Here's how much interest a $100,000 high-yield savings account can earn currently
Stock market returns, historically, have been around 10%. But that average has increased as high as 16% over the past decade, according to J.P. Morgan. So investing your money, then, feels like the natural thing to do for many savers. That's especially true when there's a large, six-figure amount at stake, like $100,000. That said, stock market returns are notoriously volatile and big gains can and often will precede big losses, potentially wiping out both your earnings and your principal at the same time. And it can take years to recover, or longer, depending on your investing timeline.
But this is not much of a concern when leveraging select savings accounts. A high-yield savings account, for example, comes with an elevated interest rate right now, often over 4%. And while that rate is variable and subject to rise or fall based on market conditions, your principal won't be impacted. Right now, then, moving $100,000 into this account type – which won't come with accessibility restrictions the way alternative account types will – could be the smart move to make. You won't have to keep the money in the account permanently, should you ultimately want to shift your savings strategy. In the interim, however, you'll earn a competitive return on your money.
How competitive will that return actually be, however? Below, we'll calculate the interest earnings that savers will want to know before getting started.
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How much interest can a $100,000 high-yield savings account earn currently?
Calculating your long-term interest earnings with a high-yield savings account will be difficult to do with precision because of the account's variable rate. That said, interest rates are currently forecast to hold steady for the next few months, and they may even rise if inflation doesn't cool and the Federal Reserve responds with an interest rate hike.
Here's how much interest a $100,000 high-yield savings account can earn now, then, calculated using the top available rate and the assumption that it holds constant over the following four earning periods:
- $100,000 high-yield savings account at 4.10% after three months: $1,009.61
- $100,000 high-yield savings account at 4.10% after six months: $2,029.41
- $100,000 high-yield savings account at 4.10% after one year: $4,100.00
- $100,000 high-yield savings account at 4.10% after 18 months: $6,212.61
Savers stand to earn somewhere between $1,000 and $6,200 with a high-yield savings account of this size over the next 18 months. And, if the Fed hikes rates and lenders raise theirs in response, these returns could be even higher. That said, if rates cool, returns here will noticeably decline as well.
But that can be a risk worth taking if it means maintaining access to your funds during this period. Carefully consider your high-yield savings account options now, and consider using an online bank, specifically, as online banks often offer better rates to savers than those banks with in-person branches.
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The bottom line
A high-yield savings account won't be the right choice for every saver, especially those with $100,000 to work with. But with returns here competitive and less volatile than many investments and the principal kept secure, they can merit serious consideration in today's economy. Consider shopping around online, then, if you're contemplating a high-yield savings account, as you may be able to track down even higher rates than those outlined above by diligently researching all of your options.
