7 Tips on How To Double Your Money
JA
Summary:
Making smart financial decisions is the key to doubling your money. And while it may seem like a daunting task, doubling your money is actually quite achievable if you have the right knowledge and resources at your disposal.
Doubling your money and achieving financial freedom doesn’t have to be a distant dream. With enough self-discipline and the right personal finance habits, you can start stashing away extra money to fund your future lifestyle. In this post, we’ll explore a few ways you can twofold your bank account balance and achieve your financial goals.
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1. Take advantage of employer match
When it comes to saving for your golden years, employer-sponsored 401(k) retirement accounts offer a great way to boost your savings. One of the biggest advantages of a 401(k) is that many employers offer to match a certain percentage of employee contributions. This means you can double your money by contributing to a 401(k) up to the limit of your employer’s match.
For example, if your employer offers a 100% match on employee contributions up to 6% of the salary, you can maximize the match by contributing 6% of your salary to your 401(k). As a result, you would end up with 12% of your salary saved for retirement — which can make a big difference over time. So if you have the opportunity to participate in a 401k with an employer match, take advantage of it!
Not to mention that contributions to 401(k) retirement savings accounts are tax-deferred, which means you don’t pay taxes on the amount you contribute. This allows you to free up more money to double your savings through other investment strategies.
When looking into how to double your money through retirement accounts, consider speaking with an investment advisor to learn about all of your options.
2. Let compound interest do the work
Why do so many financial experts preach the idea of investing while young? Well, it’s all because of compound interest. Even Albert Einstein once said: “Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn’t, pays it.”
This magical concept is based on the idea of the time value of money, which states that the value of the money changes depending on the time it was invested. The earlier you begin to take advantage of compound interest, the more you can start saving. This is because compounding allows you to earn interest on the initial principal as well as on the interest that accumulates over time.
Example:
Let’s say both Jasmine and Nicholas invest $1,000 each month at an 8% annual rate of return. Jasmine starts at 25 while Nicholas starts at 35. Due to the power of compounding, by the age of 65, Jasmine will have a little over $3 million in her bank account. By comparison, Nicholas would only have around $1 million.
For some of the best compound interest rates, look into getting a high-yield savings account.
3. Invest in real estate
With the right investment strategy, it’s not uncommon for an individual to double their money within a few years through real estate investments. Here are some of the most common ways to do so:
- Real Estate Investment Trusts (REITs). By pooling money from many investors, REITs allow you to own a share of commercial real estate without having to buy a property outright. Another beauty of Real Estate Investment Trusts is that they’re required to distribute more than 90% of their earnings each year to maintain their tax-free status. This means REITs’ dividend payments are often quite generous.
- Wholesaling property. Wholesaling property is another great way to double your money in the real estate market. By finding a property at a lower price and then selling it to a buyer at a higher price, you can earn a profit while also helping to meet the needs of the housing market. To be successful at this, you’ll want to develop a good understanding of the market and find properties that are undervalued.
- Flipping real estate. Flipping a property means buying it, fixing it up, and then selling it for a profit. To increase the value of the home, you’ll need to invest both time and money into fixing up the property. This means making necessary repairs and cosmetic changes.
4. Look into growth stocks or value stocks
Though there’s no surefire way to make a profit in the stock market, there are certain strategies that can help stack the odds in your favor. For instance, many savvy investors choose to invest in either growth stocks or value stocks.
Growth stocks are those of companies that are expected to experience rapid expansion in the near future. As of 2022, some of the most popular growth stocks include Tesla, Google, and Amazon.
Value stocks, on the other hand, are those of companies that are trading at a discount to their intrinsic value. Value stocks tend to have lower risk than growth stocks because they’re typically more established. For example, Bank of America, Wells Fargo & Company, and Berkshire Hathaway (one of Warren Buffet’s favorite stocks) are all considered value stocks.
While there’s no guarantee that either strategy will be successful 100% of the time, both growth stocks and value stocks have the potential to double your money. If you’re looking to maximize your returns, you could consider investing in these stocks with as little as $1,000. To start, consider working with one of the brokerages below.
Pro Tip
If you’re having trouble sticking to a budget and reaching your investment goals each month, consider setting up Auto Invest. Auto Invest is a tool almost every brokerage offers that allows you to set recurring contributions to your investment account.
5. Trade options
Options are contracts that give the holder the right to buy or sell an underlying asset (such as stocks, index funds, and bonds) at a set price within a certain timeframe. Options trading can be used to speculate on the future direction of a market or to hedge against existing positions. For example, if you believe that a stock will increase in value, you can buy a call option. But if you believe the stock will decrease in value, you can buy a put option.
Keep in mind that while it’s possible to double your money by trading options, it’s also possible to lose money. So before taking the plunge, understand the risks involved and have a solid plan for managing those risks. If you don’t think you’re able to stomach the possibility of losing your entire investment, then this might not be the best strategy for you.
6. Dabble in cryptocurrency
There are two popular ways to make money from cryptocurrencies: mining and trading. Mining is the process of verifying transactions and adding new blocks to the blockchain. Though it’s a complex process that requires expensive hardware, it can bring great rewards. For example, the Bitcoin cash ecosystem rewards miners with 6.25 BCH per block.
Alternatively, trading is a more straightforward way to make money. You simply buy low and sell high — but again, this is easier said than done. Prices can fluctuate wildly, and it takes a lot of skill and experience to trade successfully. However, if you believe in the long-term success of a certain cryptocurrency, you can buy and hold until you feel like it’s a good time to sell.
Of course, cryptocurrencies are incredibly volatile, and prices can change rapidly. This means you could easily end up losing all of your investment if you’re not careful. But if your risk tolerance level is high, dabbling in cryptocurrency could be a relatively quick way to double your money.
7. Add a side hustle
If you’re looking to increase your income and reach your financial goals, adding a side hustle is a great way to do it. By generating additional cash flow, you can easily double your money or even triple it.
Moreover, with this extra income, you can speed up your retirement savings rate through the power of compounding. Here are some side hustle ideas to get your creative juices flowing:
- Monetize your skills through freelancing
- Start a money-making blog
- Sell digital products on Etsy
- Drive for Uber or Lyft
- Rent your spare room on Airbnb
- Manage social media for local businesses
- Sell items on Craigslist, eBay, or Facebook marketplace
- Offer language tutoring
In addition to the opportunities listed above, take a look at some other opportunities below. With users’ reviews, you can compare and pick the best job for your needs and availability.
FAQs
What is the Rule of 72?
The Rule of 72 is a financial rule of thumb that estimates the amount of time it takes for an investment to double in value.
To calculate the number of years it’ll take for your investment to double, divide 72 by the investment’s annual rate of return. For example, if the expected rate of return is 8%, then it’d take around 9 years for your initial investment to double (72/8 = 9).
Keep in mind that the Rule of 72 only applies to cases of compound interest, not simple interest.
When does money double every seven years?
According to the Rule of 72, your money invested could double every seven years as long as the estimated rate of return of your investments is around 10.2% (72/10.2% = 7.05).
Key Takeaways
- With the right money habits and investment strategies, you can double or even triple your money and set yourself up for financial success.
- Be sure to do thorough research before investing your hard-earned money into real estate, the stock market, cryptocurrency, etc. Though some investment vehicles can yield great returns, the risks can be high.
- Apart from investing, you can double your money by increasing your cash flow. One great way to do this is by running a side hustle.
- Rule of 72 is a simple way to estimate the amount of time it’ll take for an investment to double in value. However, this can only estimate investments that earn money through compound interest, not simple interest.
Start doubling your money now
If you need help with financial planning or doubling your money invested, consult with a certified financial planner. They can provide you with peace of mind by helping you create a solid financial plan to secure your future.
Lastly, remember that though money is a powerful tool, there are other things in life you should value more than money — such as your health, family and friends, and life experience. So in the quest for financial freedom, don’t forget to stop and smell the roses as much as you can!
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