Most people want to increase their assets, so it’s common to wonder how to double your money. Discover if this is possible, how long it takes, and how to do so.
Without a sizable risk, you won’t double your money in a day or even a week. But you can double your money over the long term with smart investments and hard work. Good options include investing in stocks, index funds, and real estate.
Learn more about how to double your money, including how long it will take and good strategies for doing so.
Everyone should have financial goals, and a common one is doubling your money. This goal can mean drastically different things for different people. If you have $1,000, you only need $1,000 more to double it. But if you have $100,000, you would need another $100,000.
That being said, some of the same general principles apply no matter your starting point or end goal.
The Rule of 72 lets you estimate how long it will take to double your money. Take 72 and divide it by your rate of return. The result will tell you how many years it will take to double your funds.
So, if you expect 8% annual return, it would be about nine years before you double your money (72 divided by 8 is 9). If you expect a 10% annual return, it would be about 7.2 years to double your money (72 divided by 10 is 7.2).
Keep in mind that this is an estimate. That is primarily because your returns are likely to vary from year to year and even month to month instead of being consistent.
Assuming you are talking about more than a few dollars, there is no risk-free way of doubling your money in a day. You could try something high-risk, such as day trading traditional stocks and options or even cryptocurrency. You could even try legal betting or sports gambling.
But the key here is that these all have a sizable risk. Simply put, if you want a quick return, you need to take a major risk. And your risk will likely be much greater than your chances of success. After all, consider the odds of winning the lottery. You should think of this as gambling, not an investment or savvy financial strategy.
A week gives you a bit more time to double your money, but it is still not realistic. You may have a chance of doubling your funds in a week with smart tactics, but it is still very risky. Instead of aiming to double your money in a day or week, think of a longer-term plan.
We touched on some high-risk methods of doubling your money, like trading cryptocurrency or day trading stocks. But it is much smarter to take a long-term strategy and use the Rule of 72 to see how long it will take for you to double your funds.
With this approach, try using as many of the following strategies as possible.
Your employer likely offers a 401(k). You should be taking advantage of this, but it is even better if your employer has a matching offer. Many employers will match a small portion of what you contribute to your 401(k). An example would be if you contribute 5% of your salary, your employer may also contribute 5% of your salary. This is essentially doubling your money.
The important caveat here is that you will likely have to stay with your company for at least several years. The matching funds typically won’t fully vest for three or four years. On top of that, not all employers offer this.
Of the various investment strategies for your money, S&P 500 Index Funds are among the best options to double your money. This will be less risky than investing in stocks but riskier than investing in bonds or CDs. That means that you will have higher returns than bonds or CDs, assuming it works out in your favor.
This is an especially good option if you are looking for a longer-term investment. When you invest for a longer period of time, the average long-term return is about 10% per year. So, you would just need 7.2 years to double your return. Of course, the returns will vary annually, which is why this should be a long-term strategy.
If you prefer to have more control, you could choose which stocks to invest in instead of investing in an index fund. To maximize returns and minimize risk, opt for a diversified portfolio. You will also want to do plenty of research before investing in any stock.
You can make the most of this strategy by looking for stocks that are oversold or priced at less than their normal value. Importantly, you should be confident that the price will rise again. This strategy is typically based on the company’s reputation and historical stock prices. But there is still a risk that the prices will never return to their previous value. So, always make sure you understand why the stock’s price dropped before investing.
Bonds are a slow but reliable way to double your investment. Bonds tend to only deliver returns of about 5% or 6% annually, so you may need 12 years or more to double your investment according to the Rule of 72. But they are very safe, making them a popular choice.
Real estate is another smart investment that could potentially double your return or at least get you closer to that goal. That’s because real estate tends to have slow-and-steady gains. Of course, you will have to be willing to hold onto your property throughout market changes. The real estate market will go down at some point, but if you wait, it will go back up.
The other thing to remember is that this will require continuous investments. You will likely have to pay a mortgage. On top of that, there will be maintenance fees, property taxes, and other expenses. But you can also scale this strategy up. Just buying your own home gets you started. If you have enough money, you can also buy investment properties.
If you have a long-term goal, then taking advantage of compound interest can do wonders when it comes to growing your money. Compound interest grows on your interest. The trick is finding an account that offers a high compound interest rate.
Of course, you can also double your money by getting another job or starting a side hustle or small business. Consider freelancing, affiliate marketing, or selling items you no longer need.
All of the above options have a moderate to low level of risk. But if you increase the risk, you can also increase the potential rewards. Things like day trading can take this to the extreme, but you can take a middle ground with one of the following options.
Trading cryptocurrency can let you take advantage of its volatility. You will likely want to avoid day trading and stick to longer-term investments to reduce your risk somewhat. But you can follow the general trading principles of buying low and selling high. NFTs are another popular choice with high risk and high potential rewards, especially in the last year or two.
Just remember that cryptocurrencies are very risky. Just look at Bitcoin's price history or Ethereum, and you’ll see that you can get extremely lucky or lose it all. As a general rule of thumb, you should only invest what you are prepared to lose into cryptocurrency.
Options are another very risky yet accessible way to grow your money. You can make a call or put option. In either case, you get the right to buy or sell the stock at a specific price before a specific time. You have the right, not the obligation, to do so. Trading options could mean you lose your money buying an option you never take advantage of. Or you may buy or sell a stock in a way that doubles or even triples your investment.
Because of the high risk, always do plenty of research before investing in options. This will ensure you understand the potential losses and are realistic about your expectations.
The safest way to double your money is with long-term investments, such as index funds, stocks, or real estate. Employee matching for 401(k) accounts is also an excellent strategy. If you want to double your money quickly, you will dramatically increase your risk, so be cautious.