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  • FIRST POST
    • dllive
    • By dllive 2nd Mar 18, 1:02 PM
    • 382Posts
    • 28Thanks
    dllive
    How to work out interest rate return?
    • #1
    • 2nd Mar 18, 1:02 PM
    How to work out interest rate return? 2nd Mar 18 at 1:02 PM
    Hi,
    This is going to be a stupidly easy question to answer:

    If I have 100 in a bank account that is paying interest of 5%, how much am I earning in interest per month? Its not 5 is it? Maybe it would be 5 after 10 months?
Page 2
    • mgdavid
    • By mgdavid 3rd Mar 18, 3:36 PM
    • 5,594 Posts
    • 4,916 Thanks
    mgdavid
    esky,
    Anthorn is on my Ignore list - and I've just been reminded why!
    The questions that get the best answers are the questions that give most detail....
    • ValiantSon
    • By ValiantSon 3rd Mar 18, 3:38 PM
    • 1,844 Posts
    • 1,702 Thanks
    ValiantSon
    I think you should actually learn about the subject before you comment further !
    Originally posted by Anthorn
    Oh, the irony!
    • eskbanker
    • By eskbanker 3rd Mar 18, 4:09 PM
    • 7,096 Posts
    • 7,522 Thanks
    eskbanker
    esky,
    Anthorn is on my Ignore list - and I've just been reminded why!
    Originally posted by mgdavid
    You do realise you're missing out on a consistent form of entertainment?!

    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....
    • YorkshireBoy
    • By YorkshireBoy 3rd Mar 18, 4:19 PM
    • 30,147 Posts
    • 17,998 Thanks
    YorkshireBoy
    You do realise you're missing out on a consistent form of entertainment?!
    Originally posted by eskbanker
    I've hovered over the button many times, but this is the reason I haven't yet pressed it.
    • Anthorn
    • By Anthorn 3rd Mar 18, 6:02 PM
    • 3,578 Posts
    • 924 Thanks
    Anthorn
    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....
    Originally posted by eskbanker
    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 !
    • eskbanker
    • By eskbanker 3rd Mar 18, 6:50 PM
    • 7,096 Posts
    • 7,522 Thanks
    eskbanker
    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 !
    Originally posted by Anthorn
    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'!

    Looking at your latest posts it appears that you have now abandoned discussion and resorted to personal attack. Shame !
    Originally posted by Anthorn
    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....
    • Anthorn
    • By Anthorn 3rd Mar 18, 7:36 PM
    • 3,578 Posts
    • 924 Thanks
    Anthorn
    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....
    Originally posted by eskbanker
    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-bye
    • eskbanker
    • By eskbanker 3rd Mar 18, 7:54 PM
    • 7,096 Posts
    • 7,522 Thanks
    eskbanker
    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
    Originally posted by Anthorn
    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).

    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?
    • Anthorn
    • By Anthorn 3rd Mar 18, 10:25 PM
    • 3,578 Posts
    • 924 Thanks
    Anthorn
    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'.
    Originally posted by eskbanker
    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.
    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?
    Originally posted by eskbanker
    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-bye
    • mgdavid
    • By mgdavid 3rd Mar 18, 11:10 PM
    • 5,594 Posts
    • 4,916 Thanks
    mgdavid
    You do realise you're missing out on a consistent form of entertainment?!

    ....
    Originally posted by eskbanker
    yes but I have a glass of red that requires my full concentration....
    The questions that get the best answers are the questions that give most detail....
    • eskbanker
    • By eskbanker 4th Mar 18, 12:21 AM
    • 7,096 Posts
    • 7,522 Thanks
    eskbanker
    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.
    Originally posted by Anthorn
    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.

    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.

    I hate to flog a dead horse.
    Originally posted by Anthorn
    Could have fooled me, that seems to be your raison d'etre on here....

    Bye-bye
    Originally posted by Anthorn
    Do you mean it this time, unlike your last false promise?
    • Anthorn
    • By Anthorn 4th Mar 18, 9:33 AM
    • 3,578 Posts
    • 924 Thanks
    Anthorn
    Could have fooled me, that seems to be your raison d'etre on here....
    Originally posted by eskbanker
    My point flew over your head: You're the dead horse. Perhaps I should have said "banging my head against a brick wall"

    I provide evidence which supports my argument and your post also supports what I say and yet you still disagree and continue to post your unsupported drivel.

    As I said, bye-bye
    • msallen
    • By msallen 4th Mar 18, 10:00 AM
    • 805 Posts
    • 890 Thanks
    msallen
    I've hovered over the button many times, but this is the reason I haven't yet pressed it.
    Originally posted by YorkshireBoy
    No need to hesitate. I can confirm that its still quite entertaining only seeing the replies (and occasional quote). You can even have a little fun guessing what he wrote if you wish (although I gave that up a long time ago).
    • eskbanker
    • By eskbanker 4th Mar 18, 12:38 PM
    • 7,096 Posts
    • 7,522 Thanks
    eskbanker
    My point flew over your head
    Originally posted by Anthorn
    I suspect that this is true but not for the reason you think!

    I provide evidence which supports my argument and your post also supports what I say and yet you still disagree and continue to post your unsupported drivel.
    Originally posted by Anthorn
    Perhaps it's worth winding back to the beginning, where I explained how and why AER and gross were different. You initially agreed and then decided to digress into some unrelated wittering about tax, which you seem to believe is relevant. I've humoured you by continuing to explain how interest works but you cling on to selectively quoting from a page from a bank's website in the mistaken belief that this somehow supports whatever you're trying to say.

    As I said, bye-bye
    Originally posted by Anthorn
    Trouble is, you keep saying it but clearly don't mean it, so your words are unsupported by the facts. Can you see a pattern here?
    • dllive
    • By dllive 4th Mar 18, 3:27 PM
    • 382 Posts
    • 28 Thanks
    dllive
    So to clarify, if I have 100 in a bank account that is paying interest of 5%, after 1 year I get 5 - right? ;p
    • RG2015
    • By RG2015 4th Mar 18, 4:16 PM
    • 1,216 Posts
    • 710 Thanks
    RG2015
    So to clarify, if I have 100 in a bank account that is paying interest of 5%, after 1 year I get 5 - right? ;p
    Originally posted by dllive
    Bet you never thought your innocent question would unleash the dogs of war in so dramatic a fashion.

    And the answer to your question is yes, you would get 5.00.
    • dllive
    • By dllive 4th Mar 18, 4:18 PM
    • 382 Posts
    • 28 Thanks
    dllive
    Bet you never thought your innocent question would unleash the dogs of war in so dramatic a fashion.

    And the answer to your question is yes, you would get 5.00.
    Originally posted by RG2015
    Haha - its gone viral!
    • eskbanker
    • By eskbanker 4th Mar 18, 4:28 PM
    • 7,096 Posts
    • 7,522 Thanks
    eskbanker
    This is going to be a stupidly easy question to answer
    Originally posted by dllive
    Little did most of us realise that for some it would be an easy question to answer stupidly!
    • agrinnall
    • By agrinnall 4th Mar 18, 7:05 PM
    • 20,117 Posts
    • 15,840 Thanks
    agrinnall

    As I said, bye-bye
    Originally posted by Anthorn
    You know the story of the boy who cried wolf?
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