How well you save or invest $1,000,000 will determine whether or not you can earn enough interest to live on. This is the interest rate that a million dollars can yield.
A lot of people probably have this as their ultimate goal: accumulate $1 million, give up their jobs, and live off the interest. How much interest does $1 million earn, though? Is it enough?
Depending on how you invest or save that $1 million In the following scenarios, $1,000,000 will earn the following amounts in a year:
A wise investment will make your money go further. Investing in stocks may seem like the obvious choice, but it also depends on your age, goals, and risk tolerance.
Keep reading for a more in-depth discussion. Plus, the smart way to retire off of $1 million.
A million dollars is a significant amount of money, and many people wonder how much interest they could earn on it. The answer depends on several factors, including the type of investment the current interest rate environment, and the individual’s risk tolerance.
How Much Interest Can You Earn on $1 Million?
According to SmartAsset, if you have $1 million and are interested in growing it on interest, there are many ways you can consider investing your money. Interest-bearing assets can be a very smart way to invest $1 million while also keeping it safe. Bonds are generally your best choice for maximizing returns, but assets like a certificate of deposit or an annuity can be useful if you want to minimize risk.
Here’s a comparison of how much a million dollars in a single account would theoretically earn each year:
- Annuities: 3.98% annual returns = $39,800.
- Certificates of deposits: 1.39% annual returns = $13,900.
How Much Interest Will You Earn on $1,000,000?
According to CreditDonkey here is a table of how much interest $1000.000 will earn in 1. 10. and 20 years at different interest rates:
| Rate | 1 Year | 10 Years | 20 Years |
|---|---|---|---|
| 0.00% | $1,000,000 | $1,000,000 | $1,000,000 |
| 0.25% | $1,000,250 | $1,025,283 | $1,051,206 |
| 0.50% | $1,000,500 | $1,051,140 | $1,104,896 |
| 0.75% | $1,000,750 | $1,077,583 | $1,161,184 |
| 1.00% | $1,010,000 | $1,104,622 | $1,220,190 |
| 1.25% | $1,012,500 | $1,132,271 | $1,282,037 |
| 1.50% | $1,015,000 | $1,160,541 | $1,346,855 |
| 1.75% | $1,017,500 | $1,189,444 | $1,414,778 |
| 2.00% | $1,020,000 | $1,218,994 | $1,485,947 |
| 2.25% | $1,022,500 | $1,249,203 | $1,560,509 |
| 2.50% | $1,025,000 | $1,280,085 | $1,638,616 |
| 2.75% | $1,027,500 | $1,311,651 | $1,720,428 |
| 3.00% | $1,030,000 | $1,343,916 | $1,806,111 |
| 3.25% | $1,032,500 | $1,376,894 | $1,895,838 |
| 3.50% | $1,035,000 | $1,410,599 | $1,989,789 |
| 3.75% | $1,037,500 | $1,445,044 | $2,088,152 |
| 4.00% | $1,040,000 | $1,480,244 | $2,191,123 |
| 4.25% | $1,042,500 | $1,516,214 | $2,298,906 |
| 4.50% | $1,045,000 | $1,552,969 | $2,411,714 |
| 4.75% | $1,047,500 | $1,590,524 | $2,529,768 |
| 5.00% | $1,050,000 | $1,628,895 | $2,653,298 |
| 5.25% | $1,052,500 | $1,668,096 | $2,782,544 |
| 5.50% | $1,055,000 | $1,708,144 | $2,917,757 |
| 5.75% | $1,057,500 | $1,749,056 | $3,059,198 |
| 6.00% | $1,060,000 | $1,790,848 | $3,207,135 |
| 6.25% | $1,062,500 | $1,833,536 | $3,361,853 |
| 6.50% | $1,065,000 | $1,877,137 | $3,523,645 |
| 6.75% | $1,067,500 | $1,921,670 | $3,692,816 |
| 7.00% | $1,070,000 | $1,967,151 | $3,869,684 |
| 7.25% | $1,072,500 | $2,013,599 | $4,054,581 |
| 7.50% | $1,075,000 | $2,061,032 | $4,247,851 |
| 7.75% | $1,077,500 | $2,109,467 | $4,449,852 |
| 8.00% | $1,080,000 | $2,158,925 | $4,660,957 |
| 8.25% | $1,082,500 | $2,209,424 | $4,881,554 |
| 8.50% | $1,085,000 | $2,260,983 | $5,112,046 |
| 8.75% | $1,087,500 | $2,313,623 | $5,352,853 |
| 9.00% | $1,090,000 | $2,367,364 | $5,604,411 |
| 9.25% | $1,092,500 | $2,422,225 | $5,867,173 |
| 9.50% | $1,095,000 | $2,478,228 | $6,141,612 |
| 9.75% | $1,097,500 | $2,535,393 | $6,428,218 |
| 10.00% | $1,100,000 | $2,593,742 | $6,727,500 |
Interest-Bearing Investments: A Safe Haven
How to Live off Interest on $1 Million in Retirement
So, youve worked hard to save $1,000,000. In practical terms, what will your retirement look like? Will that be enough to last now?
An old rule-of-thumb is the 4% withdrawal rule. This entails taking out 4% of your portfolio annually (with each year’s adjustments made for inflation).
This is a generally safe rate of withdrawal, even in the most severe market bear markets. It can make your money last for an additional thirty years after you retire. For example, if you have $1,000,000 to start,.
- the 1st year, you can withdraw $40,000
- the 2nd year, assuming 3% inflation, you can withdraw $41,200
- the third year, presuming a return to 3% inflation, you can withdraw $42,436.
This rule is predicated on a balanced portfolio consisting of 2050 stocks and 2050 bonds. Although this guideline has always been in place, not every situation will benefit from it.
This calculator can be used to quickly calculate how long $1 million would last.
Your money will last:
| Year | Start Balance | Withdrawal | End Balance |
|---|
Some people would like to spend more in retirement. Or maybe even retire earlier at 50. Based on your situation, $1,000,000 may not be enough. Additionally, bear in mind that your money will lose value over time due to inflation.
How Much Interest You Will Earn on $1,000,000
The interest that $1,000,000 will earn at various interest rates in the next 1, 10, and 20 years is shown in the following table:
| Rate | 1 | 10 | 20 |
|---|---|---|---|
| 0.00% | $1,000,000 | $1,000,000 | $1,000,000 |
| 0.25% | $1,002,500 | $1,025,283 | $1,051,206 |
| 0.50% | $1,005,000 | $1,051,140 | $1,104,896 |
| 0.75% | $1,007,500 | $1,077,583 | $1,161,184 |
| 1.00% | $1,010,000 | $1,104,622 | $1,220,190 |
| 1.25% | $1,012,500 | $1,132,271 | $1,282,037 |
| 1.50% | $1,015,000 | $1,160,541 | $1,346,855 |
| 1.75% | $1,017,500 | $1,189,444 | $1,414,778 |
| 2.00% | $1,020,000 | $1,218,994 | $1,485,947 |
| 2.25% | $1,022,500 | $1,249,203 | $1,560,509 |
| 2.50% | $1,025,000 | $1,280,085 | $1,638,616 |
| 2.75% | $1,027,500 | $1,311,651 | $1,720,428 |
| 3.00% | $1,030,000 | $1,343,916 | $1,806,111 |
| 3.25% | $1,032,500 | $1,376,894 | $1,895,838 |
| 3.50% | $1,035,000 | $1,410,599 | $1,989,789 |
| 3.75% | $1,037,500 | $1,445,044 | $2,088,152 |
| 4.00% | $1,040,000 | $1,480,244 | $2,191,123 |
| 4.25% | $1,042,500 | $1,516,214 | $2,298,906 |
| 4.50% | $1,045,000 | $1,552,969 | $2,411,714 |
| 4.75% | $1,047,500 | $1,590,524 | $2,529,768 |
| 5.00% | $1,050,000 | $1,628,895 | $2,653,298 |
| 5.25% | $1,052,500 | $1,668,096 | $2,782,544 |
| 5.50% | $1,055,000 | $1,708,144 | $2,917,757 |
| 5.75% | $1,057,500 | $1,749,056 | $3,059,198 |
| 6.00% | $1,060,000 | $1,790,848 | $3,207,135 |
| 6.25% | $1,062,500 | $1,833,536 | $3,361,853 |
| 6.50% | $1,065,000 | $1,877,137 | $3,523,645 |
| 6.75% | $1,067,500 | $1,921,670 | $3,692,816 |
| 7.00% | $1,070,000 | $1,967,151 | $3,869,684 |
| 7.25% | $1,072,500 | $2,013,599 | $4,054,581 |
| 7.50% | $1,075,000 | $2,061,032 | $4,247,851 |
| 7.75% | $1,077,500 | $2,109,467 | $4,449,852 |
| 8.00% | $1,080,000 | $2,158,925 | $4,660,957 |
| 8.25% | $1,082,500 | $2,209,424 | $4,881,554 |
| 8.50% | $1,085,000 | $2,260,983 | $5,112,046 |
| 8.75% | $1,087,500 | $2,313,623 | $5,352,853 |
| 9.00% | $1,090,000 | $2,367,364 | $5,604,411 |
| 9.25% | $1,092,500 | $2,422,225 | $5,867,173 |
| 9.50% | $1,095,000 | $2,478,228 | $6,141,612 |
| 9.75% | $1,097,500 | $2,535,393 | $6,428,218 |
| 10.00% | $1,100,000 | $2,593,742 | $6,727,500 |
| 10.25% | $1,102,500 | $2,653,298 | $7,039,989 |
| 10.50% | $1,105,000 | $2,714,081 | $7,366,235 |
| 10.75% | $1,107,500 | $2,776,114 | $7,706,811 |
| 11.00% | $1,110,000 | $2,839,421 | $8,062,312 |
| 11.25% | $1,112,500 | $2,904,024 | $8,433,355 |
| 11.50% | $1,115,000 | $2,969,947 | $8,820,584 |
| 11.75% | $1,117,500 | $3,037,213 | $9,224,666 |
| 12.00% | $1,120,000 | $3,105,848 | $9,646,293 |
| 12.25% | $1,122,500 | $3,175,876 | $10,086,186 |
| 12.50% | $1,125,000 | $3,247,321 | $10,545,094 |
| 12.75% | $1,127,500 | $3,320,210 | $11,023,792 |
| 13.00% | $1,130,000 | $3,394,567 | $11,523,088 |
| 13.25% | $1,132,500 | $3,470,421 | $12,043,819 |
| 13.50% | $1,135,000 | $3,547,796 | $12,586,855 |
| 13.75% | $1,137,500 | $3,626,720 | $13,153,100 |
| 14.00% | $1,140,000 | $3,707,221 | $13,743,490 |
| 14.25% | $1,142,500 | $3,789,327 | $14,358,999 |
| 14.50% | $1,145,000 | $3,873,066 | $15,000,638 |
| 14.75% | $1,147,500 | $3,958,466 | $15,669,455 |
| 15.00% | $1,150,000 | $4,045,558 | $16,366,537 |
| Initial Balance | Total Contribution | Total Interest | End Balance |
|---|
| Year | Start Principal | Start Balance | Interest | End Balance | End Principal |
|---|
The simplest way to generate passive income year-round is to own real estate and collect rent. But what is the best way to generate passive income? But its not possible for most people.
Fortunately, websites like Fundrise enable anyone to invest in real estate. It makes property investments on your behalf automatically, allowing you to take a backseat while working toward your goals.
Here are the different ways you can invest $1,000,000. They have different levels of risk.
If your objective is to live off of $1,000,000, you will need to make wise investment decisions with that money. You must continue to earn enough interest to cover your expenses while lowering your chance of going bankrupt.
The best returns can be obtained by investing in the stock market. But it also has the greatest risk.
The historical S&P average annualized returns have been 10. 2%[5]. Thus, if you invest $1,000,000 in the stock market, you will receive $102,000 in interest over the course of a year. This is enough to live on for most people.
This is just a theory, of course, based on the long-term average S And this is returns, which is different from interest. In order to receive your capital gains, you will have to sell your stocks. You also can lose money just as quickly. It is not unheard of for you to lose up to 30% or even more in a market crash. A blow like that can be disastrous if you’re close to or already retired.
Dividend stocks earn dividends (interest) regardless of the stocks performance. The average S&P 500 dividend yield is around 2%. Investing $1,000,000 in dividend stocks yields an annual interest payment of $20,000.
To ensure that your $1,000,000 keeps growing if you want to live off of it, you must invest in stocks. However, it makes more sense to switch to more conservative investments as the end draws near.
- Sign up for an eToro account
- Deposit $100
Youll automatically receive $10 directly to your account balance. Offer only applies to US customers. eToro USA LLC and eToro USA Securities Inc.; Investing involves risk, including loss of principal; Not a recommendation
- Receive up to $700 upon funding and opening a J P. Morgan Self-Directed Investing account with qualifying new money.
- $700 when you fund with $250,000 or more
- $325 when you fund with $100,000-$249,999
- $150 when you fund with $25,000-$99,999
- $50 when you fund with $5,000-$24,999
- When you open an account, you can trade stocks, ETFs, fixed income, and options online without any commissions.
- $0 Online Commission trades
- Select the type of account that best suits your needs: Traditional IRA, Roth IRA, or General Investing.
- Utilize our safe and user-friendly trading platform via the Chase Mobile® app or our website.
- Our robust tools and resources are designed to assist you in managing your investments.
IT IS NOT A DEPOSIT, IT IS NOT FDIC INSURED, IT IS NOT A BANK GUARANTEE, AND IT MAY LOSE VALUE TOO.
Historically, real estate has outperformed stocks over the long run. Additionally, it’s a wise investment to protect against stock market volatility.
But most people can’t afford to invest in real estate. First, you need a lot of capital to buy properties. Additionally, maintaining them and managing tenants is a hassle for the sake of making a profit.
The easiest way to invest $1,000,000 in real estate is in a REIT. This is a fund that manages real estate properties. Historically, REITs have outperformed other assets. Over a 20 year period, REITs have an annualized return of 10.8%. This comes out to $108,000 per year in returns.
A public REIT, such as the Vanguard REIT, can be purchased on the stock market, and private real estate projects can be purchased through real estate investment platforms, such as Fundrise. By doing this, you can invest in real estate passively and reap the rewards without having to deal with any hassles.
- Only $10 minimum investment
- Obtain a diverse portfolio of US real estate projects.
- Open to all investors
- Short-term real estate investments lasting just 12-18 months
- Open to non-accredited investors
- No investor fees
Browse rental home investments for free. No bank account required
A mutual fund is an assortment of bonds and stocks that are professionally managed. Hundreds of stocks can be found in a single mutual fund, so with just one investment, you are diversified.
Because they have a higher degree of diversification than individual stocks, they are typically less risky. But they also have less growth. The average returns for mutual funds is 4. 67%. If you invest $1,000,000, you will receive $46,700 in interest annually.
Many retirees gradually switch to more reliable sources of retirement income These funds typically make investments in large-cap firms and less hazardous bonds. Theyre designed to provide income and some capital growth.
Although there is no risk involved in saving money in a bank, you won’t receive much interest.
Savings account interest rates are typically zero percent nationwide. 47% [6]. In a typical savings account, $1,000,000 would only be obtainable after a year.
High-yield accounts will pay more interest. Using a high-yield savings account with 4% interest, you would receive $40,000 in interest within a year.
Savings accounts have their place. They won’t make you wealthy, but they’re useful for holding money you might need soon (for big purchases or emergencies, for example).
Here are the best savings accounts to grow your money:
- No account activity or maintenance fees
- $500 minimum opening deposit
- FDIC insured
5.36% annual percentage yield (APY) is accurate as of 1/17/2024 and subject to change at the Banks discretion. Minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY. Member FDIC
- 5.05% APY with a balance of $5,000 or more
- 0.25% APY with a balance of less than $5,000
- $100 minimum opening deposit
- No monthly maintenance fee
- Member FDIC
- Earn up to 5.25% APY*
- No monthly maintenance fees
- No minimum deposit required to open an account
- Access your funds 24/7 with easy-to-use digital banking tools
How much interest does 1 million dollars earn per year?
FAQ
Can you live off interest of $1 million dollars?
How much interest can you earn on 1 million in a year?
How much does $1 million dollars make in a year?
What would the monthly interest be on 1 million?
|
Interest rate
|
Weekly
|
Monthly
|
|
1%
|
£191.78
|
£833.33
|
|
2%
|
£383.56
|
£1,666.67
|
|
3%
|
£575.34
|
£2,500
|
|
4%
|
£767.12
|
£3,333.33
|
How much interest can a million dollars earn in a year?
How much interest a million dollars can earn in a year varies wildly depending on how you choose to invest your money and the interest rates you can expect to get. In a best-case (but also not unrealistic) scenario, you could earn about $100,000 a year in interest from one million dollars.
How can I build interest on my $1 million?
Here are some of the ways you can build interest on your $1 million and how much you might earn: 1. Savings Accounts A savings account, money market account or certificate of deposit is probably the safest place to put $1 million to work.
How much money can a Million Dollar bank account earn?
A million-dollar bank account would earn $35,000 to $50,000 a year at that rate according to a simple compound interest calculator. Money market account: The average annual interest rate on a money market account falls between 0.01% APY and 3.45% APY, depending on your balance.
How much money can a million dollars earn a year?
So if, for example, you were receiving an interest rate of 7%, that means your million dollars earns you $70,000 a year in income. Many people can live on $70,000 a year. REITs are not without their risks, of course, so it’s best to do your research and seek advice from a real estate investment expert about the best REITs to invest in.