Regular Savings Accounts Article Discussion

veryintrigued wrote: »

Just to advise that Nottingham BS will be launching a 6% regular saver on Thursday. Am guessing Derbyshire may be doing too?

Nottingham and Derbyshire Building Societies are not linked at all.

You might be thinking of Derbyshire and Cheshire.

Paul_Herring wrote: »

If you want the step by step method/proof rather than just taking any calculators on trust...

£x - the amount deposited per month
y% - the Gross/AER (This assumes interest paid yearly.)

In the first month, you deposit £x, and it acquires 1/12th of y% interest - £x * y%/12
In the second month, you deposit another £x, and the £2x gets another 1/12th of y% interest - £2x * y%/12
In the third month deposit another £x resulting in £3x * y%/12 interest for the month
In the fourth month ... etc.

So for the full year you have interest of (£x + £2x + £3x+... + £12x)* y%/12

1+2+3...+12 = 78 So

Interest = £78x * y%/12 or simplifying (multiply both by 12)
Interest = £6.5x * y%

So the quick calculation is to take your monthly deposit, multiply by 6.5 and apply the AER interest to the result. Don't forget to apply income tax at your marginal (top) rate before using the result.

:T

Was really grateful for this post, so I'd like to share the maths that I used to see if i could get the same answers as the "regular savings calculator". This relates to the "regular savings calculator" on the main moneysavingexpert.com webpage, which works out interest accrued from drip feeding (monthly) the same amount from a savings account.

So, for example (having "I want to drip feed the money" selected), I input these options:

Save for 1 year
Non tax payer
In normal savings account: interest before tax is 3.12%, and amount in here is £3600
To regular savings account: interest before tax is 8% (e.g. first bank) and £300 paid pcm

The calculator says (after drip-feeding the cash for 12 months):
£52 from normal savings and £154 in the regular saver.

What maths has the calculator used to derive that £52 figure?

I've been playing around with an excel spreadsheet to get an answer. Here's the basic formula that I used:

Interest = [A * (1+(R/100)/360)^N] - A

A = amount invested
R = yearly rate
N = actual number of days invested

So Month 1 (30 days): 3300 in normal savings, and 300 in regular saver. Interest accrued in normal savings = [3300*(1+0.0312/360)^30] - 3300 = 8.59
Month 2: change 3300 to 3000
Month 3: change 3300 to 2700....
and so on until
Month 12: 0 in normal savings

I then tot up all the interest calculations for each month and get £51.54

I reckon there is a simplified formula that will work and produce the same figure, rather like the elegant Interest = £6.5x * y%, from Paul_Herring's post that works well for calculating the interest accrued from a regular savings account, paying in x every month and gaining y%.

Interest from normal savings: 5.5xQ-5.5x
x = starting amount in normal savings account (e.g. £3600 before any drip-feeding starts)
Q = (1+y%/360)^30, where y% is the interest rate of the normal savings account

5.5x is derived from 11/12x + 10/12x + 9/12x + 8/12x .... 1/12x

Any improvements on my maths (most welcome....been a long while since I did my school exams!)?

Hi - I have just had a regular savings account which reached maturity and my calculations of how much I should be paid out don't agree with what the bank says I am getting. Can anyone help me and work out what they think I should get. My account is a regular saver - it is 8% interest. I don't pay tax. The first month I put in £300 and so on until the 11th month and 12th month when I put in £100 each month. I don't want to say here yet what I worked it out at or what the bank worked it out at as I would like to know what other people get for the result. Please let me know. Thanks

treasures wrote: »

Hi - I have just had a regular savings account which reached maturity and my calculations of how much I should be paid out don't agree with what the bank says I am getting. Can anyone help me and work out what they think I should get.

Agree with pqrdef ignoring rounding. See this google drive spreadsheet here which gives £150.57 gross in cell L20.

Assuming this is the First Direct regular saver that should be very close to the correct answer.

With the HSBC regular saver at the moment, can you do multiple deposits a month as long as you ensure that you do not go over the deposit limits?

Or are you restricted to one deposit a month no matter what?