Regular Savings Calculator - New MSE Tool!

Former_MSE_Dan

Hey folks

We've built a new calculator to help work out the interest on Regular Saver accounts, as part of a big update to that article.

If you've got 5 mins to go and have a play with it, and let us know what you think, and especially an little erros or glitches we may have missed, that would be fab

http://www.moneysavingexpert.com/savings/best-regular-savings-accounts#savingscalc

Cheers

Dan

kanchhelskis

worked fine for me tryed it as soon as you put it on.

brigbrown

MSE Dan,

Nice tool, I tried the regular savings calculator tool and would just like some clarification about how exactly the calculator works.

According to your calculator, if I save £250 per month for one year at 10% and I am a basic rate taxer payer, I will earn £128.47 in interest. Now, most regular savings accounts earn interest daily but are paid at maturity. Therefore, the interest I earn should actually be £130. This is calculated by the following formula:

250*0.8*0.1*(1+11/12+10/12+9/12+8/12+7/12+6/12+5/12+4/12+3/12+2/12+1/12),

which illustrates how each regular payment earns the appropriate fraction of the 10% interest depending on how long it resides in the savings account.

Perhaps you could post details of your calculation so I can understand why our solutions differ.

Kind regards,

BrigBrown

nrsql

brigbrown
Think you are assuming every month has the same number of days.

brigbrown

nrsql wrote: »

brigbrown
Think you are assuming every month has the same number of days.

Yes, I have made a modelling assumption that a month is 1/12th of a year. We can be more sophisticated if we wish. Assuming the first deposit is made on January 1st, the formula becomes:

250*0.8*0.1*(1+(365-31)/365+(365-59)/365+(365-90)/365+(365-120)/365+(365-151)/365+(365-181)/365+(365-212)/365+(365-243)/365+(365-273)/365+(365-304)/365+(365-334)/365).

The interest earned is then £130.52. Thinking about the problem this way means that the interest earned depends on start date...something that the MSE calculator does not seem to worry about.

MSE Dan, can you enlighten me?

The reason I am curious is because I have genuinely just had a real-life £250 per month 10% Regular Saver mature. The interest I was paid was £130.14. This figure is much closer to my estimation of £130 than the the amount given by the MSE calculator.

Cheers,

BrigBrown