Who wants to be a multi-millionaire…? Plenty of people, is likely to be the answer! $50 million in your pocket qualifies you as a multi multi-millionaire in anyone’s book though! So, what is the yearly interest on $50 million dollars if you put that money in the bank?
The quick answer is that you could make as high $2.75 million a year of pre-tax interest income on $50,000,000 if you invest it in a 1-year Certificate of Deposit (CD). On a monthly basis, this means that the pre-tax interest income on $50 million would be $229,167. This works out to $52,884 of interest per week, or $7,534 of interest per day.
Interestingly enough, because the yield curve is currently inverted, you can get a high interest rate even on shorter-term CDs. Normally, you would only get these rates if you were in a longer term, say 5-year, CD!
As the yields offered by money market funds have increased, many savings accounts are now also offering interest rates in excess of 5%, so it’s worth shopping around for the best deals.
When the inverted yield curve eventually goes back to its normal state, i.e. longer duration investments offer higher returns, it would make sense to then invest in the longer term CDs to get the highest rates.
Try out the handy little calculator below to help you calculate how much interest you can generate if you deposited your money in a bank or in a CD.
Interest Income Calculator – USA
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Can I live for the rest of my life on the interest of $50 million?
I honestly believe that you should have no issues living off the interest on your $50 million in the bank for a very long time. Even if you were to invest it just a simple savings account (not a CD), at the minimum, this you will generate you will generate $2.5M a year in pre-tax interest, which works out to almost $208k a month, $48k a week, or nearly $6.9k each day! While of course these are pre-tax figures, it would still be difficult to run out of this much money!
You have achieved the much desired status that we all want: financially free! Congratulations! Now here is where things get really interesting – if you stick to only using the interest generated by that pot of money, in theory, that original pot of money never goes away. Not only you, but entire generations that come after you could easily live off that money without degrading the pot!
Of course inflation would eat away at the purchasing power of the 50 million US dollars over time, so the best option would be to take some of that money and invest in areas that generate higher rates of return. There are a variety of opportunities – like real estate, the stock market, or even buying businesses outright – which could help you maintain the value of that money over many years to come!
With $50 million in the bank, you’re in a league of your own. If you play your cards right and get the right financial advice, you could even be on your way to becoming a billionaire soon!
Want to Learn More?
If you are really curious about how interest rates work, who sets interest rates in the US, we’ve got an in-depth article that will bring you up to speed on this. It’s a fascinating topic! If the topic of investing is of great interest to you, be sure to check out my article covering the best books for beginner investors. It’s a great place to get started on your investing journey.