A billion dollars is so much more money than most Americans can fathom, but it doesn’t stop people from imagining what it would be like to have that level of wealth. While billionaires and average Americans can both earn interest on their money and assets, billionaires’ baseline is so much higher that the interest they earn is more than most households could make in several lifetimes.
This comparison matters because many Americans are told they’re falling behind financially for not earning enough on their money — without acknowledging how much starting capital determines what those returns can actually do.
If the average American earned the same daily interest as America’s top billionaires, how much would they make in a year?
To ask this question I enlisted the help of ChatGPT as well as past GOBankingRates research to run this question.
The Billionaire ‘Daily Interest’ Rate
First of all, it’s important to note that billionaires don’t earn interest in savings accounts. Their wealth grows mainly through:
- Equity appreciation
- Private company valuation increases
- Concentrated stock positions
Billionaires also can afford the savviest financial advisors who help them create balanced and blended portfolios that earn on the high end (because they have more of a loss buffer and a higher risk tolerance). Thus, they can often earn around 10% to 15% each year. However, to stay conservative, let’s calculate:
- A 12.7% annual return, which equals about 0.033% per day, compounded over 365 days
ChatGPT said this is roughly in line with long-term equity-heavy portfolios.
What That Looks Like for Average Americans’ Balances
Here’s what that “billionaire-style” return (12%) looks like at common, fictional American balances after one year’s returns:
- $1,000 = $1,127
- $10,000 = $11,270
- $50,000 = $56,350
- $100,000 = $112,700
For context, many Americans don’t have anywhere near these balances invested, meaning even “billionaire-level” returns often translate into only a few hundred or a few thousand dollars a year.
The Billionaire Advantage
That math above still understates the billionaire gap, however. Compounding magnifies wealth over time — but it magnifies large balances far faster than small ones. Even if billionaires were only netting the average return rate of around 7%, however, they’d still be making vastly more money than the average American. That’s because the return rate isn’t the main advantage; it’s the starting capital.
If a top 10 billionaire has $100 billion invested:
- 12.7% in a year = They’d come away with an additional $12.7 billion
- That’s about $34.8 million per day
- Or $1.45 million per hour
While that’s a great rate for the average person, applied to billionaire balances, it’s astronomical. A single day of gains for a top 10 billionaire can exceed what an average American might earn from investing over an entire lifetime.
Even if the average American could earn the same percentage returns as the top billionaires, the real gap wouldn’t disappear. Wealth inequality isn’t driven by superior interest rates, but by who already has money working for them at scale.
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This article originally appeared on GOBankingRates.com: If You Earned the Same Daily Interest as America’s Top Billionaires, How Much Would You Make in a Year?
