calculated savings after 10 years and Investment advice to have a larger lumb sum

Minime2.5

If someone could save 2k a month for the next 10 years how much would you expect the lump sum to be? Would it literally be only a little more than 240k or could it be considerably more if you were smart?

Henry Ford III

Depends totally on the return less any costs.

Deposit rates are minimal.

Padre_Pio

Henry Ford III wrote: »

Depends totally on the return less any costs.

Deposit rates are minimal.

Minimal right now, but could, maybe increase in the event of a recession.

It's generally not a good idea to hoard cash in an account, plenty of low risk, low (but better) return options.

Henry Ford III

Padre_Pio wrote: »

Minimal right now, but could, maybe increase in the event of a recession.

It's generally not a good idea to hoard cash in an account, plenty of low risk, low (but better) return options.

If rates go up we are totally goosed.

Factor in inflation and D.I.R.T. and deposits have always yielded a negative real return.

28064212

Assuming a simple 2% savings account, you'd receive a little over €25,000 in interest. DIRT of 35% would bring that down to about €16,000.

However, no regular savings account gives full interest rates once the balance goes over, at most, €100,000 (in Ireland anyway)

NIMAN

28064212 wrote: »

Assuming a simple 2% savings account, you'd receive a little over €25,000 in interest. DIRT of 35% would bring that down to about €16,000.

However, no regular savings account gives full interest rates once the balance goes over, at most, €100,000 (in Ireland anyway)

Surely not right.
Saver is putting in 2000 x 12 x 10 = toal of 240,000.
No way you're getting 25k interest on that.

cruizer101

NIMAN wrote: »

Surely not right.
Saver is putting in 2000 x 12 x 10 = toal of 240,000.
No way you're getting 25k interest on that.

Over 10 years you would, at 2% per annum.

If you just put 2000 in the bank at 2% per annum after 10 years you would have ~2442, so that is what the first payment would earn, thats over 20%.
Each payment after will earn a bit less (e.g. the one at 5 years will only turn into ~2100)
Add it all up and ~25k interest.

Here is a nice calculator, put in 0 as initial and then 2k monthly
https://www.thecalculatorsite.com/finance/calculators/compoundinterestcalculator.php

28064212

NIMAN wrote: »

Surely not right.
Saver is putting in 2000 x 12 x 10 = toal of 240,000.
No way you're getting 25k interest on that.

Why not? Even if interest was calculated solely on the principal amount saved at the start of the year:
Year 1: 2% of 0 = 0 interest
Year 2: 2% of 24000 = 480 interest
Year 3: 2% of 48000 = 960 interest
Year 4: 2% of 72000 = 1440 interest
Year 5: 2% of 96000 = 1920 interest
Year 6: 2% of 120000 = 2400 interest
Year 7: 2% of 144000 = 2880 interest
Year 8: 2% of 168000 = 3360 interest
Year 9: 2% of 192000 = 3840 interest
Year 10: 2% of 216000 = 4320 interest

Gives a total of €21,600, and that ignores the impact of compound interest, as well as interest on any amounts saved throughout the year (as far as I know, all Irish banks calculate interest on savings on a daily basis)

NIMAN

I stand corrected.
Should have listened more in maths class!

But don't forget DIRT.

caviardreams

And more to the point, where would you get anywhere near 2% on a savings account bar the state savings 10 years solidarity bond?

28064212

KBC's Extra Regular Saver was 2% recently (now 1.75%). But as I mentioned, it has a cap on it (€40,000)

Minime2.5

28064212 wrote: »

Why not? Even if interest was calculated solely on the principal amount saved at the start of the year:
Year 1: 2% of 0 = 0 interest
Year 2: 2% of 24000 = 480 interest
Year 3: 2% of 48000 = 960 interest
Year 4: 2% of 72000 = 1440 interest
Year 5: 2% of 96000 = 1920 interest
Year 6: 2% of 120000 = 2400 interest
Year 7: 2% of 144000 = 2880 interest
Year 8: 2% of 168000 = 3360 interest
Year 9: 2% of 192000 = 3840 interest
Year 10: 2% of 216000 = 4320 interest

Gives a total of €21,600, and that ignores the impact of compound interest, as well as interest on any amounts saved throughout the year (as far as I know, all Irish banks calculate interest on savings on a daily basis)

At what year above would you move a lump sum into investments

28064212

Minime2.5 wrote: »

At what year above would you move a lump sum into investments

Depends on the savings account. As per previous post, KBC have a cap of €40,000 on theirs. Go over the cap, and the full amount (not just the part over the cap) earns interest at 0.01%