How to Double Your Money Through Investing

Doubling your money in your sleep probably sounds like a pipe dream. Through the power of investing, you can make that dream come true. 

Of course, growing your financial holdings exponentially doesn’t happen in one night. Success requires patience, research and an investing strategy designed around your goals and risk tolerance. 

Can You Double Your Money Through Investing?

You can absolutely double your money through investing – over time. 

Truthfully, most investments require your money to percolate in the markets for months or years before generating substantial profits. You’ll also have to navigate the different type and amount of risk that each investment poses. Even investors who take all the right steps can lose money in the market. 

Mitigating these risks requires a basic understanding of each investment’s benefits and drawbacks. And remember: if an investment promises immediate or guaranteed returns, it’s probably too good to be true. 

How Fast Can You Double Your Money?

The “Rule of 72” shortcut estimates roughly how long it takes, in years, to double your money. Divide 72 by your average expected rate of return to get your answer. For example, if you think your portfolio will earn 8% annually, divide 72/8 to get 9 years. 

However, the Rule of 72 has some limitations:

• It’s only useful for compound interest (not simple interest)
• It’s more accurate at lower rates of return 
• It uses a static or average rate of return and doesn’t account for market volatility 

Still, if you need an estimate or invest in fixed-income assets, the Rule of 72 provides a handy guideline. 

Best Ways to Double Your Money Through Investments

Doubling your money through investing requires trading time, risk and returns. Riskier assets may earn larger profits faster, or you may lose everything. Conservative assets tend to grow slower but with less risk of substantial downdraft. 

Here’s how to double your money through the art of smart investing. 

Take Advantage of 401(k) Match

If you want to double your money now, look no further than your employer’s 401(k) match. These programs match every dollar you contribute to your 401(k), to a point. You may get fifty cents per dollar up to 4% of your salary, or dollar-for-dollar up to 3%. 

It doesn’t get easier to literally double your money risk-free. Plus, every dollar invested has a chance to grow until retirement, compounding your gains even faster. 

That said, nothing in the investment world is completely risk-free. Some potential risks of doubling up with 401(k) matches include:

• Having to stay employed long enough for your contributions to “vest” (become fully yours) in your account
• An inability to touch your funds until retirement without IRS penalties
• Losing your doubled funds to market volatility over time

In short, if you need money now, 401(k) matching can’t help. But future-you will thank you!

Invest in an S&P 500 Index Fund

Indexes are theoretical portfolios that track assets that tick certain boxes. like the S&P 500 index, which tracks 500 of the largest U.S. companies in the stock market. Investors might use indexes to compare against their own profits or monitor the market. Some go even further by investing in indexes using index funds. 

Index funds are mutual funds or exchange-traded funds (ETFs) that contain most or all of the stocks in a tracked index. Many investors find S&P 500 index funds particularly attractive, as the index has averaged around 10% annual returns for decades. According to the Rule of 72, that could double your money in just 7.2 years. 

It’s important to remember, though, that that 10% is just an average. Some years or decades may see the S&P 500 suffer enormous losses; others, it may perform exceptionally well. 

Still, built-in diversification and low fees make these passive funds an enticing option for doubling your money. 

Bonds

Bonds are lower-risk assets that trade less volatility for more consistent returns. Essentially IOUs, they involve investors lending a government or corporation cash until maturity, which may take days or decades. Depending on the type, a bond may generate interest until maturity or sell at a discount to the maturity price.  

Bonds’ comparatively lower returns mean you’ll wait a lot longer to double your money. For instance, the Rule of 72 estimates that a bond will take 14.4 years to double your money at 5% interest or 10.3 years at 7% interest. Bonds are also susceptible to interest rate risks, with prices moving opposite interest rates.

Many bonds still outpace inflation and savings account yields. Plus, they offer diversification benefits and plenty of options, including Treasury bonds, inflation-protected TIPS, municipal bonds and corporate bonds. 

Invest in Value and Growth Stocks

Growth and value stocks function slightly differently, but they share the potential to substantially increase in value. 

Value stocks are stocks that investors believe are underpriced, giving them room to grow. Often, value stocks include large, well-established companies suffering from poor performance, public scandals or a lagging market. Investors may find these assets by combing through balance sheet data like P/E ratios and book values. 

Growth stocks are up-and-comers that investors think will grow faster than their peers. These tend to be small- to medium-sized companies with room to expand and fast. Many growth stocks appear in expansive industries like tech where new products and opportunities to outpace the competition abound. 

You can identify growth and value opportunities through research,or let a diversified fund do the hard work for you. Either way, picking a handful of winners could see your portfolio double quickly – potentially faster than investing in index funds.  

Real Estate

Real estate investing offers several ways to double your money, though most require time and a fair bit of capital. 

Perhaps the simplest method is via simple price appreciation. 

Say you buy a $300,000 house at 20% ($60,000) down. To double your money, your home’s value would have to increase by 20% to $360,000. If you sold at that price, you’d receive your original $60,000 in equity, plus another $60,000 “earned” through price appreciation. 

However, this simple example doesn’t consider closing costs, mortgage interest, taxes or repair costs. It also excludes the very real chance that your house may take years to decades to see substantial appreciation. 

Alternatively, you could attempt to double your money in real estate by:

• Purchasing investment properties and collecting rent payments from tenants
• Buying cheap houses in need of repair and renovation to flip for profit 
• Investing in real estate investment trusts (REITs), which pay regular dividends from their real estate holdings

Each of these methods comes with its own path to profits and loss, so be sure to do your research before diving in.

Other Alternative Investments

Alternative investments include assets outside the traditional stocks, bonds and cash. They include assets like:

• Cryptocurrencies like Bitcoin and Ethereum
• Commodities like precious metals, oil or agricultural products
• Art and antiquities, like paintings or statues
• Collectibles like baseball cards and Beanie Babies
• Private equity and venture capital funds where investors fund or buy stock in younger, smaller or non-public businesses in exchange for claims to future profits

Each of these investments can expand your portfolio’s diversification and has different considerations regarding profits, risks and timing. You can use them to hedge against other assets, speculate on price movements or even profit from your hobbies and passions. 

However, many alternative assets carry similar risks, like:

• High volatility and low liquidity
• A lack of regulatory oversight
• Little to no data to inform the market’s true value
• High minimum investment, margin trading or accredited investor requirements
• Added costs for storage, insurance or sales commissions

There’s no way to tell if or when any of these assets could double your initial investment. 

The Keys to Doubling Your Money: Time and Risk

Doubling your money through investing requires taking time, risks or both. You’ll also have to put in more work than just parking your money in a high-yield savings account. But in a few years when your returns have compounded and your bank account looks fatter, you’ll thank yourself for finding the right risk-reward trade-off. 

Frequently Asked Questions