How much interest would £1 million generate in a bank account?

Quite frankly, it depends.

There are several types of Bank Accounts you can set up, but you are obviously looking to maximize your returns with minimal risk.. (Aren't we all?)

You should expect anywhere near 5.25%-7.5% interest on low-risk accounts.

In the Banking industry, the highest rate of interest offered is 6.25% APY/EAR. You can however expect to earn roughly around 5.25% APY/EAR in most U.S. or U.K. banks with a typical savings account. Taking into consideration the taxes you will have to pay on such interest income, your real returns are actually 3.10% APY/EAR. Also, if you take into consideration the effect of inflation, your real income from interest will leave you with only, .40% APY/EAR. This is a fairly slow rate of growth for your investment.

There are some other options.. Mutual funds and some premium bonds offer return-on-investment rates around 8%. This would leave you with 4.65% APY/EAR after taxes, and 1.95% APY/EAR of real income on interest. This type of investment however, is not secure. Although it has low risk, it still bears some possibility of a LOSS!

As an alternative, the U.S. has what are called I-Bonds (short for Inflation-Bonds). They offer a small amount of "real-interest". The coupon payment is seasonally adjusted according to the CPI (Consumer Price Index) and is thus shielded against any negative effects of inflation. The best part of this investment, is that all municipal bonds or government bonds hold a tax advantage! That's right! The best combination of two words, TAX FREE! Your real rate of return is I believe currently 1.74999% APY/EAR. That's it, that's what it really is, with nearly zero risk, unless you think the U.S. government won't be able to pay you back..

Now, 1 million British Pounds is currently yielding 1.98 million U.S. Dollars. You have to take into consideration, that the British Pound is currently increasing in value, at a deacreasing rate. This means that very soon, you will see an inflection point on its graph and a slight decrease in its price. The U.S. Dollar is increasing, but what seems to be either at a fairly small decreasing rate, or at a constant rate. A strong currency at the moment is the Euro, which has been showing outpreforming growth (supernormal) for the past 2 years. The Euro is expected to continue to grow at a slightly increasing rate.

If you can take a minute to phathom what that suggests, for 1-2 years down the line.. When it comes time for you to actually pull out your investment from the bank, the money you earn interest on will be in a stronger currency, and the interest payments will be made on a stronger currency. When it comes time to convert it, you will not only realize a "real, non-nominal" 1.75-1.9% rate-of-return, but an additional gain from the difference in value that the currency will yield.

This can be a little too much to keep up with for the typical investor, or for the typical working person. This is why I strongly recommend a financial analyst; which I believe in the U.K. are called "Chartered Financial Analysts". He or she may help your account make the smartest and optimal investment moves to take advantage of volatility in currency, and changes in Bank interest yields.

If you are thinking of investing in Bonds, now is an excellent time for U.S. I-Bonds. The Federal Reserve has kept Interest Rates artificially low. As a result, there has been a slight increase in the inflation rate which can be seen in the latest CPI data. Furthermore, the country is showing below-average economic preformance for the second quarter in a row; second quarter being significantly worse. Many econometricians are making fairly accurate forecasts that the economy may be headed towards a recession in the near future. Despite this, the Federal Reserve has yet to respond by raising interest rates to prevent a serious recession. As a result, they will be more than forced to respond to the recession by lowering interest rates to stimulate consumption spending and disencourage savings. What this means for Bonds is that the Yield to Maturity (YTM) will increase, because the return on similar investments will be lower, making yours a bargain, a jewel. The price of your Bonds should display a rather high increase in value if you wish to sell. However, the I-Bonds will work the best in protecting U.S. cash assets against the effects of such a recession and inflation. You can take advantage of this economic turn-around which is likely to occur in the next 3-5 years.

Lastly, if you wish to keep the same "real" value of your cash assets in the bank, but spend whatever you can without going below a 0% growth rate (meaning your assets will still be able to buy what 1million pounds can today; in any other time in the future), multiply your real rate of return, so around 1.75%, by your assets, less any fees for your financial manager(s).

This will allow you to spend, today, 17,500 pounds a year from your 1million pound starting balance at the beginning of the year; if you withdraw this amount after taxes have been paid at the end of one-year's time so that you can let the correct amount of interest accumulate.

I hope this was helpful, best of luck on making the best financial choice.

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How much interest would £1 million generate in a bank account?

I have recentloy received some inheritance and would just like some general advice (from experts especially!) I just want to know on average how much interest £1 million would earn me per year? Also for anyone who's experienced in banking, would I be able to apply for a Coutts account and an...

You can safely earn 5.25%, which would give you an income of $52,500 a year.

If you wanted to take a little risk, and I mean very little risk you could buy Preferred Stocks, in stable companies like Bank of American, Wells Fargo, etc and earn up to 7% interest, which would boost your income to $70,000 a year.

You could than go aggressive and buy High Yield Bonds which would earn more but you would also take on bigger risk.

An financial expert might recommend a mix, as an example 33% stocks, 33% bonds and 33% cash. But it all depends on your age, risk tolerance and other personal factors.

The best advice I can give you is don't tell to many people about your windfall, because there will always be someone who will try to scam you out of your money.

Good Luck

A lot depends on how much risk you're willing to accept. If you want a safe return, put it in one of those online savings account, average about 5% back (50,000 pounds). If you're wanting to grow it more, you can put it in stocks (with some risk) and get more back, theoretically.

However, you would not be able to apply for a Centurion card. I quote Wikipedia when I say, "The card is available only by invitation and, as of January 1, 2006, in the United States, it requires minimum spending of $250,000 within 10 consecutive months on another American Express card and exceptional credit history among other requirements."

Good luck. =)

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In a high Interest account of about 5% you would probaly get about £50,000 a year.

it depends which account u put it in they all have different rates of interest..have a look at some bank websites and see what interest rates they are offering on saving accounts

Don't leave it in a bank account!!! They only pay around 0.1% which is, frankly, RUBBISH!! Get in touch with a financial adviser and make sure they look at a balanced multi manager fund for any investments. These are world markets rather than individual countries, therefore have less chance of collapse. Spread the money around rather than keeping it in one fund. It protects your investments. A company called Inscape, operated by Abbey, is quite good. To aply for an Amex card, you do need to have an established credit rating, rather than a million quid!