How Much Interest Can I Earn on $100, $1K or $10K? - NerdWallet (2024)

FAQs

How much interest does $100,000 earn in a year? ›

Competitive savings account rates

The best widely available high-yield savings accounts currently earn an APY of around 4.60 percent. An amount of $100,000 in an account earning this rate will earn around $4,600 after a year, for a total of $104,600.

Interest on $100,000

If you only have $100,000, it is not likely you will be able to live off interest by itself. Even with a well-diversified portfolio and minimal living expenses, this amount is not high enough to provide for most people.

If you deposit $1,000 into a high-yield savings account with a 4.5% annual percentage yield (APY), you'll earn a little more than $45 in interest after one year. With an APY of 5%, your interest earnings would be about $51 after one year.

If you invest $10,000 in a 1-year CD, you can earn between 4.15% and 5.00% — the equivalent of $415 to $500 — depending on the bank or credit union. The advantage of CDs is that your APY is guaranteed for a fixed term — unlike with other accounts and bonds, which change their rates as the fed rate rises and falls.

Buy a low-cost index fund that tracks the S&P 500; your $100,000 could grow to $1 million in about 23 years. You'll get there even faster by investing additional funds. Add $500 monthly and reach $1 million in just 19 years. Of course, past results don't guarantee future outcomes, but history is on investors' side.

The classic approach to doubling your money is investing in a diversified portfolio of stocks and bonds, which is likely the best option for most investors. Investing to double your money can be done safely over several years, but there's a greater risk of losing most or all your money when you're impatient.

Receiving $4,000 per month translates into an annual total of $48,000, excluding the need to pay any income taxes. With a 4% dividend yield, it'd take a required portfolio size of $1.2 million to make that cash flow of $48,000. Of course, having a higher dividend yield would mean less of a required nest egg.

As of September 2024, no banks are offering 7% interest rates on savings accounts. Two credit unions offer high-interest checking accounts: Landmark Credit Union Premium Checking with a 7.50% APY and OnPath Credit Union High Yield Checking with a 7.00% APY.

What is the best way to earn interest on $10000? ›

A high-yield savings account is an effective way to do this. While traditional savings accounts tend to have lower interest rates, high-yield savings accounts are structured with more earning power. Most high-yield savings accounts are available through online banks.

According to FDIC data, the average money market account earns 0.64% APY. However, the best money market accounts currently offer APYs of around 5.00% or higher. If you deposit $10,000 into one of these high-yield accounts, you would earn $513 or more in interest over a year, assuming daily compounding.

For example, you could earn a 4.61% APY by depositing $10,000 into a 3-year CD right now. If you chose to do so, you would earn $1,447.74 in interest - bringing your total balance to $11,447.74 after three years. You could also lock in your rate for longer, albeit at a slightly lower APY.

With a rate that high, a $10,000 investment in a 5-year CD could potentially grow to over $12,000 by the end of the term — and that's without any additional contributions. That means the returns on your CD will significantly outpace the returns typically offered by traditional savings accounts, averaging about 0.45%.

At 4.25%, your $100,000 would earn $4,250 per year. At 4.50%, your $100,000 would earn $4,500 per year. At 4.75%, your $100,000 would earn $4,750 per year. At 5.00%, your $100,000 would earn $5,000 per year.

If you have $100,000 to invest for income, you can earn anywhere from a fraction of a percentage point to nearly 10% on your money. Some interest-earning investments are guaranteed safe by the U.S. government, others are subject to market fluctuations.

With $1 million invested, it may be possible to live off the interest from that portfolio. However, before deciding to do that, consider consulting with a financial planner who can help you develop the optimal plan for retirement income.