How Much Interest Will I Earn on 1 Million Pounds? (2023)

I’m sure I’m not alone in dreaming of the possibility of becoming a millionaire, sitting back and living off the interest. But I’ve never actually worked out how much money I’d need to have in order for that to actually be a reality. Whilst I’ve been working my socks off during lockdown and trying to keep my three children safe, up to date with their school work and not killing each other, I started to think – how much interest will I earn on 1 million pounds? Would it be enough to take a step back from work and live the kind of life we’ve always dreamed of?

How much interest will I earn on 1 million pounds?

Isn’t it the dream for pretty much every to be a millionaire? But could you actually live off the interest if you did have 1 million pounds in the bank? The truth is that these days, that’s unlikely. But l’m going to pretend I do have that kind of money and work out how much interest will I earn on 1 million pounds.

Many of the highest interest rate accounts will drop down to a lower rate after an initial introductory period. So, if you do have a lot of money saved, it’s always worth checking that you are getting the best rate possible for your money.

The figures given here don’t include tax. In the UK, you would be expected to pay between 20% and 40% tax on the interest on your savings.

Interest on 1 million pounds at 5%

In the UK, you won’t get a standard savings account with a rate of 5% interest. However, it is possible to achieve these kinds of rates through investments, so let’s take a look at the kind of returns you could expect for your 1 million.

• Monthly interest – £3,333
• Annual interest – £40,000

Now on first glance, £40,000 doesn’t sound bad at all, and it’s certainly enough to live on! But as good as £40,000 sounds, it’s not really going to allow you to lead the millionaire lifestyle you’re probably thinking about here.

Interest on 1 million pounds at 2.75%

Sadly, interest rates for savers have fallen over recent years, but at the time of writing, it is still possible to earn up to 2.75% interest on your savings, if you know where to look.

• Monthly interest – £2,292
• Annual interest – £27,504

Interest on 1 million pounds at 1.5%

If you’re happy to stash your money away for a long term without accessing it early, then you are likely to get a better interest rate. At the time of writing, you should be able to get around 1.5%.

• Monthly interest – £1,250
• Annual interest – £15,000

Interest on 1 million pounds at 1.16%

• Monthly interest – £967
• Annual interest – £11,604

At the time of writing, it’s possible to get around 1.16% interest on your savings if you want an easy access account.  This means that you can access your money without any penalties (unlike fixed accounts).

How to achieve millionaire status!

This is the million-dollar question (pun intended). If I knew how I could definitely become a millionaire, then the chances are I’d be sat on a yacht somewhere sipping champagne under the hot sun. But millionaire status can be achieved in all kinds of ways!

Build up a successful business

Many self made millionaires have worked themselves from nothing, building their businesses up to a successful level by sheer hard work (and maybe a bit of luck).

One of the biggest set back with setting up your own business is having the self belief that you CAN make it! It’s all about that millionaire mindset. This book – Secrets of the Millionaire Mind is a great read.

Win a large sum of money

Another way that some millionaires find their fortune is by winning that elusive million. Comping is big business, and whilst a lot of it is down to luck, there are things you can do to boost your chances of winning big.

If you do have a large amount of money saved up, then it’s best to split it between different accounts. In the UK, up to £85,000 per institution is protected if the company goes bust. This means that you can safely keep up to £85,000 with each provider and know that you will get your money back should the worst happen.

No matter how much money you have in savings, it’s always worth making sure you’re getting the very best interest rate you can. This will probably mean moving your money around every year or two, but you can see from the figures above that this really is worth doing. OK, so not many of  us are going to have £1,000,000 stashed away, but it does still make a difference!