Investments

[nickswife]

Can anybody work out the gross yearly interest on a savings account which you pay £250 per month up to a max of £3,000 for year with a gross interest of 8% thanks in advance

[factor-fiction]

Average balance over the year is £1500. Interest over a year on £1500 @ 8% is £120.

[tamborine]

Gross £3,371 would take 9months at £250pm = £2250 @ 8% re-investing monthly earned interest.

You would earn £1,121 interest over 9mts.

[factor-fiction]

£1121 interest Tambo? Can I have one of those accounts? I understood £3000 was the max annual capital investment.

[tamborine]

Oooops do you want a 'countdown' account? Q said up to £3k.....I worked 9mts with re-invested interest to be £3,371.60

[factor-fiction]

Okay tamborine- but the interest would accumulate slower than that as the balance would grow gradually by £250 a month and would take a year to reach £3000. In month 1 interest would be more or less 1/12th of 8% of £250 = £1.67. (Maybe you used 1/1th of 8% of full £3000)
For month 2 balance would be £250+ £1.67+£250= £501.67. Interest would be 1/12th of 8% of £501.67 = £3.34.
So interest actually accrues quite slowly.
I stand by £120 interest over the year give or take a pound.