How to work out interest rate return?
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You do realise you're missing out on a consistent form of entertainment?!esky,
Anthorn is on my Ignore list - and I've just been reminded why!
He'd certainly make a fascinating case study for a psychiatrist, when inhabiting his weird Trumpian world of alternative facts and fake news, and some of the breathtaking leaps of 'logic' and stubborn refusal to stop digging when getting ever deeper into a hole make for strangely compelling reading, in a similar way to not being able to resist looking at a car crash when passing. I'm never quite sure whether he's actually being serious or if it's all a massive wind-up, or maybe there are some strong hallucinogens involved....0 -
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Not for the first time, you've gone off at a tangent here!
The issue I was highlighting is the distinction between gross and AER when comparing monthly and annual interest.
The distinction between gross and net (if/when tax comes into play) is a separate issue unconnected to this thread, but since all savings accounts have paid interest gross since April 2016 this is somewhat moot.
I'm not sure where you're going with all this or why, but since there is no dispute that in order to achieve a 5% AER, the gross rate is also 5% if interest is paid annually but reduced to 4.89% if paid monthly (the point I originally made which I don't believe you're trying to challenge), I can't see any value in disappearing off down irrelevant cul de sacs about gross v net....
ROFL
I did provide an example of instances where Gross and A.E.R. appear at the same time at Lloyds bank. Those instances very clearly illustrate where Gross is related to tax and A.E.R. is the compounded interest. But that appears to have flown over your head and you still cling to your misconception. So be it !
Looking at your latest posts it appears that you have now abandoned discussion and resorted to personal attack. Shame !0 -
I'm convinced that you don't even understand your own 'argument' sometimes!I did provide an example of instances where Gross and A.E.R. appear at the same time at Lloyds bank. Those instances very clearly illustrate where Gross is related to tax and A.E.R. is the compounded interest. But that appears to have flown over your head and you still cling to your misconception. So be it !
* Takes deep breath *
Let's try this once more, shall we....
For an account paying interest annually, the gross rate is the same as the AER, and so will typically be described as x% AER/gross. Hence the Lloyds page you seem so fixated on lists, for example, the Club Lloyds Monthly Saver as "3.00% gross / AER", because interest is paid annually.
With me so far? Good.
For an account paying interest more frequently, the gross rate is less than the AER, so that the AER figure is achieved by virtue of compounding over the year, so both numbers are usually shown, as they should be. Hence the Lloyds Young Saver shows "2.00% AER / 1.99% gross" because it pays interest quarterly.
This is what I've been saying all along and you were even saying it yourself before you launched off into some irrelevant digression about gross versus net when comparing the descriptions of tax-free ISAs with taxable savings accounts (as both are intermingled together on that Lloyds page).
So, to summarise, AER and gross are two different things, but in some circumstances (namely accounts paying interest annually) they'll come to the same figure. This doesn't mean they're being 'equated'!
Not at all, I'm quite happy to continue to try to educate you but, having said that, recognise from this and many other threads that your comprehension skills appear to be somewhat deficient, so have no doubt that you will continue to misunderstand and/or deflect into side issues that have no bearing on the main issue at hand....Looking at your latest posts it appears that you have now abandoned discussion and resorted to personal attack. Shame !0 -
I'm convinced that you don't even understand your own 'argument' sometimes!
* Takes deep breath *
Let's try this once more, shall we....
For an account paying interest annually, the gross rate is the same as the AER, and so will typically be described as x% AER/gross. Hence the Lloyds page you seem so fixated on lists, for example, the Club Lloyds Monthly Saver as "3.00% gross / AER", because interest is paid annually.
With me so far? Good.
For an account paying interest more frequently, the gross rate is less than the AER, so that the AER figure is achieved by virtue of compounding over the year, so both numbers are usually shown, as they should be. Hence the Lloyds Young Saver shows "2.00% AER / 1.99% gross" because it pays interest quarterly.
This is what I've been saying all along and you were even saying it yourself before you launched off into some irrelevant digression about gross versus net when comparing the descriptions of tax-free ISAs with taxable savings accounts (as both are intermingled together on that Lloyds page).
So, to summarise, AER and gross are two different things, but in some circumstances (namely accounts paying interest annually) they'll come to the same figure. This doesn't mean they're being 'equated'!
Not at all, I'm quite happy to continue to try to educate you but, having said that, recognise from this and many other threads that your comprehension skills appear to be somewhat deficient, so have no doubt that you will continue to misunderstand and/or deflect into side issues that have no bearing on the main issue at hand....
This is my last post in this part of the discussion.
You still don't understand it. As I illustrated with links to the Lloyds Bank savings accounts, Gross relates to the tax position while A.E.R. relates to compounded interest. i.e. gross interest is what you get if you do not pay the tax which relates to the account.
If what you say is true how do you relate to it 1.50% Tax free / AER variable while comparing 0.35% gross / AER variable.
https://www.lloydsbank.com/savings.asp
I rest my case. Bye-bye0 -
As I posted in #20 above, all savings accounts pay interest gross since April 2016, so to all intents and purposes there is no distinction to be made between net and gross in terms of what the banks actually pay in interest (even though there may be some subsequent payment directly to HMRC for those who exceed the personal savings allowance).You still don't understand it. As I illustrated with links to the Lloyds Bank savings accounts, Gross relates to the tax position while A.E.R. relates to compounded interest. i.e. gross interest is what you get if you do not pay the tax which relates to the account.
If what you say is true how do you relate to it 1.50% Tax free / AER variable while comparing 0.35% gross / AER variable.
https://www.lloydsbank.com/savings.asp
However, despite it being largely irrelevant for most, it is still technically accurate for Lloyds to distinguish between ISAs (i.e. where no tax will ever be payable) and other accounts that are notionally taxable but not at source, so that's why they correctly refer to interest on some (the ISAs) as 'tax free' while referring to others as 'gross'. In both cases, as explained before, they'll use the same figure for AER where interest is paid annually, otherwise they'll show different figures for gross and AER.
I'm really struggling to think of simpler ways to explain what is a remarkably straightforward concept to you, do you perhaps have a responsible adult anywhere nearby who may be able to help?0 -
So therefore as you yourself have explained "Gross" relates to the tax position and "A.E.R." refers to compounded interest. Conversely where the account is tax free "Gross" is not quoted.However, despite it being largely irrelevant for most, it is still technically accurate for Lloyds to distinguish between ISAs (i.e. where no tax will ever be payable) and other accounts that are notionally taxable but not at source, so that's why they correctly refer to interest on some (the ISAs) as 'tax free' while referring to others as 'gross'.I'm really struggling to think of simpler ways to explain what is a remarkably straightforward concept to you, do you perhaps have a responsible adult anywhere nearby who may be able to help?
I'm struggling too and basically I'm out on the grounds that I hate to flog a dead horse.
A real shame you had to end what could have been a useful post with a personal attack, specifically, "do you perhaps have a responsible adult anywhere nearby who may be able to help" but at least you are true to form.
Bye-bye0 -
No, AER is the annual equivalent rate, i.e. the standardised measure denoting total return over a year, regardless of whether any compounding takes place or not. If interest is paid annually then the AER includes no compounding over that period.So therefore as you yourself have explained "Gross" relates to the tax position and "A.E.R." refers to compounded interest. Conversely where the account is tax free "Gross" is not quoted.
Gross is the figure used to actually calculate the interest, so, for example, the gross figure is divided by 365 to calculate daily interest. If interest is paid annually, this is the same figure as the AER.
Net is the figure which takes into account tax, where applicable. If the account is tax-free then this is the same as gross.
Could have fooled me, that seems to be your raison d'etre on here....I hate to flog a dead horse.
Do you mean it this time, unlike your last false promise?Bye-bye0
This discussion has been closed.
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