whats better: two savings accounts at 4.3% & 4.5%, or one savings account at 4.3%?

Question

the first thing most people would say is, "why not the one savings thats at 4.5%?" so to make things easy, let's say it is IMPOSSIBLE to have just the one at 4.5%.

so let's say for example you have $200,000. you are presented with a choice out of two options,

A] $100,000 @ 4.5% APY interest, and the other $100,000 @ 4.3% APY interest.

or
B] all $200,000 @ 4.3% APY interest.

the interest is compounded daily, paid monthly, and the rate does not change.
which of these values will pay more money over the long haul, having all the money compounded at a lower rate, or having half of the money compounded at a higher rate?

if you show the math you'll get the best answer.

Answer 1

If you want to know which is better in this case, since everything is compounded daily, you do not have to do any calculations at all. If you split the $200,000 equally between the 4.3% account and the 4.5% account, your effective annual interest is 4.4%

It is not necessary to do any calculations, just average out the interest rate. You can also determine the same thing using unequal amounts deposited in accounts at different rates, but that is not the question here. It's not necessary to even bother calculating the interest earned at each rate; this question as stated is far too simple to need to do that..

Not necessary to show the math. It is simply the average of 4.3 and 4.5, which is 4.4 This is the best option because 4.4 is higher than 4.3. You called it A]

Answer 2

Unless I'm missing some important element, then it's a pretty simple answer: invest in choice A to get the higher return.

Here's the math:
A) In one year, your return is $4,500 + $4,300 = $8,800
B) In one year, your return is $8,600

Another way to look at it is that you are definitely investing $100M at 4.3%, and your choice is investing the other half the money at 4.3% or 4.5%. The obvious choice is that the second $100M should be invested at the higher 4.5%. Hope that helps.

Answer 3

The question is so obvious I'm surprised you are asking it. clearly having half of the money earn 4.3% and half 4.5% will earn more than having all of the money earn 4.3%. The two separate accounts will earn about $208 per year more than a single account.

Answer 4

It's as simple as it seems, you don't need much math.
Consider only APY.
Take $200,000 and put it in the 4.3% APY account for one year and you will earn $8600 in interest.
Put $100k in that same account for one year and it will earn $4300. Put the other $100k in a 4.5% account and it will earn $4500. So total interest earned is $4300+$4500 = $8800, which is $200 more than putting it in one account.

Answer 5

First i don't be attentive to of many banks that furnish 4.seventy 5% on your funds it is a exceedingly stable activity fee. regardless of if i could look at company bonds yet verify the businesses bond score and make advantageous it is not below BBB for a sturdy secure investment. additionally i could look at a Roth IRA considering which you is merely no longer taxed on your funds once you get your distributions assuming you have reached 59 a million/2 years old once you start to entice from it. From there on an IRA you're able to seek for what you elect, in case you're older you're able to elect low threat securities like funds marketplace money and in the experience that your youthful you elect inventory money because of the fact nonetheless the prospect is bigger the return is likewise lots bigger, and in case you have years till you retire than you have got the money for to possibly lose funds some years. additionally in case you get into inventory money, bypass with index money considering which you will no longer have extreme administration expenditures because of the fact they are run by using a working laptop or computing gadget no longer a funds supervisor charging 2 hundred base pts and making 50 million a twelve months off working the fund. yet anyhow the best wager is to chat with a economic consultant they are going to steer you interior the astounding direction.

Answer 6

Do your own homework.
Oh and you might want to split the accounts up into 100,000 each and have the interest transfered to another high interest account. FDIC only covers accounts with 100,000 dollars in them.

Answer 7

at the end of a two year period:

Plan A: 109202.50+108784.90 = 217,987.40

Plan B: 217,569.80

here's the details on plan B
100000 x 1.043 x1.043

Answer 8

It's the one account with the lower APY, but I am not doing the math.
I'm right. ;)

Answer 9

Did you just answer your own question?