Getting your hands on £20 Million is no easy feat. Anyone who reaches this level of wealth will likely have built and sold their business, won the lottery or landed a huge inheritance. In this article, we’re going to look at the insane amount of interest you could earn on that kind of money by putting it into a high-interest savings account.
We’ll also take a look at some alternative ways you can invest your money to make a higher return than the interest rates offered at banks. Let’s jump in.
How Much Interest Could You Earn On £20 Million Per Year
The amount of interest you get from a savings account is based on the current BoE Base Rate. For the last 10 years, interest rates have been very low, so they haven’t given much return. However, the recent rise in the Bank of England Base Rate has put interest rates at their highest levels in the past decade.
If you actually have £20 Million you are likely able to find a bank that will give you your own private banking deal with a variety of benefits. However, for this example, we’ll take a look at accounts available to the average person. Currently, in the savings account market, you can find accounts offering 4.8% – 5.5%. Most of these accounts have deposit limits that are much lower than £20 Million but with that amount of cash, you would be able to find a bank offering a similar rate on a private deal.
If you have £20 Million in a savings account earning 5.5% interest per year you would be making £1,100,000 per year in interest. That comes out to £91,666 per month or £21,096 per week. Those are some pretty impressive figures that nobody should have a problem living on.
Rates can change regularly, so we have put together a table below showing you how much interest you could earn on £20 Million at different rates.
| £20M Saved At | Weekly | Monthly | Yearly |
|---|---|---|---|
| 1% | £3836 | £16,666 | £200,000 |
| 2% | £7671 | £33,333 | £400,000 |
| 3% | £11,506 | £50,000 | £600,000 |
| 4% | £15,342 | £66,666 | £800,000 |
| 5% | £19,178 | £83,333 | £1,000,000 |
| 6% | £23,014 | £100,000 | £1,200,000 |
| 7% | £26,849 | £116,666 | £1,400,000 |
How Much Interest On £20 Million Per Day
Having a 5.5% interest rate on £20 Million would earn you £3,013 per day in interest.
£1,100,000 per year / 365 Fays Per Year = £3,013 Per Day
If your interest is paid monthly or quarterly and you left the money in your account your daily payout would grow due to compound interest.
How Much Interest On £20 Million Per Week
Having a 5.5% interest rate on £20 Million would earn you £21,096 per week in interest.
£1,100,000 per year / 52.149 Weeks Per Year = £1,151 Per Week
If your interest is paid monthly or quarterly and you left the money in your account your daily payout would grow due to compound interest.
How Much Interest On £20 Million Per Month
Having a 5.5% interest rate on £20 Million Per Month would earn you £91,666 per month in interest.
£1,100,000 per year / 12 Months = £91,666 per month in interest.
If your interest is paid monthly or quarterly and you left the money in your account your daily payout would grow due to compound interest.
Is the Interest Taxed?
Unfortunately, you will have to pay tax on your interest, especially with the amount you will earn from £20 Million. 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. That’s not going to make a dent if you are trying to save £20 Million Pounds.
Use our interest calculator to calculate interest on any amount.
Can I Live Off £20 Million Forever?
Even if you never earned any interest on your £20 Million you could live forever on it without a problem. You could spend £250,000 per year for 80 years before running out of money if you earn zero interest on your money.
If you invest the money and use the 4% withdrawal rule, you could theoretically withdraw £800,000 per year for 30 years without running out of money. If you decrease this to 2% withdrawal rate and take £400,000 per year you have a high probability of never running out of money.
So, with £20 Million it’s safe to say that even with an expensive taste, you should be able to live off that amount of money without any problems.
Other Ways To Invest £20 Million To Earn Better Returns
If you have £20 Million, 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 £20 Million you have many options for where to put 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
Property is another proven way to invest your money and grow your wealth over time. You can use a portion of your cash to buy up rental properties and rent to tenants providing a consistent flow of cash. Historically properties have gone up in value over long periods of time, so you get both the appreciation on your building as well as the cash flow.
However, unlike stocks property will require some work. You will have to deal with maintenance and handling tenants.
Putting a portion of your £20 Million into property is a great option to provide capital growth as well as cash flow.
Buying Businesses
With £20 Million you have the option to buy or invest in your own business. Personally, I build online content sites just like this one. Investing in content on a blog can produce a much higher return than interest on a savings account but it also comes with much more risk.
Depending on your area of expertise, there may be a business that could invest in, run and grow your £20 Million faster than other options out there.
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 £20 Million 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.
If you have £20 Million, it would be wise to talk to a financial professional so they can help you spread your money around and get you the best possible rates.
Why It’s Important To Earn Interest On £20 Million
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 £20 Million 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 £20 Million pounds 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 £20 Million in a balanced portfolio of assets could be a better option.
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