We often hear about millionaires that are able to live off of interest and dividends during retirement. But what about people that are worth $100 million? What is the interest on 100 million dollars? Is the amount really as obscene as it sounds?? (Spoiler alert…for most of us, yes it is!! ;))
Let’s talk about it and see what it would be like to have 100 million dollars!
Can you live off 100 million dollars?
The first question that’s circling the internet right now is, “Can you live off $100 million dollars?”
The answer…Of course!
I’m sure you could find plenty of uses for 100 million dollars. And honestly, a hundred million could take care of you and the next 4-5 generations after you (with money to spare!).
Besides your regular cost of living, healthcare, etc., you could also:
- Buy a $100,000+ watch that takes 6 months to make
- Purchase a private top-of-the-line jet for 44 million
- Buy a Michigan mansion (my hometown) for $10 million or less
- You could donate $25 million to end homelessness in Texas
And even with those moderately insane purchases, you still have $20 million left.
There is so much that could be done with $100 million dollars. It’s not quite as insane as having a billion dollars, but it’s still quite the hefty amount to have!
How long would it take to spend 100 million dollars?
Based on the above, you can see buying even the most beautiful audacious thing still doesn’t cost a hundred million dollars. So what would it take to clear away all that cash? How long would it take to spend 100 million dollars?
Let’s say you decided to spend $1,000 a day for the rest of your life. How long could you live on 100 million dollars before you ran out of money?
By spending $1,000 a day, you would go through $365,000 a year.
Even if you earned no interest on your 100 million dollars and spent $1,000 every single day of your life, you could still live for 270 years on 100 million dollars! In other words, you’d NEVER run out of money!
That’s simply insane!
As you may have guessed, no one really needs a hundred million dollars to live a happy life. Even people with just 1/100th of that (ie. $1 million dollars) lead very happy lives in retirement.
What do people invest in that have $100 million?
People with $100+ million don’t often put their money in index funds and step away. They like to make things a bit more interesting. Instead of dull slow-growing investments, they might invest in real estate, art, or collectibles.
Want to invest like the rich?
Well, you don’t have to drop millions of dollars to do it. Today, thanks to various platforms like the three highlighted below, you can invest in a fraction of a multi-million dollar real estate deal, or a portion of an amazing painting. Pretty cool stuff. And, you could earn some decent money doing it too.
|Logo||Opportunity||Sector||Minimum Needed||Target Returns||Learn More|
|Fundrise||Direct-to-investor online real estate.||$10||9%-12%|
|CrowdStreet||Exclusive online real estate investing||$25,000||9%-24%|
|YieldStreet||Private art, real estate, finance investments||$2,500||3%-18%|
What about a million? Can I retire with a million dollars?
Okay, maybe the $100 million dollar goal isn’t quite right for you. The second question many are asking (once they realize they’ll never earn $100 million dollars…) is “Can I retire with a million dollars?”.
The answer — Yes.
Just because you’re not a billionaire, that doesn’t mean you can’t retire and live comfortably. Many people retire with a million (or less!) and are able to keep up with their current lifestyle.
The key is to be able to spend your money wisely and not let “lifestyle creep” start to affect you.
How much is interest on 100 million?
Based on research I’ve done in the past, here’s what the average interest rates look like currently:
- Savings: 0.5%
- Certificate of Deposit: 0.65%
- Short term government bond: 1%
- Short term corporate bond: 2-3%
- Annuity: 3%
- Real Estate: 7%
- S&P 500 Index Fund: 10%
Those are the interest percentages, but what does that mean in terms of dollars?
How much interest does 100 million dollars make a year?
So what is the answer? What would the interest be on 100 million per year?
- With 1% interest, you’d make $1 million a year. That’s just for the money to sit there and collect!
- At 3% interest, you’d earn $3 million per year.
- At the annual rate of return of 8%, that’s $8 million a year!
So what would the yearly interest on $100 million dollars be? Could be anywhere in between $1 million and $8 million, depending how well you invest your money!
What is the monthly interest on 100 million dollars?
How much interest does 100 million dollars earn per month?
- 1% interest: $83,333 per month
- 3% interest: $250,000 per month
- 8% interest: $666,667 per month
What is the interest on 100 million dollars per day?
If you had 100 million dollars and invested it… What would the interest be on 100 million dollars per day?
If you invested 100 million dollars with the interest rates below, here’s how much you would earn each day:
- 1% interest = $2,740 per day
- 3% interest = $8,219 per day
- 8% interest = $21,918 per day!
If you had $100 million dollars, you could earn more in a day than some people do in an entire year!
What is the interest on 200 million dollars?
Some people have super high aspirations. Maybe to them, $100 million isn’t enough (after all, you couldn’t even buy this California home for $100M). So what about $200M? What is the interest on 200 million dollars? And is it enough for you?
- With 1% interest, you’d make $2 million a year.
- At 3% interest, you’d earn $6 million per year.
- At the annual rate of return of 8%, that’s $16 million a year!
Sound like enough? Then maybe $200 million is the right number for you!
What is the interest on $50 million dollars?
Now that you’re reading about what it means to be a centi-millionaire, maybe $100 million dollars seems like a little much.
What if you dropped your target a bit?
What is the interest on $50 million dollars?
- At 1% interest, you’d earn $500,000 a year
- With 3% interest, you’d earn $1.5 million per year
- At 8%, that’s $4 million a year
Sound like this is more your speed? Then maybe targeting $50 million dollars for retirement is right for you!
Is $50 million dollars rich?
If you have $50 million dollars, are you considered rich?
Without even looking it up, I’d say yes. But…let’s get more specific.
According to a survey from Schwab, most people would consider a $2 million net worth as rich.
Others consider $5 million as rich. And, nearly everyone would consider a $10 million net worth as rich.
So is $50 million dollars considered rich? Absolutely!
What to do with $50 million dollars
What should you do with $50 million dollars? Well, there’s certainly no shortage of options!
According to Investopedia, ultra-wealthy individuals invest in more than just the stock market.
People with $50 million dollars also invest in:
- private and commercial real estate
They also invest in other business ventures to keep their money growing!
If I had 50 million dollars, I would invest a decent portion into a Vanguard S&P 500 Index Fund, private and commercial real estate, land, and new business ventures.
I’d personally steer clear of gold since it’s been a pretty terrible investment for the long term. And, I probably wouldn’t invest in artwork because I know nothing about it!
Alright. So how do people do it? How on earth do they earn $100 million dollars?
People earn $100 million in one of two ways:
- They build a business that becomes insanely successful
- They inherit the money from their business building parent
That’s really it.
You’re not going to earn a 100 million dollars by investing $1,000 a month into mutual funds. Sorry, it’s just not going to happen.
If you want a net worth of $100 million, you’re going to have to start a business, work your butt off, and constantly re-invest the majority of the profits back into it.
Related: How to Become a Billionaire Family
How Long Would It Take to Make 100 Million Dollars?
Now, let’s talk about how long it would take to make a hundred million dollars in the first place. Unfortunately, most people, no matter how hard they work, will never earn a 100 million dollars in their lifetime.
Let’s put $100 million dollars into perspective here:
- If you made minimum wage your entire life, it would take you 6,600 years to make $100 million dollars
- If you earned the average American income, or $50,000 a year, it would take you 2,000 years
- Even if you made mid-six-figures (ie. Let’s say $500,000) a year, it would take you 200 years to earn 100 million dollars!
The only way to truly earn a billion, without interest or inheriting any money, would be to earn $2 million dollars a year. Even then, it would still take you 50 years to earn $100 million.
As Einstein supposedly once said, “compounding interest is the 8th wonder of the world”. So what if you consistently invested a fair amount of money? Then how long would it take to make 100 million dollars?
- Let’s say you could invest $2,000 a month starting at age 16.
- And, let’s just say that you average a 10% return on your investments every year.
Then how long would it take to make a billion dollars?
If you invested $2,000 every single month, never spent a dime, and always earned 10% a year, you would become a billionaire on your 77th birthday!
With the scenario above, it would take you 61 years to attain a net worth of $100 million via simple investing.
That’s actually not too bad!
Sure, you’d probably never get to enjoy your money, but you’d leave a tremendous amount of wealth to your family!!
Investing 100 Million Dollars – Where Do Centi-Millionaires Put Their Money?
As we said before, most individuals that are worth $100 million are business men and women.
They work tirelessly. They love what they do. Heck, they simply live and breathe their businesses.
And, it should come as no surprise that much of these individuals’ wealth is tied up in those businesses! Where do centi-millionaires invest?
In their business!
Take, for example, Jeff Bezos…
And, as we already stated above, the same goes for most of America’s wealthiest individuals. But why?
The answer is quite simple.
If they cashed in on their holdings, that would make their wealth “realized” and they would be taxed on their gains. BUT, if they just leave their wealth in the value of their business, they aren’t personally taxed on those gains!
So, if they don’t need the money (and, as we established before…no one really needs 100 million dollars), then why take it out and pay taxes on it?
You may as well just be a well-known centi-millionaire and enjoy the fame while it lasts!
Other Questions People Ask When Thinking About 100 Million Dollars…
When researching the data for this post, I quickly realized that people have quite the array of questions when they ask about millions of dollars!
Most questions came back down to earth a bit and revolved around saving up millions of dollars, which is totally fine! No one needs a hundred million dollars. For many, saving up a couple million does the job quite nicely!
What is the yearly interest on 2 million dollars?
What is the annual interest on 2 million dollars? Considering that many millionaires reach 1 to 2 million before retirement, you may be wondering how much you could earn on your money.
The yearly interest on $2 million would be $160,000 a year (when assuming an 8% earnings rate). That could easily be money to live on year after year!
What is the interest on 10 million dollars?
Now, with $10 million dollars, you obviously won’t earn as much in interest as you would with $100 million.
The average 8% annual interest on 10 million dollars would result in about $800,000 a year. That’s still more than what many people will save in a lifetime though, so it could be worse.
Now that you know about interest and how much you could make with both 100 million and a million or two, let’s talk about bank accounts.
How many bank accounts should you have when building wealth?
Experts note that you should have at least 4 bank accounts. These will be both for budgeting, saving, and building wealth through investing.
How would this work for the average person?
For one, you’d need two different checking accounts.
- One would be for your regular bills — including your mortgage or rent, utilities, and other bills you can’t escape from (like groceries!).
- The second one would be for spending money or personal money. So this is money you can spend guilt-free.
Then, you’ll need two savings accounts.
- The first would be for your emergency fund. This account should be harder to touch so you aren’t tempted to dip into it unless you absolutely have to.
- The second savings account should house your other savings goals. These include saving for a house, a car, and more — amongst other goals.
Should I keep all my money in one bank?
What about using multiple banks? You’ve heard that some wealthy people use more than one bank to house their money. Should you keep all your money in one bank? Or split it up?
If you have less than $250,000 dollars, sure! Keep it in one account.
But, if you have more than that, it’s recommended to split it up. This helps ensure that you have full FDIC insurance coverage in case your bank fails.
Where do millionaires keep their money?
Forget centi-millionaires for a second. Where exactly are regular millionaires keeping their money?
Considering the fact that FDIC insured banks only insure $250,000 each person, they have to have the rest somewhere — right?
Well, that would be correct. Millionaires put their money in many different places and classifications. This includes…
- real estate,
- mutual funds,
- and other accounts.
Of course, it’s important to keep your hard-earned money safe. If you’re thinking about storing your millions, it’s important to talk to tax professionals and even a financial advisor.
What Is The Interest on 100 Million Dollars? Summing It Up!
As you can see, the interest on 100 million dollars is a lot. More than what most people could spend their entire lives.
If you would earn just 1% on a $100 million dollars, you’d likely earn $1 million a year. All without lifting a finger. That’s pretty insane.
Chances are, you’re not going to be a centi-millionaire, but even if you save up just $1 million bucks, that’s still a heck of a lot better than nothing. And, you could still live a very fulfilling, happy life!
So what about you? Do you think you’ll be living off the interest of 100 million dollars? Or something less?
*Personal Capital Advisors Corporation (“PCAC”) compensates LAM Finances for new leads. LAM Finances is not an investment client of PCAC.
AUTHOR Derek Sall
Derek has a Bachelor's degree in Finance and a Master's in Business. As a finance manager in the corporate world, he regularly identified and solved problems at the C-suite level. Today, Derek isn't interested in helping big companies. Instead, he's helping individuals win financially--one email, one article, one person at a time.