Alliance & Leicester Premium Regular Saver - Rip off?

Aegis

YorkshireBoy wrote: »

the 6.5 figure comes from the fact that your first payment earns interest for the full 12 months, your second for only 11 months, etc...

12/12 + 11/12 + 10/12 ......... + 2/12 + 1/12 = 78/12 = 6.5

...and can be used as a very close approximation wherever the regular savings account matures on the anniversary of the first deposit.

I always get confused about it when I get tired... I should remember that it basically boils down to 6 lots of 13 divided by 12... Thanks for the correction (yet again!)

Dean101

It's probably about right if your contributions were going in pretty late each month, say the 25th or so.

YorkshireBoy

Dean101 wrote: »

It's probably about right if your contributions were going in pretty late each month, say the 25th or so.

It doesn't matter when your payments are made, the account still matures on the anniversary of the first payment.

EDIT: See this thread...http://forums.moneysavingexpert.com/showthread.html?t=464166 (esp. post #4)

Dean101

YorkshireBoy wrote: »

It doesn't matter when your payments are made, the account still matures on the anniversary of the first payment.

EDIT: See this thread...http://forums.moneysavingexpert.com/showthread.html?t=464166 (esp. post #4)

Fair enough. I was just trying to find a reason for 110 rather than 130 i.e. if every payment was getting a month's less interest (so 11/12 + 10/12 + .... + 0/12) then it would be

(£250*12) * (5.5/12) * 0.1 * 0.8 = £110

I'm only surmising :beer:

[Deleted User]

Aegis wrote: »

(monthly amount * number of months) * (scaling factor for regular payments and monthly compounding) * interest rate in decimal form * left-over after tax deducted at source

I = C S R T

Where:

I = Total net interest
C = Total deposited capital (£3000 in this case)
S = Scaling factor (accounts for residence time and compounding, 6.5/12 is a good estimate)
T = Tax factor (80% deducted at source as standard)

Fantastic! Thanks for that although can anyone explain how YorkshireBoy worked his calculations out in post #4 on http://forums.moneysavingexpert.com/showthread.html?t=464166 ?

Aegis

Dean101 wrote: »

Fair enough. I was just trying to find a reason for 110 rather than 130 i.e. if every payment was getting a month's less interest (so 11/12 + 10/12 + .... + 0/12) then it would be

(£250*12) * (5.5/12) * 0.1 * 0.8 = £110

I'm only surmising :beer:

Maybe the last month is paid separately then?

YorkshireBoy

Deleted_User wrote: »

...can anyone explain how YorkshireBoy worked his calculations out in post #4 on http://forums.moneysavingexpert.com/showthread.html?t=464166 ?

Interest is calculated daily on the closing balance as...

Close bal x 10% / 365

Because the balance is 'static' after you've made your one-off monthly deposit, the interest for the month is...

Close bal x 10% / 365 x n

where n = number of days in the month

[Deleted User]

YorkshireBoy wrote: »

Interest is calculated daily on the closing balance as...

Close bal x 10% / 365

Because the balance is 'static' after you've made your one-off monthly deposit, the interest for the month is...

Close bal x 10% / 365 x n

where n = number of days in the month

Brilliant, as always great forum, great members - I'd have spent ages fudging the figures / looking on google to work that out!

[Deleted User]

My figures happily match your's now YorkshireBoy on post #4, took a while but Excel did the job again

[Deleted User]

Would I be right in thinking that since interest is calculated daily / paid yearly (in general) then you only gain compound interest when the next year comes along and the pervious years interest is added to the balance and it all starts again?

Also, over a 3 year period my ISA will earn £1193.33 interest, my regular saver £249.03, totaling £1442.36 or a 13.36% increase compared with storing it under my bed.

How could I expect an, average risk portfolio of S&S, to gain / loss after says 3 years (i realise the minimum is generally 5 years)? Based on past experience, on average, how would this compare to my % increase?