How to Double Your Money +6 Thrifty FAQs Answered
Who wouldn’t want to double their money? It sounds appealing, yet few people take time out of their days to learn how to do it. Even though it requires some risky maneuvers, it’s attainable.
This article will tell you how to double your money efficiently and legally through various equally valid methods. We’ll also answer some frequently asked questions and clear up as many doubts as possible.
Let’s start with five possible ways to double any investment.
How Can I Double My Money?
Take Advantage of a 401(k) Match
The easiest and most popular way to double your money is through an employer match on a 401(k) account. Saving statistics show that you need 10–12 times your pre-retirement salary saved up for a stable retirement, and a 401(k) makes this kind of penny-pinching much easier.
Here’s how it works:
Many employers give their employees money just to save for their retirement. For example, if you deposit 5% of your salary every month, your employer may match that sum. That means you’ll get an additional $0.50 for every $0.50 you save. This makes getting a 401(k) match the best way to double your money.
Also, contributions to a 401(k) account don’t get taxed until you withdraw, and that’s to your benefit because tax rates are usually lower when you retire than during your working years.
Invest in Zero-Coupon Bonds
Zero-coupon bonds are the second safest way to double your money slowly but surely.
Without delving into too much detail, zero-coupon bonds are bonds that are traded at a discount to their mature value but don’t pay interest.
The benefit these bonds provide, and what makes them one of the best ways to double your money slowly, is the absence of any reinvestment risk. You just buy, wait, and earn your payoff when the bond is mature.
Bottom line—if you don’t mind waiting and hate risks, you’ll love zero-coupon bonds.
Invest in an S&P 500 Index Fund
While investing in index funds sounds much more boring than going all-in on a tech start-up, it’s also a sure-fire gateway to doubling your investments.
When you invest in an S&P 500 index fund, you’re betting that the 500 most prominent and wealthiest companies in the United States will do well in years to come.
What makes an S&P 500 index fund one of the best ways to invest money is the impressive average return of around 9.8% yearly from 1928 to 2020.
Naturally, sometimes you’ll exceed this value or you’ll have a negative return, but it’ll most likely play out in your favor in the end. Also, investing in index funds is easy and doesn’t require any specific know-how.
The last three methods we mentioned are low-risk options for people who can afford or don’t mind a decade-long wait. If you’ve got a higher-than-average risk tolerance and some money you can afford to lose, trading options may be the best choice.
Bear in mind that single investments that double your money are almost impossible to find unless we’re talking about penny stocks, which are low-value stocks that sometimes double their value in a single day. However, you might want to stay away from penny stocks since they can be tough to get rid of, and you might get stuck with a portfolio full of worthless junk options.
Either way, there’s a lot to learn if you want to trade options successfully. We highly suggest you seek education about the practice, either through books, online courses, or in-person seminars.
Trading cryptocurrencies is one of the riskiest ways to double your money on this list. “Why,” you might ask, “isn’t this magic internet money always increasing in value?” Yes, and no.
Trading cryptocurrencies can make you rich but can also ruin you financially. Crypto itself is a beautiful feat of engineering that has given the world an alternative to traditional banks, but it’s also extremely volatile.
Failure to recognize the early symptoms of a crypto crash can make you lose a lot of money, but buying and selling at the right time can make you rich in a couple of clicks. Successfully trading crypto also means that you’ll have to follow all related news closely since you never know who or what could cause the next big crash.
Your Questions Answered
1. How to Make Money Investing
You can make a ton of money investing, but it requires discipline and research on top of an initial investment.
How much should you invest at first? Usually, it’s best to start with $1,000 you can afford to lose. It’s always best to start small and invest more once you get the hang of it.
You can either opt for a more straightforward, less risky long-term strategy by investing in index funds or real estate, or take the short-term route and become a day trader.
Being a day trader means buying and selling options in the short term to make money every day. Easy-to-remember formulas like the investing Rule of 72 (explained below) do not exist for these traders, and they must rely on their savoir-faire and research to make any significant amount of money.
If you’d like to become a day trader yourself, we suggest investing in a money-making course and learning from the best. While no amount of books can replace learning from trial and error, you need to start somewhere, and these seminars are the way to go.
2. Where to Invest Money to Get Good Returns
If you’re looking for solid short-term investment opportunities, we’ve got you covered. Here’s what we found:
- High-yield savings accounts: Shop around to see which banks offer the best accounts, and start putting money in those.
- Short-term corporate bond funds: The best short-term bond funds to invest in right now are VFSTX, DFEQX, IGSB, and FSHBX.
- Short-term US government bond funds: These funds are very low-risk since the government directly promises to pay you back.
Here are some long-term options as well:
- Growth stocks: This high-risk-high-reward long-term investment could offer a potentially limitless reward.
- Index funds: Investing in blue-chip S&P 500 index funds like QQQ, VOO, SPY, or VTWO is an intelligent decision.
3. How Long Does It Take to Double Your Money?
A simple rule allows people to calculate how much time it will take them to double their money with an investment. It’s called the Rule of 72.
To calculate how long it will take to double your money, you just need to divide 72 by your annual interest rate.
For example, we previously mentioned that an S&P 500 index fund averages a 9.8% annual return. If we divide 72 by 9.8, we get 7.3 years—that’s how long it will take to double your money.
4. How to Double Your Money in a Week
Unless we’re talking about gambling or morally dubious means, it’s not possible to double your money in a single week. We do not want to perpetuate false myths about miracle methods that will double your money in weeks or days.
We established that doubling your money through investments or savings is possible, given enough time. However, even the riskiest strategies in this guide will take you at least a year before yielding significant results.
Be wary of all those “how to double your money in a day or week” snake oil posts. At best, it’s clickbait; at worst, a scam.
5. What Is the Rule of 72?
The Rule of 72, as we previously said, is a simple mathematical formula that helps people estimate how long it’s going to take to double their money through interest.
The first mention of this rule is from the 15th-century Italian mathematician Luca Pacioli, who talks about it in his 1494 book Summa de Arithmetica, Geometria, Proportioni et Proportionalita. However, he didn’t invent the rule, and we still don’t know who came up with it.
The rule works like this: divide 72 by the interest rate of an investment, and you’ll get the number of years it will take to double your money.
6. How to Double 10k Quickly
A starting capital of $10,000 is nothing to scoff at, and you can double it in numerous ways. Here are a couple of ideas:
- Flipping stuff online: Buy things at a discount to sell them online on eBay or Depop at a profit.
- Invest in real estate: You’re not going to buy a house for $10,000, but you can still invest in real estate through crowdfunding platforms like Fundrise.
- Invest in crypto: Buy, wait, sell, and track this volatile market closely to safeguard your funds.
Ways to Double Your Money: Conclusion
As you can see, it’s possible to double your money with diligence and effort. It’s not easy or risk-free, but you can do it.
We hope this article inspired you. Thank you for reading, and good luck!