How Much Interest Can $2.5 Million Earn Per Year?

When you have a seven-figure portfolio, your investment goals often shift. For some investors, the focus remains on growth, seeking out high-return opportunities to continue building wealth over the long term. Others, having spent years accumulating their nest egg, may pivot toward preservation and income, prioritizing stability over aggressive returns. Your personal financial strategy will guide how you allocate your assets and, ultimately, how much interest you can earn each year.

A financial advisor could help you create an investment plan for your financial needs and goals.

How Much Interest Can $2.5 Million Earn Per Year?

However you want to invest, interest-bearing assets will often make up a significant portion of your portfolio. These are assets that are generally safe and which generate income each year, repaying you in exchange for lending someone your money. With $2.5 million to invest, these products can generate sustainable income over time. For mainstream investors, the most common interest-bearing assets include:

Each of these is a debt-based product by definition, since only debt products return interest payments. Yet each has its own risk/reward profile. Here’s what you could earn per year if you invest for interest and income.

Annuities

Average Annual Return: Variable
Payment on a 20-Year Contract: $197,448/Year

Annuities are structured differently from most other debt-based products, making them hard to compare against something like a bond or fund.

With many annuities, you buy a contract in advance of the intended payment. For example, you might purchase an annuity 10 years before it generates any returns. Once the contract matures, otherwise known as “annuitization,” you receive regular payments based on the nature of your specific annuity. The payments are structured such that, by the end of the contract, you have received back your initial payment with interest. That interest rate can range widely, based on factors such as the length of payment, how far in advance of payment you bought the contract, how large your contract was, etc.

This differs from a standard, more liquid, investment product such as bond, where you purchase the asset and immediately begin generating your return.

However, when it comes to particularly large investments, annuities are still worth discussing. For security-oriented investors, annuities can let you turn your money into a highly safe form of income relatively quickly. For example, say you buy a 20-year, $2.5-million annuity five years in advance. This means that in five years, the contract will begin making monthly payments, and those payments will continue for the following 20 years. Depending on the annuity you chose, you could receive $16,454 per month, or $197,448 per year. This is a very comfortable, very secure income that would leave you with almost $4 million to invest at the other end.

Bonds

Average Annual Return: Between 5% and 6%
Final Value After One Year: $2.65 Million

The bond market can be difficult to pin down. Over time, the average return of investment-grade assets comes in somewhere between 4% and 6% per year. For example, at time of writing, bonds were generally returning around 4.34% across the market as a whole.

Like stocks, specific bond rates can fluctuate widely within the market’s average annual return. Individual assets can produce a wide range of returns, with some generating returns closer to 10%, while others can actually lose money in the long run. That’s a particular risk for highly secure bonds, which can sometimes have interest rates below even the Federal Reserve’s target rate of inflation.

Overall, bonds are secure products. Treasury bonds are backed by the U.S. government itself, while corporate bonds are backed by the company’s assets and credit. It’s rare for an investment-grade bond to default, so if you can find a bond with a good interest rate, it’s often a strong investment. In fact, over time, bonds post the best returns of any mainstream interest-based product.

Certificates of Deposit

Average Annual Return: Between 0.60% and 3.5%
Final Value After One Year: $2,587,500

For high-net-worth investors, traditional banking products like certificates of deposit (CDs) can be a tough value proposition. Their primary appeal lies in security and stability. With a CD, the bank guarantees a return of your principal plus interest. This makes it a dependable choice, especially during periods of market volatility.

However, when you’re managing a portfolio in the millions, CDs offer diminishing benefits. The FDIC insures only up to $250,000 per depositor, per institution, meaning a large portion of your funds may remain uninsured if concentrated in a single bank. On top of that, CDs typically yield less than bonds, despite offering a similar low-risk profile.

In essence, CDs function much like bonds. They’re debt instruments backed by the financial strength of the issuer. But compared to bonds, CDs come with lower returns and less liquidity. Bonds can often be sold on the secondary market. Meanwhile, CDs require you to hold the investment until maturity, or face penalties for early withdrawal. This lack of flexibility makes CDs less attractive for high-net-worth investors who value both return potential and access to their capital.

That said, CDs still have a place in a diversified portfolio. For investors seeking a low-risk parking spot for short-term funds, CDs can serve as a conservative option. They’re just one that should be used strategically and within the limits of FDIC protection.

High-Yield Savings

Average Annual Return: 2.5%
Final Value After One Year: $2,563,221

A high-yield savings account is a form of depository savings account. They work the same way as a standard savings account in most respects. You hold money on deposit with your bank and can move cash in and out of this account, often to a checking account for casual spending. In exchange for offering you an interest rate, the bank restricts how often you can transfer money out of the savings account. With a high-yield savings account, the bank typically also requires you to maintain a minimum balance.

High-yield savings accounts are generally a good idea for people who want to hold a large amount of cash. Most of the time these aren’t good options as a specific investment asset, since you can find better returns with low risk elsewhere. Instead, they’re a good way to generate some additional interest on money that you were going to keep liquid anyway.

However, it’s worth noting that, at time of writing, the average high-yield savings account posted returns comparable to or better than many certificates of deposit. This leaves high-yield accounts in an unusual position. Given that they are also much more liquid than a CD, which locks up your money for years at a time, investors looking for a secure, high-interest asset may prefer a savings account to a certificate of deposit.

Exploring Private Interest Investing

Private interest investing centers on lending money with the expectation of repayment plus interest. Unlike investments in stocks that aim for capital gains or ventures like real estate that seek profit sharing, private interest investing positions you as a lender, not an owner. Your return comes from the borrower’s use of your capital.

For high-net-worth individuals, a wide range of private lending opportunities may arise. These could include personal loans, small business financing or real estate-backed loans. However, unlike public investments, private lending lacks uniform standards and regulatory oversight. Each opportunity must be assessed individually for risk, reliability and potential return.

One strategy worth exploring is secured lending, where your loan is backed by a tangible asset such as real estate. For example, with $2.5 million, you might fund a property purchase and use the property as collateral. This structure offers the benefit of competitive interest rates and an added layer of security should the borrower default.

As with any off-market investment, due diligence is essential. It’s a good idea to work with a qualified attorney to review legal terms and assess risks. When executed carefully, private lending — especially when secured — can serve as a stable, income-generating component of a broader, diversified portfolio.

What a $2.5 Million Portfolio Might Look Like

With a $2.5 million portfolio, you have the flexibility to build a well-diversified investment strategy that balances income, growth and capital preservation. Your asset allocation should reflect your financial goals, time horizon and risk tolerance. For a moderate investor focused on long-term sustainability and steady returns, a sample allocation might look like this:

Sample Asset Allocation

50% Equities ($1,250,000): Invested in a mix of U.S. large-cap, international and dividend-paying stocks or ETFs to drive growth and generate income.
30% Bonds ($750,000): A combination of U.S. Treasuries, investment-grade corporate bonds and municipal bonds to provide income and reduce overall portfolio volatility.
10% Alternatives ($250,000): Real estate investment trusts (REITs), private credit or commodities can offer inflation protection and additional diversification.
10% Cash or Cash Equivalents ($250,000): Held in high-yield savings accounts or money market funds for liquidity, emergency needs or opportunistic investments.

Here’s what this portfolio might generate annually, assuming average yield and return rates:

Equities (4% average return via dividends and growth): ~$50,000
Bonds (5% average yield): ~$37,500
Alternatives (6% average return): ~$15,000
Cash (4.5% yield in high-yield accounts): ~$11,250

Total estimated annual return: ~$113,750

Bottom Line

An investor calculates how much interest $2.5 million can earn per year.

Interest-bearing assets give you access to what’s known as “income investing,” meaning that you receive regular payments over time while you hold the product. With $2.5 million to invest, many products will generate enough interest that you can afford to live off just your investments alone.

Tips for Investing

A financial advisor help you create a financial plan for your income investing needs and goals. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
If you don’t need dividends for current income but own dividend-paying stocks, you could reinvest them. Many companies offer a dividend reinvestment plan or DRIP in which you can automatically reinvest dividends in additional shares of the same stock.