Updated May 30, 2022

How Much Interest Does $1 Million Earn?

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Can $1,000,000 generate enough interest to live on? This depends on how you save or invest it. Here's how much interest you can earn with a million bucks.

This is probably the goal for many people: reach $1 million, stop working, and live off the interest earnings. But is it enough? Just how much interest does $1 million earn?

It depends on how you save or invest that one million bucks. Here's how much $1,000,000 will earn in one year in different scenarios:

  • In a 1% high-yield account or government bond: $10,000 in interest
  • In the stock market[1]: $96,352 in interest
  • In a mutual fund: $47,804 in interest
  • In a normal savings account[2]: $600 in interest

A wise investment will make your money go further. It seems like the obvious choice to invest in stocks, right? 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.

Tip: You don't have to be a millionaire to make money. Here are ways to make extra money now:

How Much Interest You Will Earn on $1,000,000

Here is a table of how much interest $1,000,000 will earn in 1, 10, and 20 years at different interest rates:


How Much Interest Will You Earn?

Ways to Invest $1,000,000

Here are the different ways you can invest $1,000,000. They have different levels of risk.

If your goal is to live off of $1,000,000, you'll need to carefully choose how to invest that money. You'll need to maintain enough interest income to live on, while reducing risk of losing money and running out.

The Stock Market

Investing in the stock market has the potential for the highest returns. But it also has the greatest risk.

The historical S&P average annualized returns have been 9.2%[1]. So investing $1,000,000 in the stock market will get you $96,352 in interest in a year. This is enough to live on for most people.

However, you also can lose money just as quickly. It's not unusual for you to lose 30% or even more in a market crash. That kind of blow can be devastating if you're nearing or already retired.

If you'd like to live on $1,000,000, you will need to invest in stocks so your money continues to grow. But as you get closer and closer to the end, it's smarter to shift to more conservative investments.

Mutual Funds

Mutual funds are generally less risky than individual stocks because of the high level of diversification. But they also have less growth. The average returns for mutual funds is 4.67%. With $1,000,000 invested, you will get $47,804 per year in interest.

A lot of retirees gradually shift to more stable retirement income funds. Those kinds of funds usually invest in less risky bonds and large-cap companies. They're designed to provide income and some capital growth.

Real Estate

Historically, real estate has outperformed stocks over the long run. It's also a good investment to hedge against the volatility of the stock market.

The easiest way to invest $1,000,000 in real estate is in a REIT. This is a fund that manages real estate properties. REITs pay higher dividends than stocks, which can be a nice source of income. If a REIT pays 8% dividends, that's $80,000 per year.

Bank Savings Account

Saving your money in the bank is completely risk free, but you also won't make much interest.

The average national interest rate for savings accounts is only 0.06%[2]. If you leave $1,000,000 in a standard savings account, you'd only get $600 after a year.

Even high-yield accounts nowadays don't pay much interest. With a 0.5% high-yield savings account, you'd get $5,012 in interest in a year. If you are lucky enough to find a 1% APY account, that increases to $10,050 after a year.

Savings accounts have their place. They're good for storing money that you'll need in the near future (like emergency fund or upcoming expenses). But if you want to earn enough interest to produce income, you'll need to grow your money more.

How to Live off Interest on $1 Million in Retirement

So, you've worked hard to save $1,000,000. Now will that be enough to last? Realistically, how will your retirement look like?

An old rule-of-thumb is the 4% withdrawal rule. This means withdrawing 4% of your portfolio every year (each year adjusted for inflation).

This is a generally safe withdrawal rate even during the worst market downturns. It can help your money last even longer than 30 years of retirement.

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 3rd year, assuming 3% inflation again, you can withdraw $42,436

This rule assumes a balanced portfolio of 50% stocks and 50% bonds. This rule has always been a guideline, but it may not work for everyone's situation.

Here is a calculator to provide a quick estimate of how long $1 million bucks would last.

How Long Will My Money Last Calculator

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. Also keep in mind that with inflation, your money will be worth less and less in later years.

Bottom Line: Is Interest on $1,000,000 Enough?

Depending on how you invest, $1,000,000 can generate a decent amount of interest.

If you're still far from retirement, investing in stocks will have the potential for the greatest returns as you have time to ride out any temporary downs. For those nearing or in retirement, look to more stable investments that still generate a modest return.

So is it enough to live on? That depends on how you want to live. If you live a frugal lifestyle, you can absolutely make it work with smart investments and withdrawals. But if you want to travel and splurge in retirement, you'll likely need more of a nest egg.

Best Platforms to Invest $1M

Earn interest and invest like a millionaire with these top investment platforms:


Anna G is a contributing writer at CreditDonkey, a bank comparison and reviews website. Write to Anna G at feedback@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.

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How and Where to Invest $1 Million Dollars

How can you invest 1 million dollars? Many choose stocks and real estate but there are more ideas than you think. Here's what to do with that cash.
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