What is the best way to recieve your interest payments on a fixed sum, monthly or yearly ?

Question

What is the best way to recieve your interest payments on a fixed sum, monthly or yearly ?

Answer 1

It is better to get it monthly, as if you do not need to spend it all,  you reinvest the balance to earn further interest.

Answer 2

It depends on whether or not you will need the interest for income.  If you do not, and you plan to reinvest the interest (in other words let it sit in the account and continue to grow) then generally monthly is better.

However, the best thing to do is to ask the bank for the Annual Percentage Yield (APY) for the length of time you expect to deposit the money.  The highest yield (assuming no fees for banking) should get your deposit.  Be careful of banks with fees, though, as they can eat away at your APY.

Good luck.

Answer 3

It depends if their is a higher rates for longer term payment. if the interest rates is the same and if there is no "compounding interest" then monthly would be fine.

If  there is compound interest, then longer term would be better because you would be getting interest on top of interest.

Answer 4

Most good savings accounts will add the interest to the capital as it goes along hence it is better to receive your interest yearly. This both saves you the bother of re-investing these "small" amounts each month and you also know the interest rate.