How much interest will I earn on $500,000 in a year?
Earning interest on a 100,000 fixed deposit or certificate of deposit depends entirely on the contracted annual percentage yield and the chosen duration of the term. Depositing 100,000 units into a 12-month fixed deposit offering a competitive yield of 5.0 percent guarantees an exact return of 5,000 units in gross interest income over the course of the year. If the financial institution compounds interest monthly rather than annually, the effective yield increases slightly, pushing total annual earnings higher. Opting for a shorter 6-month term at a 4.5 percent rate will yield roughly 2,250 units upon maturity. Investors must also account for ordinary income taxes levied on earned interest unless the fixed deposit is held inside a registered tax-advantaged account structure.
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