How much interest could you get on a million dollars?

[james.hendrickson]

Okay, so I was washing dishes this morning and a thought popped into my mind. What if you had a million dollars (cash, without any tax obligations) and you wanted to get interest on it? How much could you get?

I am talking purely interest here, not dividends or capital gains.

For me, the highest I think I could get would be 7%, which is about what a risky corporate bond would give you under current market conditions

[97guns]

Okay, so I was washing dishes this morning and a thought popped into my mind. What if you had a million dollars (cash, without any tax obligations) and you wanted to get interest on it? How much could you get?

I am talking purely interest here, not dividends or capital gains.

For me, the highest I think I could get would be 7%, which is about what a risky corporate bond would give you under current market conditions

Not too shabby, 7% on a million works out to $5800/mo.

[feh]

Can't answer the question without knowing the amount and types of risk the investor is willing to shoulder, as well as the duration of the investment.

[JBinKC]

I normally avoid bonds and rarely actively seek out participation in the sector but purchased Cloud Peak debt due in 2019 at ave 44% yield in 3 purchase scales in late 2015 during the coal industry implosion and that investment turned out great.

Right now I couldn' t give you an answer because there isn't a potential contrarian situation to interest me on the debt side.

[disneysteve]

For me, the highest I think I could get would be 7%, which is about what a risky corporate bond would give you under current market conditions

Yep. A quick search showed rates in the 6-7% range for long-term bonds.

[Fishindude77]

Several years ago a local bank was trying to raise capitol, so they offered 5%, 5 year CD's for a short while. Competitors were only paying 2-3% at that time. I had some money laying around so took that deal with $100,000 and that's about the time savings rates really started dropping. Turned out to be a real sweet deal the last few years of it, when others were only paying 1%.

If I could find a deal like that again, I'd probably stick all my money in safe CD's and be content with 5%, rather than putting the time and effort into more risky investments.

[Spiffster]

If I had a million dollars I would retire today if I could get 5% back on it reliably. There are so many expenses tied to a career. I could easily and comfortably live on 50k /year minus taxes.

[97guns]

If I had a million dollars I would retire today if I could get 5% back on it reliably. There are so many expenses tied to a career. I could easily and comfortably live on 50k /year minus taxes.

So true, there are a lot of expenses associated with just having a job, I myself didn't even fathom it until I read your post

[disneysteve]

So true, there are a lot of expenses associated with just having a job, I myself didn't even fathom it until I read your post

I guess I'm lucky that way. There are expenses associated with my job but I don't have to pay any of them myself. The job covers them - licenses, certifications, insurance, etc. Leaving work wouldn't save me any money.

[StormRichards]

I guess I'm lucky that way. There are expenses associated with my job but I don't have to pay any of them myself. The job covers them - licenses, certifications, insurance, etc. Leaving work wouldn't save me any money.

I could be wrong, but I don't think the original post was limited to licenses, certifications, etc.

For many, those expenses also include public transportation or gasoline, parking and wardrobe come to mind.

[disneysteve]

I could be wrong, but I don't think the original post was limited to licenses, certifications, etc.

For many, those expenses also include public transportation or gasoline, parking and wardrobe come to mind.

I started a thread on this topic. I think it's an interesting questions.

[Singuy]

The stock market is getting into a hot potato situation with fed interest rate being so low. Everyone is pouring money into stocks despite of the company's valuation since you get less than inflation yield in safer investments.

I really want the feds to increase rates already. Put the market into a correction and give people other choices for investments. An interest rate of 4% would solve all our investment needs. Bonds and preferred stocks will be safer due to eroding interest hike risks and the stock market wouldn't be so expensive due to people pulling back and putting their money into banks again.


I think currently it's the worst time to have a million dollars for investment purposes.

I struggle with this on a daily basis since I need to park 20-30k/month into something.

[97guns]

Fed interest rate MUST stay low or we can not service our 16 trillion in debt, every nation is in the same sinking boat

[disneysteve]

I really want the feds to increase rates already. Put the market into a correction and give people other choices for investments. An interest rate of 4% would solve all our investment needs.

But when rates go up, inflation goes along with it, so just a higher interest rate isn't a panacea because expenses rise.

We're off topic, though.

James asked a pretty straightforward question. Let's try and get back to just answering it.

[Singuy]

But when rates go up, inflation goes along with it, so just a higher interest rate isn't a panacea because expenses rise.

We're off topic, though.

James asked a pretty straightforward question. Let's try and get back to just answering it.

Inflation goes down when rate goes up. People are putting more money into banks therefore buying less goods, driving inflation down. Growth and stocks will also go down due to this.

So having a million dollars at a time when rates are high, which bursts the stock bubble(the low interest rate bubble)..there will be a slew of options. Not saying rates going up will save our economy. I am saying that if I had a wind fall of 1million, today is the worst possible time. A time when CDs are 5+% post stock market crash is the best time to get that million. Then I can look into stocks, bonds, treasuries, and CDs. All of these being relatively low risk compared to today.

So to answer the Op's question..there's too much risk with any investments today. An average yield of 2%-3% over 10 years is probably more likely...this is with buying 7% junk bonds.