Net interest on bank deposit

B

Brutus

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If I lodge €1000 per month into say Anglo-Irish 30 day notice account at 4.5% I would get €56 after 20% tax. Is this correct? Then 12 times 56 for a year which is €672? Sorry for such a simple question but there always seems to be things hidden behind the big figures as advertised
 
Balance Monthly rate Interest in month DIRT Net interest
€1,000.00 0.375% €3.75 20% €3.00
€2,003.00 0.375% €7.51 20% €6.01
€3,009.01 0.375% €11.28 20% €9.03
€4,018.04 0.375% €15.07 20% €12.05
€5,030.09 0.375% €18.86 20% €15.09
€6,045.18 0.375% €22.67 20% €18.14
€7,063.32 0.375% €26.49 20% €21.19
€8,084.51 0.375% €30.32 20% €24.25
€9,108.76 0.375% €34.16 20% €27.33
€10,136.09 0.375% €38.01 20% €30.41
€11,166.49 0.375% €41.87 20% €33.50
€12,199.99 0.375% €45.75 20% €36.60

(monthly rate = 4.5%/12, actually you should do a little better than this as the interest should be calculated daily? But it will only be a little bit better!).

So you deposit €12,000 over the year and get €199.99 in net interest. (Assuming dirt is calculated on each interest payment and interest is credited monthly).

So that's €16.67 a month.

Sounds very low, doesn't it? I may have gone wrong somewhere? Can't see where though!
 
You're dead right yogan - that's the problem with monthly saving, it often feels like the interest should be more because you have been saving for a year, but you have to bear in mind that it is only the first installment which has been saved for the full year and the subsequent ones for only a fraction of a year.
 
I still dont understand where you get the €199+ because when I add all the interest together I get €236.60. am i missing something?
 
Try this calculator:

[FONT=verdana, arial, helvetica][FONT=verdana, arial, helvetica][FONT=verdana, arial, helvetica]Future Value[/FONT][/FONT][/FONT]
 
Future Value of an Ordinary Annuity:

FV = PMT (1 + i) n – 1
i
PMT = periodic deposit, i = rate per period, n = number of periods



therefore



FV = 1000 (1.003)^12-1 = 12,199.99

.003



therefore interest would total (net) 199.99



Regards,



BM
 
Rose said:
I still dont understand where you get the €199+ because when I add all the interest together I get €236.60. am i missing something?
Click to expand...
Sorry for the confusion, I should have taken the last interest calculation (€36.60) off the chart. €12,199 is the balance at the end of 12 months. The €36.60 is the interest that would be earned on the 13th month.
 
thomsk said:
So basically that's a return of (199.99/12000 )x100 = 1.67% profit :(
Click to expand...
Eh, no.

Not unless you have €12,000 in cash at the start of the year and you are drip-feeding it in at €1,000 each month.

You make, roughly speaking:
3.6% net on €1,000 (deposited for 12 months)
3.6%*11/12 net on €1,000 (deposited for 11 months)
3.6%*10/12 net on €1,000 (deposited for 10 months)
etc.

You only get a return for money that is in your account.

I hope you don't do the same calculations for your Cape Verde investments ;)
 
Folks,
I made a mistake in my original question. I meant the regular savings ac @ 7% for a monthly deposit of €1000. Do my figures then stack up?Apologies tho I hope some will have benefitted anyway from the replies
 
Brutus said:
Folks,
I made a mistake in my original question. I meant the regular savings ac @ 7% for a monthly deposit of €1000. Do my figures then stack up?Apologies tho I hope some will have benefitted anyway from the replies
Click to expand...
Eh, again, no. See my post above.

Calculate €1,000 at 5.6% (7% less DIRT) for 12 months
€1,000 at 5.6% * 11/12 - 11 months
etc. for each payment.

Then add the interest amounts together.

Comes to €360.96 according to Clubman's calculator.
 
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