How Much Interest Does $3 Million Earn Per Year?

Wondering how much interest 3 million dollars could earn per year? The answer isn’t straightforward, as annual returns depend on several critical factors, including your risk tolerance, investment choices, prevailing economic conditions, and current interest rates. Conservative options like high-yield savings accounts or certificates of deposit might offer safety but lower returns. Meanwhile, more aggressive investments such as stocks, real estate or business ventures could potentially yield higher returns. There is no one-size-fits-all answer to this question as one person will have individual needs that change the answer from another.

You can find a financial advisor to help you manage risk and help you get the most interest income from your $3 million.

How Much Interest $3 million Earns on Different Investments

SmartAsset: How Much Interest Does $3 Million Earn Per Year?

The amount you can make on interest for $3 million will greatly depend on where your money is invested. Generally speaking, the higher the return an investment offers, 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 Accounts

A savings account at a bank or credit union pays from 0.01% to 1% per year. At those rates, $3 million would earn from $3,000 to $30,000 in interest per year. Bank deposits are highly liquid and insured against loss by the Federal Deposit Insurance Corporation (FDIC), while the National Credit Union Administration (NCUA) insures credit union deposits.

However, each account is only insured up to $250,000. So, to invest the entire $3 million, you would have to use several different financial institutions. You can identify top-earning savings accounts using SmartAsset’s online savings account comparison tool.

2. Money Market Account

Rates for these bank and credit union accounts currently pay up to 4% or more. Money market accounts are insured like savings accounts, but may pay more interest while also providing high liquidity and the ability to write checks and use other services.

3. Money Market Funds

Money market funds are currently paying seven-day yields up to 4.4%. You can buy money market funds at many banks, but they are not insured against loss, although they are considered safe, conservative and liquid investments.

4. Certificates of Deposits (CDs)

These currently pay up to 4%, depending on maturity, which can range from 28 days to 10 years. Longer maturities pay higher rates of interest. A jumbo CD that pays a somewhat higher interest rate is available for savers ready to deposit at least $100,000. CDs are less liquid than other insured deposits. If you withdraw your money early, you may be charged a penalty.

5. Treasury Securities

Bonds, notes and bills issued by the U.S. government are safe and pay interest every six months. They come in various maturities, allowing investors to purchase bonds that fit their time frames. Longer maturities pay higher rates. Mutual funds that invest in government securities provide greater flexibility, liquidity and diversity.

However, government bonds are subject to price declines and most bonds and bond funds have produced negative total returns during the current cycle of inflation and rising interest rates.

6. Series I Savings Bonds

These U.S. Treasury securities are currently paying 3.98% annually, one of the highest yields available. Their government backing also makes them very safe. Investors can only buy a maximum of $10,000 of Series I bonds a year, plus another $5,000 worth if using a tax refund. An investment of $15,000 at 9.62% produces $1,443 in interest. However, you’ll have to put the rest of the $3 million to work elsewhere for the time being.

7. Corporate Bonds

While less safe than Treasury securities, debt obligations from major corporations also tend to pay higher interest. Corporate bond interest rates vary widely depending on the stability of the issuer. Price for corporate bonds fluctuate, so total return, including interest and value of the bond, is a key factor.

Corporate bond funds offer diversified baskets of bonds from many different issuers that can help manage risk and improve returns. However, as of the time of writing, the Bloomberg Global Aggregate Corporate Total Return Index has posted a one-year return of negative 1.33%.

8. Municipal Bonds

These debt instruments are issued by local governments to raise money to build roads and fund other improvements. While not as safe as Treasury securities, municipal bonds are free from federal income taxes and, often, state and local income taxes as well.

Municipal bond funds let investors easily buy and sell diversified baskets of municipal bonds. The S&P Municipal Bond Index in mid-2022 had lost approximately 7.54% during the previous year, equal to a decline of $226,200 in the value of a $3-million investment. However, at the time of writing, the 12-month performance has earned a return of 2.28%.

Strategies to Maximize Earned Interest in Your Investment Portfolio

Interest-earning investments form the foundation of many income-focused portfolios. These investments typically include bonds, certificates of deposit (CDs), money market accounts and high-yield savings accounts. Each offers different risk levels and potential returns, creating opportunities to balance stability with growth potential in your financial strategy.

Spreading your investments across various interest-generating vehicles helps optimize your returns while managing risk. Consider allocating portions of your portfolio to government bonds for safety, corporate bonds for higher yields, and CDs for guaranteed returns. This balanced approach can help maintain a steady income regardless of market fluctuations.

The length of time until a bond matures significantly impacts its sensitivity to interest rate changes. Shorter-duration bonds typically offer lower yields but less price volatility when rates change. Longer-duration bonds generally provide higher yields but come with greater price fluctuations. Balancing these factors based on your risk tolerance and interest rate outlook can enhance your portfolio’s performance.

Market conditions and interest rates constantly evolve, requiring periodic portfolio adjustments. Set a schedule to review your interest-generating investments quarterly or semi-annually. This discipline helps ensure your allocation remains aligned with your goals and takes advantage of changing interest rate environments.

Bottom Line

An investor with $3 million can earn from ranging from ordinary savings accounts to government-issued Series savings bonds. For those fortunate enough to have such substantial capital, developing a diversified investment strategy with a qualified financial advisor is crucial. By balancing growth opportunities with preservation of capital, you can create a sustainable income stream that aligns with your financial goals and risk tolerance. Whether funding retirement or building generational wealth, understanding how your three million can work for you is the first step toward financial security.

Investing Tips for Beginners

A financial advisor can help you determine the best portfolio for your situation. 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.
Before investing, most advisors recommend that you pay off any high-interest debt you owe. At the same time, consider creating an emergency fund to allow you to cover unexpected expenses without dipping into your investment portfolio.