Your great-grandmother Bernice has passed and left you with a nice nest egg, $1 million. Instead of blowing in two days in Vegas, you decide to invest it. So, how much interest will you earn on $1 million?
It is time to do the right thing.
While you may not have had an especially close relationship with your aunt, you were likable enough to earn a spot in her will. Investing your new-found wealth is the right option. So, where do you go from here? The first thing you want to do is figure out how you want to invest your money.
Do you want to use bonds? Would you prefer to diversify your money into various ventures and investments? Answering these questions first will help you figure out how much interest you will earn on $1 million. Bonds, for example, are a possible way to begin your investment. There are two types of bonds you should consider when investing. The first is a high yield bond. If you were to dump your money in a high yield bond you could potentially earn about 4.97% interest on your investment.
Your next option could be a 30-year treasury bond. If you opt out of adjusting your bond for inflation, your rate could be close to 3.33% earning you about $30,000, according to Mint.
You could invest your million in a 5-year CD
A CD, or a certificate of deposit, is a somewhat safer version of a savings account. Depending on the type of account you have and your bank, you may not have any monthly fees. Most of the time people use a CD to grow their money over a short period of time. Usually, this is anywhere from three months to 5 years. After the end of the investments life, you can withdraw the money or you can put into another CD.
Based on the type of account you have you can possibly earn about 2% interest on $1 million. Which means you will receive about $20,000 per year. To protect your CD from inflation you have to adjust it, which can lower your interest.
How much interest will you earn on $1 million if you spread your money into all of these?
Luckily, you grandmother was a very smart lady and she made sure to tell you to always spread your money around. With that much money, you should definitely think about depositing your money in a variety of different options. Instead of hoping one of them will work for you, you have a better chance of making a lot more money. Think of it as a gunshot.
It is far easy to hit a target with a buckshot than it is with one bullet. Having multiple streams is your best bet to get as much as you can out of your money. Make sure you are consistently checking on your money as it grows, as well. Some of the methods mentioned could be taken by the company you are working with if you are not vigilant.