First of all, most banks are federally insured for up to $250,000 per person per bank. So, putting $1 million in one bank may not be a good idea.
Secondly, the interest you earn depends on the rate the bank will pay you. Assuming the interest compunds monthly, which is ususally the case, here’s what you’ll earn annually at the following interest rates:
2% – $20,184
3% – $30,416
4% – $40,742
5% – $51,162
6% – $61,678
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Not much. Interest rates on savings accounts are around 1% these days, which means that your interest earnings would be about $10,000 per year. However, that is taxable – so in reality your net income would be maybe $7,000 after paying 30% in taxes. Adjusted for inflation, the value of that $7,000 would go down each year by whatever the inflation rate is, so your actual income is pretty low.
There are way, way better places to put your money than in a savings account – even CDs, Money Markets, Treasury Notes – there’s all kinds of safe places that will yield more.
Also, you would never want to put a million dollars in any one bank – the FDIC only insures deposits up to $100,000. If you were sold on the banking idea, you would want to find a minimum of ten banks. When banks were failing last year, depositors were all covered by the FDIC up to 100,000 – those who had larger accounts were hosed.
You can’t (or at least shouldn’t!) put a million dollars in a Savings Account, since that account is only insured up to $250,000 by the Feds, so if the bank go belly-up, all you’ll have left is a quarter of your cash.
A million bucks belongs in a well-diversified portfolio of stock & bond funds where you can reasonably expect it to spin off 4.5% to 6.5% a year ($45K to $65K a year) with little to no long-term risk & without ever getting any smaller
You wouldn’t want that in just a savings acct – interest would likely be around $10-15K for the year. You could split it across 4 different banks to keep FDIC coverage, and do CD’s and get a bit more interest. Even that though is pretty low these days, maybe close to 3%.
Depends on the yield