Stuck working out interest

Shamish

I have tried to read a few threads and work out how much interest i will earn over the year.

Can sombody please help me and tell me how much the interest would be.

If we invest £50 a week for a year and how much the interest would be every month? If anybody could tell me how to put these calcs into a spreadsheet that would be great. I think it would it's 4.4% / 12 to get the monthly interest rate? I also dont pay tax as i'm a student. Thanks

Balance £1 - £999,999
AER 5.50%
Gross pa 5.50%
Net pa 4.40%

Aegis

Shamish wrote: »

I have tried to read a few threads and work out how much interest i will earn over the year.

Can sombody please help me and tell me how much the interest would be.

If we invest £50 a week for a year and how much the interest would be every month? If anybody could tell me how to put these calcs into a spreadsheet that would be great. I think it would it's 4.4% / 12 to get the monthly interest rate? I also dont pay tax as i'm a student. Thanks

Balance £1 - £999,999
AER 5.50%
Gross pa 5.50%
Net pa 4.40%

That account pays interest annually, and the average income would be about 6.5/12 times the AER if you're contributing a fixed amount per month. As such, paying in £600 in monthly instalments will net you about £33 over the year.

The AER is pretty poor, by the way, you could do a lot better than that with the top payers.

In fact, if you're going to save £50 each month you should look into a regular saver

Shamish

Aegis wrote: »

That account pays interest annually, and the average income would be about 6.5/12 times the AER if you're contributing a fixed amount per month. As such, paying in £600 in monthly instalments will net you about £33 over the year.

The AER is pretty poor, by the way, you could do a lot better than that with the top payers.

In fact, if you're going to save £50 each month you should look into a regular saver

Thanks

We plan to use it to save up a decent amount and then put it into an ISA. We dont have as much money normally and reguarly borrow so we're hoping to save and use the savings at the moment until we are managing to save reguarly and then get into a better savings This is linked to our current bank account so we can transfer to our bank account straight away if needed.

Thanks for the advice on how to work out the interest i'd hope'd to get a bit more but hopfully once we have enough and get an isa we'll get more

Thanks

YorkshireBoy

First of all, if you don't pay tax then the rate you should use is the AER/gross figure of 5.50% AER. Remember to complete an R85 form with the provider to ensure your interest is paid gross, ie without the deduction of 20% savings tax.

Regarding your return, the conventional formula for a regular saver fed monthly is...

Closing balance x %AER / 12 x 6.5

For example, if you fund the account monthly with £216.50 (which is the montly equivalent of your £50 per week), the interest paid at the end of the year will be...

(£216.50 x 12) x 5.50% / 12 x 6.5 = £77.40

In practice, because you're feeding weekly, your interest will be slightly less than this.

how much the interest would be every month?

This particular account doesn't pay interest monthly (we know this because the AER and the gross p.a. rate are the same).

If anybody could tell me how to put these calcs into a spreadsheet that would be great

Calculate each days interest as...

(Opening balance + credits - withdrawals) x 5.50% = ??????

Sum up the results ...and that's your gross interest for the year.

CLAPTON

your question is a bit confusing but

yes as the account only adds the interest annually then the monthly interest rate is 5.5%/12 = 0.458% per month

however how much you earn each month depends how much you haved saved up

so the first month you will have approximately
interest of
50 x 0.458%
plus
50 x 0.458% x3/4 as you have only saved the 50 for 3 weeks
plus
50 x 0.458% x 2/4 as you have only saved that 50 for 2 weeks etc


if you save £50 each week for a year the interest will be

26.5/52 x 5.5% x £50 x 52 = £72.87

Aegis

Oops, I misread per week and per month... My bad!

YorkshireBoy

Aegis wrote: »

As such, paying in £600 in monthly instalments will net you about £33 over the year.

You'd need to deposit the £600 in one go at the start of the year to get £33 at 5.5% AER...

£600 x 5.5% = £33

£50 per month would return 600 x 5.5% / 12 x 6.5 = £17.87

Aegis

YorkshireBoy wrote: »

You'd need to deposit the £600 in one go at the start of the year to get £33 at 5.5% AER...

£600 x 5.5% = £33

£50 per month would return 600 x 5.5% / 12 x 6.5 = £17.87

It's just not my night obviously!

Shamish

albertross wrote: »

When you say you regularly borrow, do you mean you have debts accruing interest? If so, the savings money would be better used paying off debt

We dont have any actual debts we owe money on credit card but on 0% until January next year which will be paid off well before then. I mean that we over budget some weeks and dont have as much money as we should so end up borrowing from our parents a small bit to put into our account to help cover any bills. We're hoping to cut our spending enough to put £50 a week which should be easy on our income and then we have this to transfer in emergencys if needed.

Shamish

CLAPTON wrote: »

your question is a bit confusing but

yes as the account only adds the interest annually then the monthly interest rate is 5.5%/12 = 0.458% per month

however how much you earn each month depends how much you haved saved up

so the first month you will have approximately
interest of
50 x 0.458%
plus
50 x 0.458% x3/4 as you have only saved the 50 for 3 weeks
plus
50 x 0.458% x 2/4 as you have only saved that 50 for 2 weeks etc


if you save £50 each week for a year the interest will be

26.5/52 x 5.5% x £50 x 52 = £72.87

Thanks for that i never realised that my payments were yearly i'd hoped for them to be monthly but then that's better as we'll get it in a lump some each year.

Thanks for that will take a note of the calculations so i can work it out as the year goes on if i put in anymore money as i hope every few weeks to put in £100.

Thanks