Passive Income Calculator

A high-yield savings account (HYSA) and Treasury bills usually pay similar rates, because both follow short-term interest rates. The real differences are protection and taxes.

Savings deposits are FDIC insured up to $250,000 per depositor, per bank. Treasury bills are backed by the US government and pay their full face value at maturity. T-bill interest is exempt from state and local income tax, while savings interest is taxed by your state too, so T-bills can pay more after tax in a high-tax state. T-bill funds such as SGOV pass the exemption on only for the share of income from Treasury interest.

SGOV and other T-bill ETFs hold bills that mature within a few months and pay monthly. Their share price barely moves, but they are funds, not bank deposits, so FDIC insurance does not apply. Money market funds are similar: they pay short-term rates without FDIC insurance. To compare SGOV with a high-yield savings account, fill the ETF row with SGOV and enter your savings rate.

To compare what these yields leave after federal and state tax, use the taxable equivalent yield calculator.

Interest is paid by a bank or a borrower at a rate the bank sets or the bill locks in. Dividends are paid by companies and funds, which can raise, cut or stop them.

Comparing dividend stocks with a HYSA comes down to that trade. A dividend ETF that yields less than savings today can pay more in later years if its payouts grow, and less if they are cut. The calculator grows the two dividend rows at the rates you set and holds savings and T-bill income at today's rates.

Taxes differ as well. In the US, qualified dividends are usually taxed at lower federal rates than interest, which is taxed as ordinary income. The results are before tax, so the gap after tax depends on your account and tax bracket.

A higher yield says nothing about what happens to the money you put in. Savings balances and Treasury bills held to maturity do not fall when markets drop, while dividend ETFs and stocks can lose more in a bad year than they pay in several years of income.

That is why this passive income calculator keeps them apart. The income table shows what each option pays, and the risk and protection table shows whether the price can fall, whether the principal is protected, whether the payout can change and how the income is taxed. Use it as an investment income calculator for comparing options, not as a forecast.

Passive income here means the interest and dividends your money pays you without selling anything. Each option's yearly income is the amount multiplied by its rate or yield, so $100,000 at 4% pays $4,000 a year. Monthly income is the yearly figure divided by 12, an average rather than a payment schedule.

When you fill the ETF row from a fund, its yield is the fund's regular payouts over the last 12 months divided by its latest price, the same figures its GNG dividend history page shows. The Treasury bill field can take the latest 3-month yield GNG has, shown with the date it was recorded. Every rate stays editable.

• Income is taken as cash every year and never reinvested.
• Savings and T-bill income stays at today's rate. Real rates change over time.
• Dividend payouts change once a year, at the growth rate you set for each row.
• A savings APY includes interest earned on interest during the year, so taking each payment out pays slightly less.
• Results are before tax and fees. They are hypothetical, not a forecast or a promise of income.

Say you have $100,000 to invest. A savings account pays 4%, Treasury bills yield 4.20%, a dividend ETF yields 3.50% and a stock portfolio yields 2%. You expect the ETF and stock payouts to grow 5% a year.

This year, Treasury bills pay the most: $4,200, about $350.00 a month. The savings account pays $4,000, the dividend ETF $3,500 and the stock portfolio $2,000.

If those payouts grow as expected, the dividend ETF pays $5,430 in year 10 and the stock portfolio $3,103, while savings and T-bill income stays flat at today's rates. Over the 10 years, the dividend ETF pays $44,023 in total, against $42,000 from Treasury bills.

Income is only half of the comparison. The risk and protection table shows that only the savings account and Treasury bills held to maturity protect the $100,000 itself, while ETF and stock prices can fall and their payouts can be cut. To check a real fund, enter a ticker such as SGOV under Fill the ETF row from a fund, then change any rate to see every row update.