Yearly Interest on 1 Billion Dollars: What Does it Look Like?

Besides your regular cost of living, healthcare, and so on, you could also—

• Buy a $100,000+ watch that takes six months to make.

• Get yourself a private jet for $44 million.

• Become the owner of California's most expensive home for $160 million.

• Donate $25 million to end homelessness in Texas.

• And that's just a start. There is so much you could do with $1,000,000,000 dollars. And, as you can see, all of the above payments still wouldn't get you close to spending a billion dollars.

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Based on the above, you can see buying even the most beautiful audacious thing still doesn't cost a billion dollars.

So what would it take to clear away all that cash? How long would it take to spend it?

Let's say you decided to spend $10,000 a day for the rest of your life. How long could you live on 1 billion dollars before you ran out of money?

By spending $10,000 a day, you would go through $3,650,000 a year. Even if you earned no interest on your billion dollars and spent $10,000 every single day of your life, you could still live for 270 years on 1 billion dollars.

In other words, you'd never run out of money.

Billionaires 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. One of the top platforms right now is Yieldstreet. (It's a bit exclusive though—I believe you need to earn over $200,000 a year to qualify.)

Okay, maybe the billion dollar goal isn't quite right for you. The second question many are asking (once they realize they'll never earn a billion dollars) is, "Can I retire with a million dollars?".

The answer is—yes, you can.

Just because you're not a billionaire 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.

So what is the income on $1 billion dollars per year?

• With 1% interest, you'd make $10 million a year. (That's just for the money to sit there and collect.)

• At 3% interest, you'd earn $30 million per year.

• At the annual rate of return of 8%, that's $80 million a year.

If you had a billion dollars and invested it, what would the interest be on 1 billion dollars per day?If you invested a billion dollars with the interest rates below, here's how much you would earn each day:

• 1% interest = $27,397 per day.

• 3% interest = $82,191 per day.

• 8% interest = $219,176 a day.

If you had a billion dollars, you could earn more in a day than most people do in an entire year.

How about the interest on 2 billion dollars? Well, you would just double what we discovered above—

• At 1% interest, you'd earn $20 million a year.

• With 3% interest, you'd earn $60 million per year.

• At 8%, that's $160 million a year.

As Einstein (supposedly) once said, "compounding interest is the eighth wonder of the world". So, what if you consistently invested a fair amount of money? How long would it take to make 1 billion dollars with investing?

• Let's say you could invest $2,000 a month starting at age 16.

• And, let's assume that you average a 10% return on your investments every year.

If you invested $2,000 every single month, never spent a dime, and always earned 10% a year, you'd become a billionaire on your 100th birthday.

In the above scenario, it would take you 84 years to become a billionaire via simple investing.

That's actually not too bad. Sure, you'd never get to enjoy your money, but you'd leave a tremendous amount of wealth to your family.

Around 90% of Jeff Bezos's fortune is in Amazon stock holdings. And, as we already said 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'd be taxed on their gains. As long as they leave their wealth in the value of their business—they aren't.

So if you don't need the money, why take it out and pay taxes on it? You may as well just be a well-known billionaire and enjoy the fame while it lasts.

Considering that many millionaires reach $1–2 million before retirement, you may be wondering how much you could earn on your money.

The yearly interest on $2,000,000 would be $160,000 a year (when assuming an 8% earnings rate).

That could easily be money to live on year after year.

Now, with $10 million dollars, you obviously won't earn as much in interest as you would with a billion.

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 a billion and a million or two, let's talk about bank accounts.

Experts say that you should have at least four bank accounts. These will be for budgeting, saving, and building wealth through investing.

How would this work for the average person?

You'll 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.

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?

That depends.

If you have more than $250,000, it's recommended to split it up.

This helps ensure that you have full FDIC insurance coverage in case your bank fails.

Forget billionaires for a second. Where exactly are millionaires keeping their money?

Considering the fact that FDIC insured banks only insure $250,000 each person, they have to keep the rest somewhere, right?

Well, that would be correct. Millionaires put their money in many different places and assets. These include—

• Real estate

• Stocks

• Mutual funds

• Other accounts

It's important to keep your hard-earned money safe. If you're thinking about storing your millions, talk to a tax professional or a financial advisor.