Reaching your first £10k in savings is a great achievement. When you reach that level of savings you can start making a reasonable amount of money in interest. To protect your money from losing value to inflation, you will want to put it in a high-yield savings account.
In this article, we will show you just how much you could make per year, month and week on £10k in savings.
How Much Interest Could You Earn On £10k
The amount of interest you get from a savings account is based on the current BoE base rate. For about the last decade, interest rates have been very low, so they haven’t given much return. But, with the recent rise in the Bank of England Base Rate, interest rates have gone up considerably.
Most high street banks and even online banks will accept £10k without a problem. Some accounts will have limits on the amount you can invest but it’s usually around £200-250k but that’s not an issue with £10k. Once you get above that you will have to find some higher limit accounts.
Sainsbury’s Bank via Hargreaves Lansdown is currently offering 5.18% AER fixed up to £10 Million.
Rates can change regularly, so we have put together a table below showing you how much interest you could earn on £10k at different rates.
| £10k Saved At | Weekly | Monthly | Yearly |
|---|---|---|---|
| 1% | £1.92 | £8.33 | £100.00 |
| 2% | £3.83 | £16.67 | £200.00 |
| 3% | £5.75 | £25.00 | £300.00 |
| 4% | £7.67 | £33.33 | £400.00 |
| 5% | £9.58 | £41.67 | £500.00 |
| 6% | £11.51 | £50.000 | £600.00 |
| 7% | £13.43 | £58.33 | £700.00 |
At the current rate of 5.18% on the Sainsburys Savings account above you would earn £518 per year in interest. While this isn’t life-changing money, it also isn’t nothing! Let’s take a look at how that breaks down over the year.
How Much Interest On £10k Per Day
Having a 5% interest rate on £10k would earn you £1.37 per day in interest.
£500 per year / 365 Days Per Year = £1.37 Per Day
If your interest is paid monthly or quarterly and you left the money in the account your daily payout would grow due to compounding interest.
How Much Interest On £10k Per Week
Having a 5% rate on £10k would earn you £9.59 per week in interest.
£500 per year / 52.1429 Weeks Per Year = £9.59 Per Week
If your interest is paid monthly or quarterly and you left the money in the account your daily payout would grow due to compounding interest.
How Much Interest On £10k Per Month
Having a 5% rate on £10k would earn you £41.67 per month in interest.
£500 per year / 12 Months per year = £41.67 Per Month
If your interest is paid monthly or quarterly and you left the money in the account your daily payout would grow due to compounding interest.
Is The Interest Taxed?
Unfortunately, you do have to pay tax on your interest, however, with £10k in savings it won’t be much, if anything. Basic rate taxpayers can earn up to £1,000 in interest tax-free and higher rate payers get £500 tax-free. Additional ratepayers don’t get a personal allowance.
After your Personal Savings Allowance, the remaining is taxed at your current income tax rate.
One way to avoid paying tax on savings interest is to save your money in a Cash ISA. ISAs are tax-free however there is a contribution limit of £20,000 per year. If you have £10k to save an ISA could be a good option.
Use our interest calculator to calculate interest on any amount.
Other Ways To Invest £10k To Earn Better Returns
If you have £10k, a savings account is not the only place for your money. Diversifying where you put your money is a wise decision to protect your wealth. With £10k you have a few different places you can invest your money. Let’s take a look at some of the most popular ways to invest your money in the UK.
Stock Market
The stock market is one of the most passive ways to invest your money. Personally, I invest most of my portfolio in Index Funds that have historically grown at over 10% for the past 50 years. This is a great way to get exposure to the whole market without having to pick your own individual stocks which can be much riskier.
Less than 10% of U.S. actively managed funds beat the market. If these people can’t beat the market, we probably can’t either. That’s why I opt to invest in the broad market through low-cost index funds.
Property
With only £10k, you probably don’t have enough money to get into property. You may be able to put a deposit down on a small house however you would likely need more money for renovations etc. At this level of savings you may want to consider savings a little more before jumping into the property game.
Buying Businesses
With £10k there are not a lot of businesses that are worth purchasing. However, £10k is a great amount of money to start your own business. I would recommend checking out our article on different online businesses you can start with small amounts of money.
Is It Better To Save Or Invest Your Money?
There really is no right option here. It all comes down to personal circumstances.
Historically, over the long term (10+ Years) investing in a low-cost broad market index fund will outperform a savings account. If you don’t plan on needing the money any time soon investing may be a better option.
If you plan on needing your savings in the short term, for example, to purchase a house or pay for a wedding, keeping your money in a high-interest savings account is a better option.
Is My £10k Safe In A Bank?
The FSCS protects 100% of the first £85,000 you have saved per UK-regulated financial institution (Not account). This money is guaranteed to be protected. If you spread your money across multiple financial institutions you can have more protection.
Your bank must be registered with the Financial Conduct Authority to be covered. Ensure it is before depositing your money.
Why It’s Important To Earn Interest On £10k
If you are not earning interest on your savings then it is losing purchasing power due to inflation. At the time of writing this, inflation is at 7.3% in the UK. This eats away at your purchasing power year after year, meaning that your £10k won’t go as far as it used to.
It’s important to at least preserve your purchasing power by growing your money at the same or higher than the rate of inflation.
Final Thoughts
If you have managed to get your hands on £10k you’re already in a great position. By putting your money in a high-interest savings account you can make a considerable amount of money each year just through interest payments. While savings rates are good at the minute, they won’t always be. Investing your £10k in a balanced portfolio of assets could be a better option.
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