I had €90000 which I decided to put into a Halifax Regular Saver account @ €750 per month (@7% interest) and gained €299 gross interest over 12 months. I reckon that's roughly 3.3% gross on the whole amount, so would I not have been better leaving this lump sum in an account that earns 5% gross AER? People on AAM advise drip feeding into Regular Savers but I can't see how you end up with more interest that way - am I missing something? Thanks.
Regular Saver vs Lump Sum Deposit
- Thread starter treasure
- Start date
This question crops up regularly and yes you are ''missing something.'' Could I ask -
(1) Were you drip feeding from a saving account into the regular saver account? Where have/had you the €90,000 - surely in an interest deposit account or some account which was making money. You have to factor this in.
(2) Remember your regular saver only starts making interest from the time it is lodged and increases each month accordingly.
To answer your question, to get the best interest one should drip feed from a high interest deposit account (around 5% nowadays) to a regular saver account (around 7% nowadays). Which brings me back to my first question - is the lump sum in a high interest deposit account?
(1) Were you drip feeding from a saving account into the regular saver account? Where have/had you the €90,000 - surely in an interest deposit account or some account which was making money. You have to factor this in.
(2) Remember your regular saver only starts making interest from the time it is lodged and increases each month accordingly.
To answer your question, to get the best interest one should drip feed from a high interest deposit account (around 5% nowadays) to a regular saver account (around 7% nowadays). Which brings me back to my first question - is the lump sum in a high interest deposit account?
F
finbar21
Guest
Sorry to hop on here but can i ask you to clarify what you mean by drip feeding into the regular savings a/c?
Regular saver accounts normally have a max monthly contribution, so a lump sum (e.g. in this case the 90k) can't be lodged in one go. The term drip feed just means the adding of the money to the regular saver account (or any account) in small amounts (e.g. drip feeding it in one piece at a time. As an analogy, a dripping tap will eventually fill a sink, it will just take a longer time).
The figure of 3.3% is largely meaningless. As most of the money has only been in the account for a short time, it had the potential to be earning in another/different account up until it was deposited... as the previous posters have pointed out. Once the money has been lodged, it will continue to earn the high rate of interest for the term of the account (so, the money already lodged will recieve the full 7% next year, while the "new" lodgements will again average the ~3.3% + whatever other interest is recieved from the holding account it is being transferred from).
G
Gautama
Guest
I've moolah in a Ulster Bank account (4.3%), which I'm drip feeding, indirectly via standing order at a maximum of €1000 per month, into an Irish Nationwide Regular Saver account (7.15%).
So my lump sum is sitting making interest at 4.3% but is being maximised by feeding it into a higher-earing savings account.
In your case you should (this is my opinion, not advice) put all your money in the "account that earns 5% gross AER"(unless it is Northern Wreck
) and from there set up a DD or SO (indirectly or directly) into the "Halifax Regular Saver account @ €750 per month (@7% interest) ". You get the best of both worlds this way.