The interest due on your headline annual interest rate of, say, 4%, can be calculated and paid by your bank on a daily, monthly or annual basis.
How often is the interest worked out and paid? The longer you leave your money untouched, the more the interest rolls up and grows, as you get interest on the original interest, and then interest on the interest ON the original interest, and so on. Compound interest means you get interest on your interest.This is due to compound interest, which really increases over long periods of time. The longer you leave your million untouched, the more money you’ll have at the end. How long will you wait before withdrawing any money? Keep your million safe and untouched for 30 years though and even a 2% difference will have a huge consequences, as we’ll see below. Over one year, the maths is not surprising. A 6% interest rate paid annually will earn you £61,678.A 4% interest rate paid annually will earn you £40,742.The higher the interest rate, the more your £1,000,000 will earn you in a year: Whether you are paid interest daily, monthly or annually.
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