Tag: Proven

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3 Proven Ways to Double Your Money | Personal-finance

3 Proven Ways to Double Your Money | Personal-finance

Someone once quipped that the best way to double your money is to fold it in half. That’s amusing, but it’s not going to help you build a nest egg for retirement. Since few of us are financially independent, most of us need to be saving and investing for our future financial security.

If you have $10,000 socked away, you’ll want to double it to $20,000, and then double it again, to $40,000, and again and again, to $80,000, $160,000, $320,000, $640,000, and perhaps beyond. Here’s how you might go about doubling your money.

Image source: Getty Images.

1. Have ample time

First, you’ll need ample time in which to keep doubling your money. You’re not likely to go from $10,000 to $600,000 in a few years, but as the “Rule of 72” shows, you can probably double your money every seven to nine years, on average, if you earn an average annual return of around 8{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} to 10{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}. (The stock market’s long-term average annual return is around 10{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}, though it can be lower — or higher — over shorter periods and even a few decades.)

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If that seems like it will take too long to get where you need to be — having enough money for retirement, for example — know that there are ways to speed up the process of doubling your money. Keep reading.

2. Have a solid growth rate

Another way to be sure you’re doubling your money at a decent clip is to aim for a good growth rate. You might hope for 50{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}, but that’s not likely to happen. A 10{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} average annual return would roughly match the overall stock market’s long-term growth rate, but it might grow more slowly or briskly over the next few decades.

Here’s how your money might grow, if you’re making annual investments of $10,000:

Growing for

Growing at 6{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}

Growing at 8{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}

Growing at 10{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}

10 years

$139,716

$156,455

$175,312

15 years

$246,725

$293,243

$349,497

20 years

$389,927

$494,229

$630,025

25 years

$581,564

$789,544

$1.1 million

30 years

$838,017

$1.2 million

$1.8 million

35 years

$1.2 million

$1.9 million

$3.0 million

40 years

$1.6 million

$2.8 million

$4.9 million

Data source: Calculations by author.

3. Have money to invest

Finally, you’ll need money to invest, and the more the better. You can amass a lot if you start with very little, but for best results, aim to invest aggressively, and often — perhaps even 20{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} or more of your income.

The table below shows what you might amass depending on how much you can invest each year:

Growing at 8{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} for

$10,000 invested annually

$15,000 invested annually

$20,000 invested annually

5 years

$63,359

$95,039

$126,718

10 years

$156,455

$234,683

$312,910

15 years

$293,243

$439,865

$586,486

20 years

$494,229

$741,344

$988,458

25 years

$789,544

$1,184,316

$1,579,088

30 years

$1,223,459

$1,835,189

$2,446,918

Data source: Calculations by author.

For best results…

So what’s your best strategy for doubling your money effectively? Well, aim to incorporate all three points above — invest meaningful sums for a long period, growing at a solid rate. You can get roughly the same return as the overall market if you opt for a low-fee, broad-market index fund, and that’s an excellent investing strategy.

If you want to shoot for even better growth rates than those offered by the overall stock market, you might add some growth stocks to your portfolio. They’re tied to companies growing at faster-than-average rates, and together, they may average annual growth rates of 15{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} or more over longer periods. Growth stocks can be riskier and/or more volatile investments, so consider following The Motley Fool’s investing philosophy, which suggests owning 25 or more stocks, aiming to hold them for at least five years. That approach can give even overvalued stocks a chance to grow — or to fall, and then recover.

So take some time to assess where you are in your investments, and where you need to be in the future. Working on doubling your money multiple times can get you there.

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3 Proven Ways to Double Your Money | Smart Change: Personal Finance

3 Proven Ways to Double Your Money | Smart Change: Personal Finance

These times, there are tons of promises floating all-around the online to “double your funds” swiftly. Some offer you means to create even greater returns on your investment decision.

If you’ve been a consumer of the online for extra than 5 minutes, you know most of these promises are developed to do the actual reverse. To use a well timed case in point, it ought to not come as a surprise that obtaining digital pictures of monkeys has a really small return on expense.

But there are confirmed methods to double your money if you are affected individual sufficient.

Impression source: Getty Photos.

S&P 500 index cash

The closest detail to a confident point in the stock sector is basically betting on the market place as a entire heading up about time. In that respect, it has a perfect file.

Irrespective of many bear marketplaces and corrections, the S&P 500 has normally recovered its all-time highs and trudged larger. As a result, by simply just investing in a reduced-expense S&P 500 index fund this kind of as the Vanguard S&P 500 ETF (NYSEMKT: VOO), you happen to be almost assured to double your money presented ample time.

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Although you can find always the possibility of investing suitable before a industry crash, the historic details is on your aspect. Dating back again to 1928, the regular bull current market has lasted a lot more than 1,100 days, whilst the ordinary correction/bear marketplace has only lasted 194 days.

So even if you acquire proper at the peak in advance of a crash, all you have to have to do is wait around, and your investment will possible flip out just high-quality. And if you might be intelligent, you can expect to maintain acquiring by the ensuing bearish period of time to make an even higher return.

401(k) employer match

If I could shout it from the mountaintops, I would scream that employer 401(k) matches are quite virtually no cost revenue.

Image resource: Getty Pictures.

Bear in mind how I mentioned the S&P 500 is as close to a assure as it will get? Effectively, the only other detail that comes near is a 401(k) employer match — when the company you get the job done for matches your retirement contributions dollar for greenback up to a specific point. For instance, your employer could possibly match 100{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} of your contributions up to 3{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} of your income. In other words and phrases, if you set 3{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} of your paychecks into your 401(k), your employer will double your contribution.

This is, to my expertise, the best way to double your income, assuming your employer offers this reward.

Regretably, according to advisory business Fiscal Engines, People go away $24 billion in unclaimed 401(k) matches on the desk just about every 12 months. If your employer presents contribution matching, get edge of it! It is really the least complicated double-your-income option you may ever face.

Serious estate

Actual estate can be a great asset to double your money due to the fact it really is almost often in substantial demand, and they aren’t earning any more of it.

With the exception of the housing bubble in 2008, home rates have risen continuously for the past 50 several years. Part of this can be discussed by mounting inflation, but it is really also because of to the fact that housing is a basic will need for each individual individual on the earth.

Like investing in the broader stock industry, the key component for actual estate investing is time. Even though the near time period can be unpredictable, we can pretty much surely rely on authentic estate currently being value much more about time.

The most practical way to achieve exposure to actual estate is as a result of authentic estate expenditure trusts, or REITs. REITs make it possible for you to diversify substantially more very easily than acquiring assets immediately, and they present a great deal larger liquidity.

For example, aside from investing in household housing REITs like Mid-The united states Apartment Communities (NYSE: MAA), you could simply diversify into other sectors of the serious estate sector, this kind of as Crown Castle International (NYSE: CCI), which owns, operates, and leases towers for wireless communications.

Interestingly adequate, if you evaluate both equally of these REITs’ stock charges with the S&P 500’s returns more than the earlier decade, they observe closely.

Uninteresting normally wins

With NFTs, cryptocurrencies, and meme shares dominating the headlines these days, it is uncomplicated to believe they are the route to producing huge returns. But as with all speculative assets, the lofty returns hardly ever very last. As a Foolish investor, you ought to look for resources of extended-expression and steady returns like the illustrations higher than.

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When our award-profitable analyst workforce has an investing tip, it can spend to listen. Right after all, the newsletter they have run for above a ten years, Motley Fool Inventory Advisor, has tripled the current market.*

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Mark Blank has no place in any of the shares pointed out. The Motley Idiot has positions in and recommends Crown Castle Intercontinental, Mid-The usa Condominium, and Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.

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3 Proven Ways to Double Your Money | Personal Finance

3 Proven Ways to Double Your Money | Personal Finance

The quickest way to double your money is to fold it in half and put it in your back pocket. — attributed to Will Rogers

We’d all love to double our money. Even billionaires, presumably, would love to double their money. It might seem like a hard thing to do, but there are several ways to go about it. Here are a few to consider.

Image source: Getty Images.

1. Grab a 401(k) match

Let’s start with an easy way to double your money — as long as you have a 401(k) plan available to you at work. If you do, there’s a very good chance that your employer offers matching dollars, according to a particular formula. An example would be matching 100{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} of worker contributions up to 4{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} of salary. So if you contribute 4{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} (let’s say that you earn $100,000 and that amounts to $4,000), your employer will kick in another $4,000. That’s free money, and it’s also pretty much guaranteed.

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There are other formulas, some more generous, some less so. A common one is matching 50{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} of contributions up to 6{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} of salary. So if you contribute 6{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}, you’ll get 3{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} chipped in by your employer. Aim to never leave such money on the table. Note, too, that contribution limits for 401(k) accounts are very generous. For 2020, you can contribute up to $20,500, and if you’re 50 or older, you can add another $6,500 to that.

2. Invest more effectively

Another strategy is simply to invest more effectively. Many of us, myself included, are guilty of just leaving some money invested somewhere in some account. Maybe you chose a few mutual funds for your 401(k) account’s contributions, or for your brokerage account. If you haven’t kept up with them and assessed how they’ve been performing for you, you might be in for a sad surprise.

Similarly, if you’ve just been stockpiling dollars in a bank account (which I did for several years in my youth), earning very little, they could be working harder for you invested in more effective places.

Do keep short-term money — money you expect to need within five (or 10, to be more conservative) years — out of stocks and in accessible places, such as money market accounts or certificates of deposit (CDs). But park your long-term dollars where they’re likely to grow best for you. For most of us, that’s the stock market.

You might invest in stocks simply, via a low-fee, broad-market index fund, or you might study companies and pick some individual stocks in which to invest. (Or do both!) The Vanguard S&P 500 ETF (NYSEMKT: VOO) and the SPDR S&P 500 ETF (NYSEMKT: SPY) are solid index funds to consider.

For individual stocks, be sure to read up on how to research stocks, as it’s not enough to just invest in great companies. You also want to invest when their shares are undervalued — or at least not too overvalued.

Consider the following kinds of stocks:

  • Dividend-paying stocks — which tend to be relatively established and can generate fairly reliable income
  • Growth stocks — which are tied to companies growing at an above-average clip and have much growth potential (though they can be especially volatile, too)
  • Undervalued stocks — which are trading for less than their intrinsic value and thereby offer a margin of safety

If you’re going to invest in individual stocks, focusing on just a few can be risky. So our Motley Fool investing philosophy recommends buying at least 25 stocks and planning to hold them for at least five years. That can increase your likelihood of ending up with some big winners, as you’ll be giving the stocks time to grow and perform.

3. Be patient

Finally, prepare to be patient, and to let the power of compounding do its awesome work. Check out the table below, which shows how various sums invested regularly can grow over time:

Growing at 8{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} for

$10,000 invested annually

$15,000 invested annually

$20,000 invested annually

5 years

$63,359

$95,039

$126,718

10 years

$156,455

$234,683

$312,910

15 years

$293,243

$439,865

$586,486

20 years

$494,229

$741,344

$988,458

25 years

$789,544

$1,184,316

$1,579,088

30 years

$1,223,459

$1,835,189

$2,446,918

Data source: Calculations by author.

You can see that in the early years, the portfolio value is growing — but in the later years, it’s growing by a lot. And you don’t necessarily have to do much work to achieve such results, beyond sticking with the program and investing regularly for many years. Your money just doubles — and, if your investing timeframe is long enough, doubles again and again.

There are no guaranteed returns in the stock market, but over many decades it has averaged annual growth of around 10{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}. A broad-market index fund will perform roughly as well as that, and so it can clearly build wealth effectively. The table above assumes an 8{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} average growth rate, to be a bit more conservative.

These are some solid approaches to building long-term wealth and having your money double. See which strategies mentioned here you might want to act on.

10 stocks we like better than Walmart

When our award-winning analyst team has an investing tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

They just revealed what they believe are the ten best stocks for investors to buy right now… and Walmart wasn’t one of them! That’s right — they think these 10 stocks are even better buys.

Stock Advisor returns as of 2/14/21

Selena Maranjian has no position in any of the stocks mentioned. The Motley Fool owns and recommends Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.