By: Kristen Frisa| October 28th, 2020
What do you do with the money you earn? Do you spend it? Stick it in a low-yield savings account? Do you wrap it in tin foil and stick it in the freezer?
Working hard and getting paid for your time is a great way to get by on the day to day, but if you’re looking to grow your net worth you’ve got to learn to leverage your funds to earn more toward your financial goals. Find the right way to do that, and you can double your money.
We’re not talking super risky ‘double or nothing’ bets at the racetrack or poker table. Although all investments involve some level of risk, some investment tricks and personal finance strategies can reliably grow your money over time.
Invest in the Tried and True
Picking investments can be a daunting experience for beginners, and that’s why many people never dabble in the stock market at all – not even penny stocks. Others hand their funds over to investment advisors or brokerage firms and never look back. If you’re looking to make your money grow faster than inflation, though, you need to pay a bit of attention, take a deep breath, and put your money in some solid performing stocks, bonds, or an exchange-traded fund (ETF).
This will not pay off overnight. There aren’t any quick investment tricks you can rely on. Depending on what you invest in, you can figure out how long it will take to multiply your investment by using the rule of 72 to calculate compound interest. Using this method, divide 72 by the fixed annual interest rate of your investments to determine how long it will take to double your cash.
For example, for an investment that earns a 5% interest each year, you could estimate that your money could double in under 15 years at that fixed rate (72 ÷ 5= 14.4).
This growth rate won’t provide an overnight fortune, but a solid, unchanging interest rate will grow your money over time. Choose even lower risk bonds or Certificate of Deposit (CD) investments for your retirement account.
On the other hand, maybe a decade and a half is longer than you’d like to wait to double your money. This approach is better suited for retirement plans than immediate income. If you’re in more of of a rush to double your money, you might want to try a riskier strategy that could pay off sooner for your bottom line.
Invest in the Up and Coming
If you’re in to double your money in a shorter amount of time, you can try investing in shares of the next big thing. Obviously, there is considerable risk here, but if you’re a bit of a visionary when it comes to upcoming trends there’s opportunity in purchasing an initial public offering (IPO). An IPO is when a company becomes publicly traded for the first time ever. Shares of these newly offered companies often start at a really affordable rate. But if the company takes off, your investment could double quickly – in some cases inside of a year, a month, or even a day.
For example, Beyond Meat, a plant-based meat alternative food company, increased share prices by 209% in 2019. People who bought Beyond Meat stock at its IPO paid $25 per share, but within a single day each share was worth $65.75 – an increase of 163% in a single day.
This method, while harboring a much greater speed and rate of return, also carries a whole lot more risk. If the appetite isn’t there for an IPO, the price can crash, leaving stock holders at a loss – definitely not the type of strategy you’d use with your retirement savings.
Your risk tolerance will have a lot to do with how much money you have saved away, and how long until you plan to use it. Still, if you want to double your money, research your selected IPO through historical trends and business news, then take the plunge and you could get a solid annual rate of return.
Invest in Yourself
It’s going to be a bit more difficult to tell when you’ve succeeded at doubling your money by investing in yourself, but the statistics bear this out: people who have a bachelor’s degree earn an average of $32,000 more per year than those who stopped at a high school education, and experienced unemployment at half the rate of their lesser educated peers during the last recession. Not only that, college grads were 47% more likely to have employer-provided health insurance.
Education can impact your earnings potential, thus doubling your money over a number of years. Purchase a course or workshop, or go back to school to increase your earning potential.
Research is key when choosing education as much as any other investment. Along with your personal aptitudes and interests, consider learning skills that will provide you with a sustainable income to reap the rewards of your investment.
How Will You Double Your Income?
Having cash on hand puts you in a powerful position – there are many ways to take that money and grow it. Use a variety of methods to grow your money with an average return. Investments that grow slowly over time provide stability and peace of mind for your nest egg, while high-risk strategies can yield big results in the short term so you keep building wealth. Whatever path you choose, do your homework and enjoy the ride to a great return on investment.
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