starting with £0, £300pm & 7% interest.

Then for the easy access as it wouldn't let me to a comparable start of £3,600 & nothing for the rest of the year I did a start of £3,588 & putting in £1/month for a year with an interest rate of 4.35%.

Which told me that the easy access lower interest account would leave me with more money at the end of the year than the 7% regular saver. 

Have I crunched the numbers correctly then because I assumed the 7% would've been a better bet?

* Granted the 7% is fixed and 4.35% isn't, so the 4.35% could drop to 2.35% or whatever else the day after I take it out.

Clearly you don't get it as you do get 7% on everything in the account all the the time. No ifs, no buts, you get exactly what it says you will get, 7%.

I disagree, I think the OP does get it (compared to other people we've had the regular saver argument with).

B0bbyEwing

exel1966 said:

B0bbyEwing said:

Specifically First Direct at 7%.

I get that you don't get 7% on everything all the time. Only the first amount gets it for the full year, so on & so forth so in a roundabout way the account works out at an overall percentage less than 7.

So I ran the MSE calculator to see what would be better - this fixed rate regular saver or an easy access account.

Put the numbers in, starting with £0, £300pm & 7% interest.

Then for the easy access as it wouldn't let me to a comparable start of £3,600 & nothing for the rest of the year I did a start of £3,588 & putting in £1/month for a year with an interest rate of 4.35%.

Which told me that the easy access lower interest account would leave me with more money at the end of the year than the 7% regular saver. 

Have I crunched the numbers correctly then because I assumed the 7% would've been a better bet?

* Granted the 7% is fixed and 4.35% isn't, so the 4.35% could drop to 2.35% or whatever else the day after I take it out.

Clearly you don't get it as you do get 7% on everything in the account all the the time. No ifs, no buts, you get exactly what it says you will get, 7%.

Ok
6543210

Exodi

It's not for the OP (who appears to have seen the error of their ways) - it's for the countless other people that ask the same question on here very regularly.

kimwp said:

friolento said:

exel1966 said:

B0bbyEwing said:

Specifically First Direct at 7%.

I get that you don't get 7% on everything all the time. Only the first amount gets it for the full year, so on & so forth so in a roundabout way the account works out at an overall percentage less than 7.

So I ran the MSE calculator to see what would be better - this fixed rate regular saver or an easy access account.

Put the numbers in, starting with £0, £300pm & 7% interest.

Then for the easy access as it wouldn't let me to a comparable start of £3,600 & nothing for the rest of the year I did a start of £3,588 & putting in £1/month for a year with an interest rate of 4.35%.

Which told me that the easy access lower interest account would leave me with more money at the end of the year than the 7% regular saver. 

Have I crunched the numbers correctly then because I assumed the 7% would've been a better bet?

* Granted the 7% is fixed and 4.35% isn't, so the 4.35% could drop to 2.35% or whatever else the day after I take it out.

Clearly you don't get it as you do get 7% on everything in the account all the the time. No ifs, no buts, you get exactly what it says you will get, 7%.

That’s a tad unfair as the OP was eating their words at 08:44 this morning and was big enough to admit their mistake 😇

 https://forums.moneysavingexpert.com/discussion/comment/81623412/#Comment_81623412

Agree. I think a few later posters have got their proverbials in a twist and not read the next sentence of the original post that makes it clear that "everything" is referring to the entire sum that is started with and that the OP understood from the start the point that these posters are making.

I appreciate you're referring to me, but it is incorrect to suggest the OP understood 'from the start' when they said things like "I get that you don't get 7% on everything all the time" which is exactly the very common misconception people have with regular savers - that RS's seemingly pay half the rate on your money (as opposed to the reality that they pay the full rate, but on average you only have around half the closing balance in the account across the year).

This can be distilled down to a fundamental misunderstanding on how interest is calculated. An annual rate may lead people to believe the interest is calculated annually at the end of the year, and naturally this would be on the closing balance, however in reality interest is calculated daily, it's just not paid daily and you don't see it.

To use an analogy - imagine a job was posted advertising a £40k FTE annual salary..

You apply for the job, you get it and at the start you work half the full time hours to cater around children. Near the end of the year, your partner changes job and is able to take care of the children, so you go to full time hours. At the end of the year you look at your annual income and are surprised to see you've earned a bit over £20k.

You then complain that the job was advertised as £40k FTE and as you're now working full time at the end of the year, you should have been paid £40k for the year. You also argue that if they are only going to pay you ~£20k then the job should advertise that it only pays ~£20k FTE or that future employees should be aware of that. It doesn't make sense does it?

As we all know, the £40k FTE will boil down to an hourly rate and how much you're actually paid will depend on how many hours you've worked across the year. Just like a Regular Saver will boil down to a daily rate and it will depend on how much money you've had saved across the year, not just at the end.

(I accept it has clicked for the OP now, but again, this is not for the OP's purposes - even in the common threads we see on this, we see a great amount of misunderstanding, even among MSE posters). It's not about lecturing people or being pedantic, it's to prevent the very real possibility that people reading this thread now may be turning their noses up at 7% or 7.5% regular savers, because they think they're actually 3.5% or 3.75% and their 4% Easy Access savings account is better, which is strictly incorrect.

clairec666

Exodi said:

It's not for the OP (who appears to have seen the error of their ways) - it's for the countless other people that ask the same question on here very regularly.

kimwp said:

friolento said:

exel1966 said:

B0bbyEwing said:

Specifically First Direct at 7%.

I get that you don't get 7% on everything all the time. Only the first amount gets it for the full year, so on & so forth so in a roundabout way the account works out at an overall percentage less than 7.

So I ran the MSE calculator to see what would be better - this fixed rate regular saver or an easy access account.

Put the numbers in, starting with £0, £300pm & 7% interest.

Then for the easy access as it wouldn't let me to a comparable start of £3,600 & nothing for the rest of the year I did a start of £3,588 & putting in £1/month for a year with an interest rate of 4.35%.

Which told me that the easy access lower interest account would leave me with more money at the end of the year than the 7% regular saver. 

Have I crunched the numbers correctly then because I assumed the 7% would've been a better bet?

* Granted the 7% is fixed and 4.35% isn't, so the 4.35% could drop to 2.35% or whatever else the day after I take it out.

Clearly you don't get it as you do get 7% on everything in the account all the the time. No ifs, no buts, you get exactly what it says you will get, 7%.

That’s a tad unfair as the OP was eating their words at 08:44 this morning and was big enough to admit their mistake 😇

 https://forums.moneysavingexpert.com/discussion/comment/81623412/#Comment_81623412

Agree. I think a few later posters have got their proverbials in a twist and not read the next sentence of the original post that makes it clear that "everything" is referring to the entire sum that is started with and that the OP understood from the start the point that these posters are making.

I appreciate you're referring to me, but it is incorrect to suggest the OP understood 'from the start' when they said things like "I get that you don't get 7% on everything all the time" which is exactly the very common misconception people have with regular savers - that RS's seemingly pay half the rate on your money (as opposed to the reality that they pay the full rate, but on average you only have around half the closing balance in the account across the year).

This can be distilled down to a fundamental misunderstanding on how interest is calculated. An annual rate may lead people to believe the interest is calculated annually at the end of the year, and naturally this would be on the closing balance, however in reality interest is calculated daily, it's just not paid daily and you don't see it.

To use an analogy - imagine a job was posted advertising a £40k FTE annual salary..

You apply for the job, you get it and at the start you work half full time hours to cater around children. Near the end of the year, your partner changes job and is able to take care of the children, so go to full time hours. At the end of the year you look at your annual income and are surprised to see you've earned a bit over £20k.

You then complain that the job was £40k FTE and as you're now working full time at the end of the year, you should have been paid £40k for the year. It doesn't make sense does it?

As we all know, the £40k FTE will boil down to an hourly rate and how much you're paid will actually depend on how many hours you've worked across the year. Just like a Regular Saver will boil down to a daily rate and it will depend on how much money you've had saved across the year.

(I accept the it has clicked for the OP now, but again, this is not for the OP's purposes - even in the common threads we see on this, we see a great amount of misunderstanding, even among MSE posters). It's not about lecturing people or being pedantic, it's to prevent the very real possibility that people reading this thread now may be turning their noses up at 7% or 7.5% regular savers, because they think they're actually 3.5% or 3.75% and their 4% Easy Access savings account is better, which is strictly incorrect.

If you read the second paragraph of the OP's original post, I think that makes it clear that they do get it.

Exodi

clairec666 said:

Exodi said:

It's not for the OP (who appears to have seen the error of their ways) - it's for the countless other people that ask the same question on here very regularly.

kimwp said:

friolento said:

exel1966 said:

B0bbyEwing said:

Specifically First Direct at 7%.

I get that you don't get 7% on everything all the time. Only the first amount gets it for the full year, so on & so forth so in a roundabout way the account works out at an overall percentage less than 7.

So I ran the MSE calculator to see what would be better - this fixed rate regular saver or an easy access account.

Put the numbers in, starting with £0, £300pm & 7% interest.

Then for the easy access as it wouldn't let me to a comparable start of £3,600 & nothing for the rest of the year I did a start of £3,588 & putting in £1/month for a year with an interest rate of 4.35%.

Which told me that the easy access lower interest account would leave me with more money at the end of the year than the 7% regular saver. 

Have I crunched the numbers correctly then because I assumed the 7% would've been a better bet?

* Granted the 7% is fixed and 4.35% isn't, so the 4.35% could drop to 2.35% or whatever else the day after I take it out.

Clearly you don't get it as you do get 7% on everything in the account all the the time. No ifs, no buts, you get exactly what it says you will get, 7%.

That’s a tad unfair as the OP was eating their words at 08:44 this morning and was big enough to admit their mistake 😇

 https://forums.moneysavingexpert.com/discussion/comment/81623412/#Comment_81623412

Agree. I think a few later posters have got their proverbials in a twist and not read the next sentence of the original post that makes it clear that "everything" is referring to the entire sum that is started with and that the OP understood from the start the point that these posters are making.

I appreciate you're referring to me, but it is incorrect to suggest the OP understood 'from the start' when they said things like "I get that you don't get 7% on everything all the time" which is exactly the very common misconception people have with regular savers - that RS's seemingly pay half the rate on your money (as opposed to the reality that they pay the full rate, but on average you only have around half the closing balance in the account across the year).

This can be distilled down to a fundamental misunderstanding on how interest is calculated. An annual rate may lead people to believe the interest is calculated annually at the end of the year, and naturally this would be on the closing balance, however in reality interest is calculated daily, it's just not paid daily and you don't see it.

To use an analogy - imagine a job was posted advertising a £40k FTE annual salary..

You apply for the job, you get it and at the start you work half full time hours to cater around children. Near the end of the year, your partner changes job and is able to take care of the children, so go to full time hours. At the end of the year you look at your annual income and are surprised to see you've earned a bit over £20k.

You then complain that the job was £40k FTE and as you're now working full time at the end of the year, you should have been paid £40k for the year. It doesn't make sense does it?

As we all know, the £40k FTE will boil down to an hourly rate and how much you're paid will actually depend on how many hours you've worked across the year. Just like a Regular Saver will boil down to a daily rate and it will depend on how much money you've had saved across the year.

(I accept the it has clicked for the OP now, but again, this is not for the OP's purposes - even in the common threads we see on this, we see a great amount of misunderstanding, even among MSE posters). It's not about lecturing people or being pedantic, it's to prevent the very real possibility that people reading this thread now may be turning their noses up at 7% or 7.5% regular savers, because they think they're actually 3.5% or 3.75% and their 4% Easy Access savings account is better, which is strictly incorrect.

If you read the second paragraph of the OP's original post, I think that makes it clear that they do get it.

Sorry I disagree - someone can not say "I get that you don't get 7% on everything all the time" and simultaneously get it - these things are mutually exclusive. They also did a flawed comparison of drip-feeding £300 p/m into a Regular Saver and comparing it to having ~£3600 in a Easy Access year round. These are the two main pillars of regular saver misunderstanding we see.

I've read their comments in full several times, it's clear they have a better initial understanding than many, and I've no doubt they get it now.

Regardless, as I said multiple times in my post, it's not about the OP.

clairec666

Read their second paragraph:

B0bbyEwing said:

I get that you don't get 7% on everything all the time. Only the first amount gets it for the full year, so on & so forth so in a roundabout way the account works out at an overall percentage less than 7.

Yes they could have worded it better but to me it looks like they know that the full amount isn't getting 7% for the full year, because it isn't in the account for a full year.

Bobblehat

I think the OP would prefer that this thread died a death!

kimwp

clairec666 said:

Read their second paragraph:

B0bbyEwing said:

I get that you don't get 7% on everything all the time. Only the first amount gets it for the full year, so on & so forth so in a roundabout way the account works out at an overall percentage less than 7.

Yes they could have worded it better but to me it looks like they know that the full amount isn't getting 7% for the full year, because it isn't in the account for a full year.

I agree, though I think it's worded quite clearly. This paragraph demonstrates (clearly) a full understanding of the concept and then they go on to say they can't get their maths to line up with their understanding (which turned out to be due to attempting unfamiliar finance calculations too early in the morning)

B0bbyEwing

Bobblehat said:

I think the OP would prefer that this thread died a death!

I think you'd be correct. 

How we've got to the stage where we're writing 10,000 word arguments I don't know but I'll leave them to it because my original question has been dealt with. 

Probably be best for others too if a mod locked this thread. Would save some folk a hell of a lot of typing. 

boingy

Bobblehat said:

I think the OP would prefer that this thread died a death!

He's not the only one