How Much Interest Can I Earn On $200,000?

If you have $200,000 to invest, one of the first questions you might ask is how much income it can realistically generate. The answer depends on where you put the money and how much risk you’re comfortable taking. From high-yield savings accounts to bonds and dividend stocks, different options can produce very different results. Understanding those trade-offs can help you turn a lump sum into a steady stream of income.

If you’re looking for help to find the right investment plan for your money, then you may benefit from speaking with a financial advisor. 

How Much Interest $200,000 Can Earn by Investment Type

How much interest $200,000 can generate each year depends largely on where it’s invested and the prevailing interest rate environment. Conservative options typically offer lower but more stable returns, while higher-yield investments may come with additional risk or volatility. Understanding the trade-offs can help you align income expectations with your financial goals.

In a high-yield savings account paying 4% annually, $200,000 could earn about $8,000 per year. At a 3% rate, that annual income would drop to $6,000. These accounts offer liquidity and capital preservation, but rates can change over time.

Certificates of deposit (CDs) may offer slightly higher fixed rates in exchange for locking up funds for a set term. For example, at 4.5%, $200,000 could generate roughly $9,000 annually, though early withdrawals may result in penalties. CDs can provide predictable income but limit flexibility.

Investing in bonds can also produce steady income. If a diversified bond portfolio yields around 4%, that same $200,000 could generate approximately $8,000 per year, depending on credit quality and maturity. Bond prices can fluctuate with interest rates, so returns aren’t guaranteed if sold before maturity.

Dividend-paying stocks may offer income as well, often yielding between 2% and 4%. At a 3% dividend yield, $200,000 would produce about $6,000 annually, with the added potential for price appreciation. However, stock income and value can fluctuate with market conditions.

Ultimately, how much interest you earn on $200,000 depends on your risk tolerance, time horizon and broader financial strategy. Balancing income needs with growth potential and stability is key to making the most of your investment.

Invest in Bonds

• Average Interest/APY: Approximately 3.76% – 4.85%
• Value of $200,000 in Five Years: Varies based on bond type and reinvestment strategy​

Bonds are debt instruments issued by governments and corporations to raise capital. Investors lend money to the issuer in exchange for periodic interest payments and the return of principal at maturity. The maturity period can range from short-term (a few months) to long-term (up to 30 years).​

As of February 2026 ¹ , both 10- and 30-year U.S. Treasury yields are around 3.760%, reflecting current market conditions. Corporate bonds typically offer higher yields to compensate for increased risk. Municipal bonds may provide tax advantages, depending on the investor’s location and tax bracket.​

While bonds can offer steady income, they are subject to risks such as interest rate fluctuations and credit defaults. It’s important to assess the creditworthiness of the issuer and understand the terms before investing.

Invest in Certificates of Deposit (CDs)

• Average Interest Rate At Time Of Writing: 3.10% – 4.05%
• Value of $200,000 in Five Years: $233,484.92 – $244,808.53

A certificate of deposit, or a “CD,” is a form of loan that you give to your bank. You agree to lock in your deposit for a fixed period, during which withdrawals are restricted. In exchange for letting the bank lock up your money like that, you receive a higher interest rate than you would for an ordinary savings account. The interest rate you receive depends on how long you give the bank your money.

A certificate of deposit offers just about the most security you can get from an investment product. This is secured by your bank and the FDIC, so you will almost certainly get your money back, but this is also a low-yield option. Yields are low enough that you may lose purchasing power relative to inflation if you put your money in a standard CD.

Invest in High-Yield Savings Accounts

Interest Rates: 3.30% – 4.21%
Value of $200,000 in Five Years: $235,251.07 – $245,797.22

Traditionally, savers have two types of accounts available to them through their banks: checking and savings. A checking account offers the most liquidity, you can move money in and out of that as you please, while also paying very little interest.

A savings account offers some liquidity, but you generally have rules around how often you can move money in and out of savings each month. In exchange for that reduced access, you get a better interest rate. It’s still not great though, with a 0.41% average savings account interest rate, according to the FDIC.

To compete with this, many online and alternative banks have begun to offer what’s known as a “high-yield savings account.” These are not standardized products, so we can’t guarantee what you’ll see in every case, but most of the time they are ordinary savings accounts. You have the usual setup of high liquidity, with some rules around how often you can move money each month.

Invest in Annuities

• Average Interest Rate: 6% – 10%
• Value of $200,000 in Five Years: N/A

Annuities can provide steady interest income, depending on the product type (fixed, indexed or variable). At a 5.5% fixed rate, $200,000 would generate approximately $11,000 per year in interest. You may defer income or receive it annually depending on how the annuity is structured.Immediate annuities pay out right away, blending interest and principal. Deferred annuities let interest accumulate on a tax-deferred basis.

Fixed indexed annuities, which credit interest based on market index performance (such as the S&P 500) without direct exposure, may average 3% to 6% annually. However, actual returns vary due to caps, spreads, and participation rates, and may fluctuate each year.

Bottom Line

How much interest $200,000 can earn each year depends on where you invest it and how much risk you’re willing to take. Conservative options like high-yield savings accounts and CDs offer predictable income, while bonds and dividend-paying stocks may provide a mix of income and growth potential. Interest rates, market conditions and taxes will all influence your actual return.

Tips for Investing

• Getting the right balance in your portfolio for your specific goals is important, but it can be a lot to figure out on your own. You may want to consider speaking with a financial advisor who can help you sort it out. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call 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.
• Bonds can offer a good balance of security and return, especially if you invest for the long run. Learn all about how to invest in bonds and how it could potentially change your portfolio.
• Determining the right balance, or asset allocation, in your portfolio can be difficult to figure out. You can use our asset allocation calculator to help you determine an industry-proven balance.

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