Ways To Double Your Money On Investment –

Ways To Double Your Money On Investment –

Key Points

  • We all need our investments to grow — ideally at a relatively rapid rate.

  • You can double your money in many ways, such as via dividend-paying stocks.

  • Both growth stocks and value stocks can also increase your wealth significantly.

Motley Fool Issues Rare “All In” Buy Alert


How To Use the Rule of 72 To Estimate Compound Interest

Like most equations, you can move variables around to solve for others that aren’t certain. If you’re looking back on an investment you’ve held for several years and want to know what the annual compound interest return has been, you can divide 72 by the number of years it took for your investment to double.

For example, if you started out with $100,000 and eight years later the balance is $200,000, divide 72 by 8 to get a 9% annual rate of return. 

2. Invest in an SP 500 index fund

An index fund based on the Standard & Poor’s 500 index is one of the more attractive ways to double your money. While investing in a stock fund is riskier than a bank CD or bonds, it’s less risky than investing in a few individual stocks. Plus, the S&P 500 is composed of about 500 of America’s largest and most profitable firms, so it’s a strong option for long-term investing.

The S&P 500 also has an attractive long-term return, averaging about 10 percent annually over long periods. That means that, on average, you’ll be able to double your money in just over seven years. That said, the return in any single year is likely to be much different – higher or lower – than the average. And the S&P 500 can go through long losing streaks too. For example, the index had a negative return during the 2000s. The S&P 500 made up for it in the 2010s, returning 252 percent – more than tripling.

It’s easy to buy an S&P 500 index fund and you don’t need a lot of expertise to invest this way.

Rule of 72 vs. 70

The Rule of 72 provides reasonably accurate estimates if your expected rate of return is between 6% and 10%. But if you’re looking at lower rates, you may consider using the Rule of 70 instead.

For example, take our previous example of a 2% return. With the simple Rule of 70 calculation, the time to double the investment is 35 years—exactly the same as the result from the logarithmic equation.

However, if you try to use it on a 10% return, the simple formula gives you seven years while the logarithmic function returns roughly 7.3 years, which has a wider discrepancy. 

As with any rule of thumb, the Rules of 72 and 70 aren’t perfect. But they can give you valuable information to help you with your long-term savings plan. Throughout this process, consider working with a financial advisor who can help you tailor an investment strategy to your situation.

How To Double Your Money

The Rule of 72 teaches us that a wonderful investment that produces high returns will help double your money fast. 

I like to target an average annual growth rate of 26%. 

This means my money will double every 3 years. But you can’t get these high returns with just any investment. You have to pick the right companies that will generate great returns year over year. 

To get a great return on your money, first, you have to learn how to invest. Join me at my next Free Investing Webinar to learn, not only the basics of investing but also know how you can find incredible companies that will give you that 26% annual return. 

Once you know this, you’ll be able to experience the magic of compound interest for yourself and double your money in no time. 

Phil Town Phil Town

Phil Town is an investment advisor, hedge fund manager, 3x NY Times Best-Selling Author, ex-Grand Canyon river guide, and former Lieutenant in the US Army Special Forces. He and his wife, Melissa, share a passion for horses, polo, and eventing. Phil’s goal is to help you learn how to invest and achieve financial independence.


Article NameThe Rule of 72: Learn How To Double Your Money with Compound Interest DescriptionUse The Rule of 72 to make better investing choices by figuring out how long it takes investments to double. Start benefiting from compound interest now! Author Phil Town Publisher Name Rule One Investing Publisher Logo

Locking-in profits

In my opinion, one of the simplest, oldest methods, and most effective ways to help lock in profits and let your winners ride, especially with lower-priced, smaller-cap stocks, is to sell half on a double. This way you take your initial investment off the table and you let your winnings ride. Or you can use a slightly more conservative approach. In order to keep it simple and since it is different for everyone commissions, fees and taxes are not considered in the following example. When a stock goes up by 40%, sell 20% of the position. When it goes up another 40%, sell another 20%. This basically leaves you with 125% of the initial position and about 60% of your initial investment off the table. You can also use this “up 40%, sell 20%” method on the remainder of the position you sold half of on a double. I think it is also prudent to use one or more outside services to rate your stocks. When those services show red flags you may want to consider tightening up stop losses for those holdings and becoming even more diligent monitoring them.

Portfolio management

In my opinion, most portfolios should consist of less than 40 open positions at any time; for most individuals a stock portfolio of less than 20 is sufficient and 5-10 holdings is likely as much as one individual can effectively manage. Consider employing and utilizing some of these portfolio management techniques. In my opinion, no one position should maintain such a large percentage that it determines the future of the portfolio. Consider investing across multiple sectors and generally no one sector should compose too much of the overall portfolio. When the investor’s economic and market outlook is strongly bearish (or turns negative), a more defensive posture could be instituted by limiting new buys, selling losers faster, tightening up stops and/or implementing some downside protection.

Finding proper entry points, trading around core positions, and having a sell discipline can be crucial to increasing the returns of the portfolio. Remaining disciplined, unemotional, and mitigating risk are some of the keys to investment success. Maintaining an unbiased and unemotional stock selection process and consistent portfolio management practices can help with achieving success. Most importantly, the ability to avoid bad behavior can be the difference between success and failure in the long run. Any one of the 7 deadly investing sins in Figure 2 can be the ruin of an investment portfolio.

Figure 2: Bad behavior – The 7 deadly sins to avoid

  1. Averaging down into losing positions
  2. Over-concentration in too few positions
  3. Investing in illiquid positions
  4. Falling in love with a stock, position, or a management team
  5. Excessive use of margin
  6. Over-concentration in one sector
  7. Hubris

2. The magic of compounding

Compounding is simply math that demonstrates how numbers (such as interest or stock investments) can grow over time. Check out the table below, showing how much a single investment of just $1,000 can grow, at an average annual rate of 8%:

Over This Period…

…$1,000 Will Grow to:

5 years


10 years


15 years


20 years


25 years


30 years


35 years


40 years


45 years


50 years


55 years


60 years


Calculations by author.

You see that your original $1,000 more than doubles in 10 years, and more than doubles again after 20 years, and 30 years, and so on. You’ll double your money even faster if you’re not waiting for a single investment to grow and are instead adding to your investments over time. For example:

Growing at 8% for

$10,000 Invested Annually Becomes:

$15,000 Invested Annually Becomes:

$20,000 Invested Annually Becomes:

5 years




10 years




15 years




20 years




25 years




30 years




 Calculations by author.

Inage source: Getty Images.

Inage source: Getty Images.

3. The Safe Way

Just as the fast lane and the slow lane on the highway will eventually get you to the same place, there are quick and slow ways to double your money. If you prefer to play it safe, bonds can be a less hair-raising journey to the same destination.

Consider zero-coupon bonds, for example. For the uninitiated, zero-coupon bonds may sound intimidating. In reality, they’re simple to understand. Instead of purchasing a bond that rewards you with a regular interest payment, you buy a bond at a discount to its eventual value at maturity.

One hidden benefit is the absence of reinvestment risk. With standard coupon bonds, there are the challenges and risks of reinvesting the interest payments as they're received. With zero-coupon bonds, there's only one payoff, and it comes when the bond matures. On the flip side, zero-coupon bonds are very sensitive to changes in interest rates and can lose value as interest rates rise; this is a risk factor to be considered by an investor who does not intend to hold a zero-coupon bond to maturity.

Series EE Savings Bonds issued by the U.S. Treasury are another attractive option for conservative investors who do not mind waiting a couple of decades for the investment to double. Series EE Savings Bonds are low-risk savings products that are only available in electronic form on the TreasuryDirect platform. They pay interest until they reach 30 years or the investor cashes them in, whichever comes first. Although the current rate of interest is a paltry 0.10% for bonds issued between November 2021 and April 2022, they come with a guarantee that bonds sold now will double in value if held for 20 years. The minimum purchase amount is $25, while the maximum purchase per calendar year is $10,000. Savings bonds are exempt from state or local taxes, but interest earnings are subject to federal income tax.

2. Invest in a money-making course

Investing in yourself is one of the best possible investments you can make. While you might not be able to pinpoint an actualized return on investment, there’s no money that’s better spent. Invest in yourself. Invest in your education. Learn. Adapt. Grow. Discover what you’re passionate about.

There are loads of money-making courses on the internet. The hard part is choosing the right one. From ebooks to social media marketing, search engine optimization and beyond, the possibilities are endless. While many money-making gurus might pop up on social media, not all courses are created alike. Spend time doing your due diligence and research to choose the one that’s right for you.

Related: Mark Cuban’s 3 ‘Smart Money Moves Everyone Should Make’

6. Mind the Costs of Investing

Investing costs can eat into your gains and feed into your losses. When you invest, you generally have two main fees to keep in mind: the expense ratio of the funds you invest in and any management fees advisors charge. In the past, you also had to pay for trading fees each time you bought individual stocks, ETFs or mutual funds, but these are much less common now.

Fund Expense Ratios

When it comes to investing in mutual funds and ETFs, you have to pay an annual expense ratio, which is what it costs to run a fund each year. These are usually expressed as a percentage of the total assets you hold with a fund.

Schulte suggests seeking investments with expense ratios below 0.25% a year. Some funds might also add sales charges (also called front-end or back-end loads, depending on whether they’re charged when you buy or sell), surrender charges (if you sell before a specified timeframe) or both. If you’re looking to invest with low-cost index funds, you can generally avoid these kinds of fees.

Financial Advisory Fees

If you receive advice on your financial and investment decisions, you may incur more charges. Financial advisors, who can offer in-depth guidance on a range of money matters, often charge an annual management fee, expressed as a percentage of the value of the assets you hold with them. This is typically 1% to 2% a year.

Robo-advisors are a more affordable option, at 0% to 0.25% of the assets they hold for you, but they tend to offer a more limited number of services and investment options.

Long-Term Impact of Fees

Though any of these investing costs might seem small independently, they compound immensely over time.

Consider if you invested $100,000 over 20 years. Assuming a 4% annual return, paying 1% in annual fees leaves you with almost $30,000 less than if you’d kept your costs down to 0.25% in annual fees, according to the U.S. Securities and Exchange Commission. If you’d been able to leave that sum invested, with the same 4% annual return, you’d have earned an extra $12,000, meaning you would have over $40,000 more with the lower cost investments.

Earn Compound Interest

The main reason the stock market has been such a tremendous wealth generator is the effect of compound interest. While you can make short-term profits in the stock market, it’s actually a safer bet to leave your money in the market for the long term and let compound interest do its magic.  For starters, the longer you leave your money in the market, the less risk you actually take. While no one can predict what the market will do from year to year, the S&P 500 index has actually never lost money over any 20-year rolling period. That’s an amazing statistic when you think about how volatile the market can be over the short run.  If you can keep your money in the market for 10, 20 or even 30 years, your potential to build wealth is tremendous. Think about it this way: If you put $10,000 in the market and earn 10% per year, taking out your profits each year, you’ll have a net profit of $30,000 after 30 years, or three times your money. But if you instead let that money compound every year at 10%, you’ll end up with just under $200,000, or 20 times your money. This may not be the answer that those looking for a quick buck want to hear, but the best, safest way to generate real wealth in the stock market is to stay in it. More From GOBankingRates 2022 Stimulus Checks: Is Your State Giving Out Money This Year?Nominate Your Favorite Small Business To Be Featured in GOBankingRates’ 2022 Small Business SpotlightWhat To Do With Your Money During High Inflation17 Biggest Budgeting Mistakes You’re Making

National Savings Certificates

Issued by the Indian Postal Department, National Savings Certificates (NSC) is one of the safest options for investments. These certificates have a fixed tenure of 5 and 10 years, along with fixed rate of interest, calculated on the tenure. For NSCs with a 5-year tenure, the rate of interest offered is 8.50% per annum. On the other hand, 8.80% per annum interest rate is compounded for NSCs with a term period of 10 years.

National Savings Certificate are exempted under Section 80C of the Income Tax Act, 1961 for up to Rs 1,50,000. There is also no TDS on the amount received at maturity of the scheme. Another benefit of investing in NSCs is that they can be used to avail loans from any bank.

Kisan Vikas Patra (KVP)

Though made defunct in 2012, Kisan Vikas Patra (KVP) was reinstated in 2015-16. Since there was no rein on the income source invested in the scheme, and anyone could buy a plan from KVP, the policy was discontinued, However, according to new regulations, PAN card is mandatory in order to invest the Kisan Vikas Patra scheme worth Rs 50,000 paid in cash. The current rate of interest offered by KVP is 8.70% per annum, where the money will be doubled in approximately 8 years.

Sell Short

A short seller essentially bets that a stock’s price will fall. Technically, a short seller borrows shares of stock, sells them, then buys them back and returns them to the lender. If the stock price has fallen in between these two transactions, the short seller turns a profit. But if the stock instead rises, then the short seller loses.  In many ways, short selling is like day trading, meaning it’s a quite aggressive strategy. As the long-term trend of the market is strongly up, a short seller must have a compelling reason for believing that a specific stock or index will fall. Macroeconomic factors, an overvalued stock price or a deteriorating business are all reasons that might cause a stock to fall, but they are not guarantees. In a booming market, even stocks that are “overvalued” or unprofitable may continue to rise. Like day trading, short selling can be profitable, but it takes a very astute or professional trader to do so.

5. Use peer-to-peer lending

Peer-to-peer lending is a hot investment vehicle these days. While you might not get rich investing in a peer-to-peer lending network, you could definitely make a bit of coin. Which lending platform do you use? Today, there are many to choose from, but the most popular ones include Lending Club, Peer Form and Prosper.

How does this work? Peer-to-peer lending platforms allow you to give small bursts of capital to businesses or individuals while collecting an interest rate on the return. You get more money than you would if you placed it in a savings account, plus your risk is limited because the algorithms are doing much of the work for you. 

Once you identify the offer, you can dig in and do some research — then, you can either take the deal or not. You’ll have your risk evaluated based on a proprietary algorithm that includes employment and credit history, and you’ll be able to make the decision to invest based on a variety of well-thought-out data.

Related: Why Peer-to-Peer Lending Could Be a Good Investment Choice

Bottom line

If you’re looking to double your money in any reasonable time frame, you’ll need to take some risk. You simply won’t be able to earn enough from safe bank products to reach that goal. Above all, it’s important to remember that you don’t have to make the riskiest trades – ones that look more like gambling than investing – to build your fortune. You do have high-return options that can limit (but not eliminate) your risk, such as a house, S&P 500 funds and 401(k) matching.

Learn more:

Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.


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