Investing wisely is not just about preserving wealth but also about growing it. Whether you are a novice investor or a seasoned pro, doubling your investment money is an appealing goal. While it’s essential to acknowledge that investing always carries some level of risk, there are several strategies and principles that, when applied diligently, can significantly increase the likelihood of doubling your investment. Let us look at different strategies to double your money.
Rule of 72
Before we look at the strategies, let us understand a rule that helps you determine how soon you can double your money – Rule of 72. It is a simple and useful formula for estimating the time it takes for an investment to double in value based on its compound interest rate. It’s calculated by dividing 72 by the annual rate of return. Let’s illustrate this with an example.
Let’s say you have an investment with an annual interest rate of 8%. Using the Rule of 72, you can estimate how long it will take for your investment to double:
- Time to double = 72 / Annual interest rate
- Time to double = 72 / 8 = 9 years
So, with an annual interest rate of 8%, it would take approximately 9 years for your investment to double.
Similarly, if you have an investment with a different interest rate, you can use the Rule of 72 to estimate the time it takes to double. For instance:
If the interest rate is 6%:
- Time to double = 72 / 6 = 12 years
If the interest rate is 10%:
- Time to double = 72 / 10 = 7.2 years
If the interest rate is 12%:
- Time to double = 72 / 12 = 6 years
Strategies to double your investment
Here are some strategies to double your money:
Diversification: You can double your investment with fixed deposits, real estate, stocks, and other asset classes. Some options will double your money faster, while others may take longer, as seen above. You cannot be too aggressive – put everything in equity or too conservative – put everything in fixed deposits. Spread your investments across different asset classes, such as stocks, bonds, real estate, and commodities. Diversification helps mitigate risk by reducing the impact of any single investment’s poor performance on your overall portfolio.
Long-Term Investing: Adopt a long-term perspective and resist the temptation to engage in short-term trading or speculation. Patiently staying invested allows compounding to work its magic, potentially doubling your money over time. However, if you don’t have the patience to wait for years and the skills to make money in the short term, then you should check Jarvis Invest’s One Stock plans.
Invest in Stocks: Stocks have to be part of your portfolio if doubling of investment money is something you want – in a reasonable time. Identify companies with strong growth prospects and invest in their stocks. Growth stocks typically outperform the market over the long run, offering significant capital appreciation potential. If you are not ready to pick growth stocks for your portfolio, use Jarvis Invest to create your personalized portfolio.
Invest in Yourself: It’s not always about the investment. You can allocate resources towards furthering your education, acquiring new skills, or starting a business. Investing in yourself can yield substantial returns in the form of higher earning potential and career advancement, effectively doubling your investment over the long term.
Continuous Learning and Adaptation: Stay informed about market trends, economic indicators, and investment strategies. Continuously educate yourself and be willing to adapt your investment approach based on changing market conditions and personal circumstances.
Be careful while running after doubling your money
With equity investing, the returns are higher, so you can double your investment sooner. But please don’t invest everything in equity. Why? This is because higher returns come with higher risks. And not everyone can take a high return because of their risk profile. You must always invest according to your risk profile.
Before you go
Doubling your investment every 6 years can be tempting with equity investment, but you should not run after it. Your money doubling should be the outcome of the process you follow based on various factors, and not the other way around.
Approach investing with a disciplined mindset, realistic expectations, and a willingness to accept risk. By implementing these proven strategies and principles, you can enhance the growth potential of your investments and work towards achieving your financial goals. Remember, successful investing is a journey that requires diligence, perseverance, and a long-term perspective.