Everyone would love it if their money doubled! Especially every investor in the market is out to double their hard-earned money. Doubling your investment is not rocket science. A bit of strategy and planning will increase your chances of doubling your investment in a quick and easy manner.
As an investor, patience and perseverance are required to double an investment in a smart way, it cannot happen overnight.
Smart ways to double your investment
Every investor wonders where to invest their money such that it doubles. Here are a few smart ways to double your investment.
Manage your taxes
It is believed that taxes deplete most of your savings. However, if you can reduce your taxes by investing in a 401(k) plan, you could end up with a large chunk of savings. By matching your employer’s contribution to the plan, you will not only be able to manage your taxes but have some money at your disposal for investing in future. Investing in equity index funds and your 401(k) contribution together will add to your portfolio.
Penny Stocks
Some investors stay away from penny stocks. However, you can consider making a sizeable amount of investment in them. Other stocks options such as put and call are available as well. With proper research, these investment options can work for you. Timing is everything when you are dealing in penny stocks and put and call options. Investors with a considerable risk appetite can buy on margin, which means they can borrow money from the market to invest in shares. However, they must be cautious as this move can backfire!
Invest in bonds
If you do not want to expose all your savings to high-risk equities, you can balance your portfolio by splitting equities with bonds. This is because bonds are safe and you will not lose your money. Investing in bonds requires patience and long-term goals. That way, if your stocks do not perform, you can at least bank on your bonds to double your money.
Following the rule of 72
Under this rule, the investor needs to decide the period by which their investment must double in value. For instance, if the investor has a 10-year goal, they need an appropriate rate of return to reach that goal. In this case, the target interest rate is 7.2%, which is derived as (72/10). The best part of the rule of 72 is that it can be used backward as well. You can estimate the timeframe for doubling your investment by dividing the rate of interest by 72. For instance, if the annual rate of interest for a given investment is 10%, by using the formula 72/10%, the tenure for doubling your investment works out to be 7 years.
If you invest diligently by following a few sound principles, your money will double within a specific period. Always remember, slow and steady investment will double your earnings eventually.
