By Kate — Aug 31, 2024

How Much Interest Can You Earn on $1 Million in 2024?

Investing $1 million is a significant financial milestone, and understanding how much interest you can earn on this amount in 2024 is crucial for planning your financial future. Whether you're looking to preserve your wealth, generate income, or grow your investment, the interest you earn depends on where and how you invest your money. In this article, we'll explore various investment options and the potential returns they offer in 2024.

1. High-Yield Savings Accounts

High-yield savings accounts are one of the safest options for earning interest on your money. These accounts typically offer better interest rates than traditional savings accounts, but the rates can vary depending on the bank and market conditions.

Expected Interest Rate in 2024: 3-4%
Potential Earnings: On a $1 million deposit, you could earn between $30,000 and $40,000 annually.
Risk Level: Low

2. Certificates of Deposit (CDs)

Certificates of Deposit (CDs) are time deposits offered by banks that typically offer higher interest rates than regular savings accounts. The catch is that your money is locked in for a specific period, ranging from a few months to several years.

Expected Interest Rate in 2024: 4-5%
Potential Earnings: If you invest $1 million in a 5-year CD at 5%, you could earn $50,000 per year.
Risk Level: Low (subject to early withdrawal penalties)

3. Treasury Bonds

U.S. Treasury bonds are considered one of the safest investments. These government-backed securities pay a fixed interest rate over a specified period.

Expected Interest Rate in 2024: 4-5%
Potential Earnings: A $1 million investment could yield $40,000 to $50,000 annually.
Risk Level: Low (subject to interest rate risk)

4. Corporate Bonds

Corporate bonds offer higher returns compared to Treasury bonds, but they come with higher risk. The interest rate depends on the credit rating of the issuing company.

Expected Interest Rate in 2024: 5-7%
Potential Earnings: Investing in corporate bonds could earn you $50,000 to $70,000 per year on $1 million.
Risk Level: Medium to High (depending on the issuer's creditworthiness)

5. Dividend-Paying Stocks

Investing in dividend-paying stocks can provide both income and potential capital appreciation. Many well-established companies offer attractive dividend yields.

Expected Dividend Yield in 2024: 3-6%
Potential Earnings: A $1 million portfolio of dividend-paying stocks could generate $30,000 to $60,000 annually in dividends.
Risk Level: Medium to High (subject to market volatility)

6. Real Estate Investment Trusts (REITs)

REITs are companies that own, operate, or finance income-producing real estate. They offer the potential for high dividend yields.

Expected Dividend Yield in 2024: 4-8%
Potential Earnings: With a $1 million investment in REITs, you could earn $40,000 to $80,000 per year.
Risk Level: Medium (subject to real estate market fluctuations)

7. Peer-to-Peer Lending

Peer-to-peer (P2P) lending platforms connect investors with borrowers. These platforms offer higher interest rates but come with increased risk.

Expected Interest Rate in 2024: 5-10%
Potential Earnings: Investing $1 million in P2P loans could earn you $50,000 to $100,000 annually.
Risk Level: High (subject to borrower default risk)

8. Annuities

Annuities are insurance products that provide a guaranteed income stream. They can be a good option for those seeking steady income in retirement.

Expected Interest Rate in 2024: 3-6%
Potential Earnings: A $1 million annuity could generate $30,000 to $60,000 per year, depending on the type of annuity.
Risk Level: Low to Medium (depending on the type of annuity)

Conclusion

The amount of interest you can earn on $1 million in 2024 depends on your investment choices and risk tolerance. Whether you opt for safe options like high-yield savings accounts and Treasury bonds or explore higher-yield opportunities like corporate bonds and dividend-paying stocks, it's essential to align your investments with your financial goals.

Diversifying your investment portfolio can help you balance risk and reward, ensuring that your $1 million continues to work for you in 2024 and beyond. Always consult with a financial advisor to make informed decisions tailored to your specific needs.