5 Ways to Double Your Money: Top Strategies

Rate of Return Rule of 72 Actual no. of Years Difference (no.) of Years
2% 36.0 35.0 1.0
3% 24.0 23.5 0.5
5% 14.0 14.2 0.2
7% 10.3 10.2 0.1
9% 8.0 8.04 0.0
12% 6.0 6.1 0.1
25% 2.9 3.1 0.2
50% 1.4 1.7 0.3
72% 1.0 1.3 0.3
100% 0.7 1.0 0.3

Key Takeaways

  • There are five key ways to double your money, ranging from a conservative strategy of investing in savings bonds to an aggressive approach that involves investing in speculative assets such as options, penny stocks, or cryptocurrencies. The classic approach of doubling your money by investing in a diversified portfolio of stocks and bonds is probably the one that is applicable to most investors.
  • Broadly, investing to double your money can be done safely over several years, or quickly, although for those who are impatient, there’s more of a risk of losing most or all of their money. 
  • Though doubling your money is a realistic goal that most investors can strive toward, there are some caveats—be honest about your risk tolerance; don’t let greed and fear have an adverse impact on your investment decisions; and be extremely wary about get-rich-quick schemes that promise you “guaranteed” sky-high results with minimal risk.
  • One of the best ways to double your money is to take advantage of retirement and tax-advantaged accounts offered by employers, notably 401(k)s.

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5 Ways to Double Your Investment

Five Ways to Double Your money

Doubling your money is actually a naturalistic goal that most investors can strive toward and is not as daunting a view as it may seem initially for a new investor. There are a few caveats, however :

  • Be very honest with yourself (and your investment advisor, if you have one) about your risk tolerance; finding out you don’t have the stomach for volatility when the market plunges 20% is the worst possible time to make this discovery and may prove very detrimental to your financial well-being.
  • Don’t let the two emotions that drive most investors—greed and fear—have an adverse impact on your investment decisions.
  • Be extremely wary about get-rich-quick schemes that promise you “guaranteed” sky-high results with minimal risk, because there’s no such thing. Because there are probably many more investment scams out there than there are sure bets, be suspicious whenever you’re promised results that appear too good to be true. Whether it’s your broker, your brother-in-law, or a late-night infomercial, take the time to make sure that someone is not using you to double their money.

broadly public speaking, there are five ways to double your money. The method acting you choose depends largely on your appetite for risk and your timeline for investing. You may besides consider adopting a mix of these strategies to achieve your goal of doubling your money .

1. The classical Way—Earning It Slowly

Investors who have been around for a while will remember the classic Smith Barney commercial from the 1980s in which british actor John Houseman informs viewers in his unmistakable dialect that “ they make money the antique way—they earn it. ”

When it comes to the most traditional means of doubling your money, that commercial is not besides far from the truth. The tested direction to double your money over a fair amount of time is to invest in a upstanding, balance portfolio that ‘s diversified between blue-chip stocks and investment-grade bonds .

The S & P 500 Index—the most widely followed index of blue-chip stocks—has returned about 9.8 % per annum ( including dividends ) from 1928 to 2020, while investment-grade corporate bonds have returned 7.0 % annually over this 93-year period. Thus, a authoritative 60/40 portfolio ( 60 % equities, 40 % bonds ) would have returned about 8.7 % per annum during this time. Based on the Rule of 72, such a portfolio should double in about 8.3 years, and quadruple in approximately 16.5 years .

note, however, that a meaning come of volatility generally accompanies such sterling results. Investors should brace themselves for episodic sharp drawdowns, such as the 35 % plunge in the S & P 500 within a six-week period in the first base quarter of 2020 as the coronavirus pandemic erupted cosmopolitan .

In summation, very high returns compared to the historical norm may reduce the potential for future returns. For exemplar, the S & P 500 recovered from its 2020 dip in record meter and powered its way to modern record highs by year-end 2020. Although it returned a jaw-dropping sum return of 100 % from 2019 to 2021, such leading returns may mean that future returns from the S & P 500 may be significantly lower .

S&P 500 Doubles in 3 Years!

The S & P 500 returned a phenomenal sum restitution of 100 % in the three years from 2019 to 2021, despite plunging 35 % within a six-week period in February and March of 2020. An investor who held an investing like the SPDR S & P 500 ETF ( SPY ) over these three years would have seen it doubling in prize .

What about real estate ?

real estate is another traditional direction to build wealth, although it is a army for the liberation of rwanda less attractive proposition at times like the show when caparison prices in North America have surged to record levels in many regions. The prognosis of rising interest rates besides reduces the appeal of real estate investing .

That said, during a real estate of the realm boom, the prognosis of doubling one ‘s money proves irresistible to many investors because the huge amount of leverage provided from mortgage finance can truly juice up returns. For example, a 20 % down payment on an investing property worth $ 500,000 would require an investor to plunk down $ 100,000 and get a mortgage for the balance of $ 400,000. If the place appreciates 20 % to $ 600,000 in the following few years, the investor now has equity worth $ 200,000 in it, which represents a double of the master $ 100,000 investing.

2. The contrarian Way—Blood in the Streets

tied the most unadventurous investor knows that there comes a time when you must buy, not because everyone is getting in on a good thing but because everyone is getting out .

barely as great athletes go through slumps when many fans turn their backs, the stock prices of otherwise capital companies occasionally go through slumps, which accelerate as fickle investors bail out. As Baron Rothschild purportedly once said, smart investors “ buy when there is rake in the streets, even if the blood is their own. ”

cipher is arguing that you should buy drivel stocks. The indicate is that there are times when good investments become oversold, which presents a buy opportunity for investors who have done their homework .

valuation metrics used to gauge whether a stock may be oversold include a party ‘s price-to-earnings proportion and book value. Both measures have well-established diachronic norms for both the broad markets and for specific industries. When companies slip well below these historic averages for superficial or systemic reasons, bright investors smell an opportunity to double their money .

Being contrarian means that one is going against the prevailing swerve. It therefore requires a greater degree of risk tolerance and a substantial measure of due diligence and research. As such, a contrarian strategy is best left to identical experience investors and is not recommended for a button-down or inexperienced investor .

3. The safe Way

just as the firm lane and the dull lane on the highway will finally get you to the same place, there are quick and decelerate ways to double your money. If you prefer to play it safe, bonds can be a less bloodcurdling journey to the lapp finish.

Consider zero-coupon bonds, for example. For the uninitiate, zero-coupon bonds may sound intimidating. In reality, they ‘re bare to understand. rather of purchasing a bond that rewards you with a regular interest payment, you buy a bond at a rebate to its eventual measure at maturity .

One shroud benefit is the absence of reinvestment risk. With standard coupon bonds, there are the challenges and risks of reinvesting the interest payments as they ‘re received. With zero-coupon bonds, there ‘s merely one bribe, and it comes when the bond matures. On the flick side, zero-coupon bonds are identical sensitive to changes in matter to rates and can lose value as interest rates rise ; this is a risk divisor to be considered by an investor who does not intend to hold a zero-coupon adhesiveness to adulthood .

Series EE Savings Bonds issued by the U.S. Treasury are another attractive option for conservative investors who do not mind waiting a couple of decades for the investing to double. Series EE Savings Bonds are low-risk savings products that are lone available in electronic shape on the TreasuryDirect platform. They pay interest until they reach 30 years or the investor cashes them in, whichever comes first. Although the stream pace of interest is a measly 0.10 % for bonds issued between November 2021 and April 2022, they come with a guarantee that bonds sold now will double in respect if held for 20 years. The minimum purchase amount is $ 25, while the maximum buy per calendar year is $ 10,000. Savings bonds are excuse from submit or local taxes, but interest earnings are subjugate to federal income tax .

4. The bad way

Though slow and steady might work for some investors, others find themselves falling asleep at the wheel. For folks with a high degree of risk tolerance and some investment capital that they can afford to lose, the fastest way to super-size the nest egg may be the use of aggressive strategies such as options, gross profit trade, penny stocks, and in recent years, cryptocurrencies. All can super-shrink a nest egg just as quickly .

lineage options, such as childlike puts and calls, can be used to speculate on any company ‘s stock. For many investors, particularly those who have their fingers on the pulse of a particular diligence, options can turbocharge a portfolio ‘s performance .

Each banal choice potentially represents 100 shares of stock certificate. That means a company ‘s price might need to increase alone a small percentage for an investor to hit one out of the park. precisely be careful and be sure to do your homework before trying it .

For those who do n’t want to learn the ins and outs of options but do want to leverage their religion or doubts about a particular stock, there ‘s the option of buying on margin or selling a stock short-circuit. Both these methods allow investors to basically borrow money from a brokerage house firm to buy or sell more shares than they actually have, which in sour raises their likely profits well. This method acting is not for the faint of heart. A margin call can back you into a corner, and short-selling can generate infinite losses .

last, extreme dicker hunt can turn pennies into dollars. You can roll the dice on one of the numerous former blue-chip companies that have sunk to less than a dollar. Or, you can sink some money into a company that looks like the next big thing. penny stocks can double your money in a single trade day. just keep in mind that the low prices of these stocks reflect the sentiment of most investors .

As Bitcoin has grown in popularity and become more mainstream, other cryptocurrencies have besides emerged in recent years as one of the favor ways for speculators to make a quick buck. Though Bitcoin surged 60 % in 2021, its operation pales in comparison to that of a many as 10 early cryptocurrencies ( with a market cap of at least $ 10 billion ) that soared 400 % or more in 2021, such as Ethereum, Cardano, Shiba Inu, Dogecoin, Solana, and Terra ( Solana and Terra gained more than 9,000 % in 2021 ). unfortunately, the cryptocurrency arena is a prolific hound ground for scamsters, and there are numerous instances of crypto investors losing a great deal of money through fraud. manque cryptocurrency investors should therefore take the extreme manage when putting their hard-earned money into any cryptocurrency .

5. The Best room

Though it ‘s not closely adenine fun as watching your favored stock on the flush news, the undisputed heavyweight champion is an employer ‘s matching contribution in a 401 ( thousand ) or another employer-sponsored retirement design. It ‘s not sexy and it wo n’t wow the neighbors, but getting an automatic 50 cents for every dollar you save is hard to beat .

even better is the fact that the money going into your plan comes justly off the top of what your employer reports to the IRS. For most Americans, that means that each dollar invested costs them only 65 to 75 cents .

If you do n’t have access to a 401 ( kilobyte ) design, you still can invest in a traditional IRA or a Roth IRA. You wo n’t get a company match, but the tax profit alone is substantial. A traditional IRA has the same immediate tax benefit as a 401 ( kilobyte ). A Roth IRA is taxed in the class the money is invested, but when it ‘s withdrawn at retirement, no taxes are ascribable on the principal or the profits .

Either is a good share for the taxpayer. But if you ‘re new, think about that Roth IRA. Zero taxes on your capital gains ? That ‘s an easy way to get a higher effective come back. If your stream income is humble, the government will even effectively match some parcel of your retirement savings. The Retirement Savings Contributions Credit reduces your tax bill by 10 % to 50 % of your contribution .

What ‘s the Single Best Way to Double Your Money?

It truly depends on your gamble allowance, investment time horizon, and personal preferences. A balanced overture that involves investing in a diversify portfolio of stocks and bonds works for most people. however, those with higher risk appetites might prefer dabbling in more notional stuff like small-capitalization stocks or cryptocurrencies, while others may prefer to double their money through real estate of the realm investments .

Can an Investor Use All Five Ways in the Quest to Double One’s Money?

Yes, of course. If your employer matches contributions to your retirement design, take advantage of that perk up. Invest in a diversify portfolio of stocks and bonds and consider being a contrarian when the market plunges or rockets higher. If you have the hazard appetite and want some sizzle on your steak, allocate a small part of your portfolio to more aggressive strategies and investments ( after doing your research and due diligence, of class ). Save on a regular basis to buy a house and keep the down payment in a salvage account or early relatively risk-free investment.

Should I Invest in Cryptocurrencies If I Am a Conservative Investor With Very Low Risk Tolerance?

No, you should not invest in cryptocurrencies if you are a conservative investor with gloomy risk tolerance. Cryptocurrencies are very bad investments, and although many of them had huge returns in 2021, their fantastic excitability makes them unsuitable for conservative investors .

reference : https://bethelculturalcenter.com
Category : How

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