# instant access vs regular saver



## settlement (14 Aug 2014)

Hi.

I can save 1k per month. Am I better off putting this in an instant access account at 2% gross or a regular savings account at 4% gross per annum? The savings account has higher interest but I'm not sure if that amounts to more money at the end of a 12 month period because of differences in interest payment with these 2 different types of accounts.

Thanks


----------



## Boyd (15 Aug 2014)

With regular savings, only the first lodgement earns the full X% and each subsequent lodgement earns progressively less. This is because the first 1K will be on deposit for the entire 12 months, the second 1K only for 11 months, the third only for 10 months etc.

Hence you get following interest
(12/12) * 4% of first 1K
(11/12) * 4% of second 1K 
(10/12) * 4% of third 1K 
etc.

This is just the way regular saving wotks. Hence, IMO, regular saver in PTSB is what you want. 

Similarly, with the instant access, you only get paid interest on cash that is in the account. So with the 2% instant access account (assuming interest is paid annually), you will not get 2% of the 12K, because the 12K was only in the account for one month (the last one), not the entire year.


----------



## Gervan (15 Aug 2014)

NatUK (Ire) 1000 pm x12 @4% is 6000 (average in account) @4% = 240 less Dirt @ 41% (?) 141.6
Put into instant access account @ 2% is 6000 @ 2% = 120, then less Dirt if applicable. 

Regular Saver provides slightly more interest, and is more binding on you. This could be good if you are inclined to spend first, save later. The Nationwide UK account is instant access anyway (though you would obviously get less interest if you draw funds out) so if you really need access to your savings, you have it.


----------



## settlement (16 Aug 2014)

Thanks guys, great explanations


----------



## Lightning (16 Aug 2014)

settlement said:


> Hi.
> 
> I can save 1k per month. Am I better off putting this in an instant access account at 2% gross or a regular savings account at 4% gross per annum? The savings account has higher interest but I'm not sure if that amounts to more money at the end of a 12 month period because of differences in interest payment with these 2 different types of accounts.
> 
> Thanks



Do both. 

Open an instant access account with PTSB which pays 2.00% then drip feed 1,000 EUR per month into the 4.00% Nationwide UK regular saver account.


----------



## settlement (16 Aug 2014)

So put whatever I can save in the instant access account and set it up so that 1k is taken from it monthly and put into the nationwide account?


----------



## Lightning (16 Aug 2014)

Pretty much. 

A standing order can, normally, only be set up from a current account. So you will need to wire the 1,000 EUR from your PTSB Online Instant Access account to a current account for onward standing order or onward manual wire to your Nationwide UK Regular Saver account.


----------



## settlement (17 Aug 2014)

Will do. Thanks.


----------



## rob oyle (17 Aug 2014)

I'm doing something like this... I wouldn't underestimate the work involved in doing this each month but I think it's worth it.


----------



## settlement (24 Aug 2014)

getting it set up now. Better off getting the interest paid to tsb account or the nationwide uk account?


----------



## rob oyle (25 Aug 2014)

settlement said:


> getting it set up now. Better off getting the interest paid to tsb account or the nationwide uk account?


 
Depends on what you want to do with it. If the intention is to re-invest, the 'interest on the interest' will be fairly low anyway.


----------



## Lightning (25 Aug 2014)

settlement said:


> getting it set up now. Better off getting the interest paid to tsb account or the nationwide uk account?



Reinvest. You are slightly financially better off reinvesting.


----------



## settlement (27 Aug 2014)

CiaranT said:


> Reinvest. You are slightly financially better off reinvesting.



Will do. Can you give me a rough idea how you calculate that?


----------



## pudds (1 Sep 2014)

username123 said:


> Hence you get following interest
> (12/12) * 4% of first 1K
> (11/12) * 4% of second 1K
> (10/12) * 4% of third 1K etc.



On this basis I've calculated gross interest earned on 12k

Regular Saver €260
Instant access €240

So regular saver wins by €20, but is it really worth the hassle for anyone with only 12k to put into it.


----------



## Boyd (1 Sep 2014)

Those figures have to be wrong. If you start with nothing and you put 1K each month into a 4% account, its going to be approx double what you get if you deposited 1K each month into a 2% account.

(12/12) * 4% of first 1K = 40
(11/12) * 4% of second 1K = 36.67
(10/12) * 4% of third 1K = 33.33
(9/12) * 4% of third 1K = 30
(8/12) * 4% of third 1K = 26.67
(7/12) * 4% of third 1K = 23.33
(6/12) * 4% of third 1K = 20
(5/12) * 4% of third 1K = 16.67
(4/12) * 4% of third 1K = 13.33
(3/12) * 4% of third 1K = 10
(2/12) * 4% of third 1K = 6.67
(1/12) * 4% of third 1K = 3.33+
= 259.97

(12/12) * 2% of first 1K = 20
(11/12) * 2% of second 1K = 18.34
(10/12) * 2% of third 1K = 16.65
(9/12) * 2% of third 1K = 15
(8/12) * 2% of third 1K = 13.34
(7/12) * 2% of third 1K = 11.65
(6/12) * 2% of third 1K = 10
(5/12) * 2% of third 1K = 8.34
(4/12) * 2% of third 1K = 6.65
(3/12) * 2% of third 1K = 5
(2/12) * 2% of third 1K = 3.35
(1/12) * 2% of third 1K = 1.65+
= 129.97

Figures are approx and don't deduct DIRT, but they are ballpark as I would expect them to be relative to each other. I have no idea where you got the 240 for the 2% saver.

This calculator http://www.askaboutmoney.com/clubman/CompoundCal.htm#rjava2 (Future Value one) calculates the 4% account as giving 258.44  interest and 129.60 on the 2% account, which is in line with my calculation above.

What hassle? Set up a standing order for 1K to happen the day after you get paid each month. Better you get any extra interest than the bank.


----------



## pudds (2 Sep 2014)

For the 2% I just used 12k x 12months calculation wasn't thinking about dribbling it in like regular saver, while my way not strictly a like for like comparison, but for 12k investment is the overall gain going to be very little, like €20 or so


----------



## Boyd (3 Sep 2014)

As I said above, *if you start with nothing* and are contributing 1K per month, then the regular saver at 4% gives twice as much interest, as calculation showed.

However, *if you start with a lump sum*, you are better putting that into the instant access account as the whole lump sum will immediately get the 2%. From this, you can drip feed 1K per month to the regular saver at 4% to make sure you get the best of both works.

As youyu said, the drip feed from instant access to regular probably doesnt add up to that much, and I'm not bothered doing the exact calcuations at the moment!


----------

