How much interest on £100 million pounds can you earn?
Uncover the potential of a 100 million pound investment. We reveal comprehensive insights into how much interest you can earn with a £100 million investment.
Discover how much interest you can earn on £100 million, whether you should invest or save your money, and what taxes you’re liable for.
You can earn as much as £4 million a year in interest if you have £100 million.
A financial adviser can direct you to an investment or private bank that offers the best interest rate.
There are pros and cons to saving or investing such a large sum of money.
You can easily live comfortably on the interest from £100 million.
For most of us, £100 million is an unimaginable amount of money. But, there will always be a small minority who become super wealthy during their lifetime.
Top sports stars, actors, business tycoons, and descendants of wealthy families are just some of the people who may well have access to £100 million in cash.
Find out how much interest £100 million would earn in the UK and other important information about managing this sum of money.
How much interest can I earn on 100 million pounds?
It goes without saying that £100 million is a huge sum - it’s easily enough to offer a sustainable source of income through interest alone.
So how much would £100 million earn in interest?
As a rough rule of thumb, someone earning an average of 4% interest on £100 million could look at earning £4 million per year.
The reality is probably more complicated. Although many high street banks offer interest of between 4% to 4.8%, savings interest is often not available on higher balances.
Private and boutique banks may offer higher interest rates of around 4% on larger balances, but the Financial Services Compensation Scheme (FSCS) only protects savings up to £85,000 per bank.
At the time of writing, Coutts offers 3.96% on balances over £3 million with 95 days' notice, Weatherbys Bank offers 3.85% interest on balances up to £2 million with 250 days' notice, and Barclays Private Bank offers 3.61% on balances over £5 million.
In reality, ultra-wealthy individuals are unlikely to keep everything in cash. Instead, they will often diversify their investments, using a bespoke package of investment options, including an investment portfolio alongside cash savings.
If you’re looking for banking as a wealthy individual, a financial adviser can guide you toward a bank that suits your needs and offers the best interest rate.
The table below shows how much interest you can currently earn with Coutts private bank if you have a private notice account of 60 or 95 days.
| Balance | Annual interest with 60 days’ notice | Annual interest with 95 days’ notice |
|---|---|---|
| Interest on balances up to £2,999,999 | 3.44% | 3.65% |
| Interest on balances of over £3 million (this interest rate is charged on the whole balance) | 3.75% | 3.96% |
| £1 million | £34,400 | £36,500 |
| £5 million | £187,500 | £198,000 |
| £10 million | £375,000 | £396,000 |
| £50 million | £1.87 million | £1.98 million |
| £100 million | £3.76 million | £3.96 million |
When it comes to unusually big sums like £100 million, a regular bank won’t do.
Most high street UK savings accounts have a maximum deposit guarantee limit of £85,000 as this is the maximum protection offered by the Financial Services Compensation Scheme (FSCS).
So, it’s perhaps safer to deposit your wealth into an account at an investment or private bank with additional safeguards or structures in place.
A financial adviser can guide you toward a bank that suits your needs and offers the best interest rate.
Do you pay tax on savings interest?
Yes. You will have to pay tax on savings interest, especially for a sum as big as £100 million.
Tax on interest is charged at the same rate as your marginal rate for income tax - the rate for those earning over £125,140 is 45%.
Savings held inside an individual savings account (ISA) are tax-exempt, but they come with a yearly tax-free contribution limit of £20,000.
The interest varies depending on the bank and the type of account you open.
If you’d like to develop a more efficient strategy to keep tax on savings interest rates down, you might want to consider getting financial advice.
What is the best way to invest 100 million pounds to earn better returns?
There is more than one way to invest £100 million.
If you decide to invest your funds into other projects or items for long-term wealth building, below are some of the most popular options.
Luxury personal items
When you have access to £100 million, you can afford to treat yourself.
Purchasing something like a yacht, sports car, or famous artwork may seem indulgent, but by looking after them, they can become assets that add value to your estate.
Property
Commercial and residential property are two of the most consistently invested assets for a reason.
They’re stable and can provide a steady cash flow through rent.
Business
Many wealthy individuals have built their wealth through business success or through inheriting a family business.
They will often continue to work hard, building up and reinvesting money in their business, even once they are wealthy.
Equity
Investing in equities through buying individual shares, funds, or ETFs is a great way for wealthy individual to grow their wealth.
Returns on equities tend to outperform cash and inflation over time, although they can be volatile.
Is it best to invest or save £100 million?
The answer to the age-old question “Is it better to invest or save money?” is tricky. If you are ambitious and experienced, investing may be the best decision.
If you are looking for stability and gradual growth, saving might be the right decision for you.
Below are the pros and cons of saving.
| Pros | Cons |
|---|---|
| You can get predictable interest on your earnings. | Interest rates can vary and can be low compared to other investments. |
| There’s low to no risk of losing your money. | Interest is taxable and this can be substantial. |
| You get easy access to your funds, | Your bank may charge fees to manage your money. |
Below are the pros and cons of investing.
| Pros | Cons |
|---|---|
| Investing can result in long-term gains. | Investing can be risky and you can lose money. |
| You have a higher potential for big returns. | Your gains from investing will likely be taxed. |
| It’s easy to buy and sell stocks and shares. | Investing can be time-intensive as it involves research. |
Can you live off the interest from 100 million pounds?
Considering the interest potential for £100 million is between £1 and £4 million, the answer to this question is yes, absolutely.
Most people would agree that even £1 million is plenty to live off of in a year, let alone £4 million.
Remember, depending on what you do with the money (such as making worthwhile investments), you can make higher returns that replenish the funds and allow you to continue living without the need to work for the rest of your life—and hopefully with some to spare.
Whether you invest in property or other assets, buy stocks and shares, or explore other ways to invest money, the interest you earn allows you to sustain a high standard of living.
Get matched with a financial adviser
Inheritance planning and tax management are essential for everyone, especially wealthier households, as looking after large sums of money requires careful planning.
Obtaining expert advice from a professional financial adviser can keep your money and taxes in order, ensuring that future generations benefit fully.
To find out more about wealth management, get matched with a financial adviser at Unbiased.
:quality(20))