How Much Interest Can I Earn on $100,000?

If you have $100,000 to invest for income, you might be wondering, “How much interest will I earn on $100,000?” You can earn anywhere from a fraction of a percentage point to nearly 10% on your money. Some interest-earning investments are guaranteed safe by the U.S. government, others are subject to market fluctuations. Some have tax advantages, while others may limit the amount you can buy. If you’re unsure about which options might be best for you, you can find a financial advisor to help you get the most interest income from your $100,000.

Where to Invest Your $100,000 for Interest

An investor with $100,000 in search of interest has a wide range of options. Generally speaking, the higher the return, the greater the risk. Investments also differ in terms of liquidity, or how easily and quickly an investor can turn the investment into cash. Here are eight common choices:

1. Savings Account

A savings account at a bank or credit union offers high liquidity and principal protection, making it an appealing place to park cash. These accounts are insured up to $250,000 per depositor by the Federal Deposit Insurance Corporation (FDIC) for banks and the National Credit Union Administration (NCUA) for credit unions. While interest rates vary, high-yield online savings accounts currently offer annual percentage yields (APYs) around 4.00% to 5.00%.

Estimated annual interest on $100,000: At a 4.25% APY, you could earn approximately $4,250 per year.

2. Money Market Account

Money market accounts combine the safety of a savings account with some of the features of a checking account, like limited check-writing privileges. They are also protected by FDIC or NCUA insurance. These accounts typically offer slightly higher interest rates than standard savings accounts, though money market accounts may have higher minimum balance requirements.

Estimated annual interest on $100,000: With an interest rate of 4.50%, you could earn around $4,500 per year.

3. Money Market Funds

Money market funds invest in short-term debt instruments like Treasury bills and commercial paper. While they’re considered low risk, they are not FDIC- or NCUA-insured. These funds offer competitive yields and are a popular choice for conservative investors seeking better returns than a bank account.

Estimated annual interest on $100,000: With current yields around 5.00%, you might earn approximately $5,000 per year, though returns can fluctuate slightly.

4. Certificates of Deposit (CDs)

CDs offer higher fixed interest rates than savings or money market accounts in exchange for locking in your money for a set term, typically ranging from a few months to several years. Breaking the CD before maturity often triggers an early withdrawal penalty. Jumbo CDs, requiring deposits of $100,000 or more, may offer slightly better rates.

Estimated annual interest on $100,000: With a 1-year jumbo CD offering 5.25%, you’d earn about $5,250 per year.

5. Treasury Securities

A woman reviews how much interest she can earn on $100,000.

U.S. Treasury securities — including Treasury bills, notes and bonds — are backed by the full faith and credit of the U.S. government, making them among the safest investments. You can buy them directly from the government or through brokers, and they pay interest every six months. Rates depend on maturity and market demand.

Estimated annual interest on $100,000: A 10-year Treasury note currently yielding around 4.30% would pay approximately $4,300 per year.

6. Series I Savings Bonds

Series I bonds (iBonds) are U.S. government-issued savings bonds that offer a composite interest rate combining a fixed rate and an inflation-adjusted rate. They are highly secure, though each individual can purchase a maximum of $10,000 electronically per year, with an optional additional $5,000 through a tax refund.

Estimated annual interest on $15,000 (max purchase): At a current composite rate of 4.30%, you’d earn about $645 per year. To allocate more of a $100,000 portfolio to I Bonds, you’d need to spread purchases over several years or across multiple individuals.

7. Corporate Bonds

Corporate bonds are issued by companies looking to raise capital. They typically offer higher yields than government bonds but carry greater credit risk. Investment-grade corporate bonds might yield 5% to 6%, while high-yield (junk) bonds offer even more, but with increased risk of default. Bond funds provide broader diversification. A financial advisor can help you determine the role bonds could play in your portfolio and create a strategy for them, such as a bond ladder.

Estimated annual interest on $100,000: A diversified corporate bond fund yielding 5.75% would pay roughly $5,750 per year, depending on the credit quality and market conditions.

8. Municipal Bonds

Issued by state and local governments, municipal bonds help finance public projects like schools and highways. While not as risk-free as Treasuries, they are typically lower risk and offer tax advantages. Interest is exempt from federal income tax, and sometimes state and local taxes as well, boosting their after-tax yield.

Estimated annual interest on $100,000: A muni bond fund with a tax-equivalent yield of 4.00% (assuming a 24% tax bracket) would generate $4,000 per year in tax-free income.

Understanding Interest as an Investor

Interest-earning investments represent just one way you can invest $100,000. You can also look into stocks, including dividend stocks, as well as real estate, commodities and even collectibles. Interest-earning investments are generally safer than other investments, such as stocks, for which the opportunity of return is based on price appreciation. For this reason, interest-earning investments are a good fit for investors with limited risk tolerance, especially when investing over a shorter time frame.

If you are more risk-tolerant and investing for a longer period, such as a retirement date that is a decade or more away, you may gain higher returns by investing in stocks. Over longer time frames, inflation can also be a significant concern. Stocks may perform better against inflation than many interest-earning investments.

Compounding is an important concept in interest investing. Investments that earn interest on the interest already earned can increase the value of your portfolio surprisingly quickly. Diversification is another element to consider. Dividing investments between different asset classes, such stocks and bonds, as well as among different securities, can help manage risk and improve return.

Bottom Line

An investor calculates how much interest they can earn on $100,000.

An investor with $100,000 and a desire for interest income can choose from a variety of options, ranging from ordinary savings accounts to government-issued Series I savings bonds. The rate of interest, safety and liquidity offered by these different investments differ widely, as does the tax liability of various fixed-income securities.

Investing Tips for Beginners

A financial advisor can help you put a financial plan into action for your investments. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have free introductory calls with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Before you start investing for interest, consider paying off any high-interest debt you owe. Also look into creating an emergency fund to allow you to cover unexpected expenses without dipping into your investment portfolio.