hellothere
Registered User
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Dear all,
I am looking for the NPV calculation for a premium savings product. >10yrs ago I got a special/premium savings product with my local bank. The idea is to save every month a given amount of money. Doing so, at the end of the year you receive the regular interest rates (today basically at 0) and, more importantly, a premium interest payment on your annual savings. This premium interest increases constantly over the years until it is capped at 50%. Obviously, this product for years is not any more offered.
Let me illustrate the above with some numbers:
Assume you are saving each year 100€ (lets go for the annual amount for illustration purposes instead for the monthly saving). This amount is fixed, i.e., no dynamics.
Looking forward to your help/answers.
Best!
I am looking for the NPV calculation for a premium savings product. >10yrs ago I got a special/premium savings product with my local bank. The idea is to save every month a given amount of money. Doing so, at the end of the year you receive the regular interest rates (today basically at 0) and, more importantly, a premium interest payment on your annual savings. This premium interest increases constantly over the years until it is capped at 50%. Obviously, this product for years is not any more offered.
Let me illustrate the above with some numbers:
Assume you are saving each year 100€ (lets go for the annual amount for illustration purposes instead for the monthly saving). This amount is fixed, i.e., no dynamics.
- 1. year your savings are at 100€: 0% interest, 0% premium interest
- ...
- 10. year your savings net of interests are at 1,000€: 0% interest, 25% premium interest on your annual savings, i.e., 25€
- ...
- 15. year your savings net of interests are at 1,500€: 0% interest, 50% premium interest on your annual savings, i.e., 50€
- remember that this last year is the standard for the rest of the premium savings products. There is no limit on the timeline contract wise which would it make a perpertuity. Practically, you probably will run this model for another 10years and then get your money out.
Looking forward to your help/answers.
Best!