When it comes to investing, people love the idea of doubling their money. Most investors get fixated on the possibility of earning twice the amount they invested in a short period of time. What they don’t know, however, is that doubling one’s money on investments can only be achievable and realistic if one is willing to start investing the right way. Let’s take a look at the best ways to double your investment.
1. Invest in safe, low-priced investments and hold them for a long time. The buy and hold investment strategy is one of the safest ways to double your investment money. They key here is to invest in a solid, diversified portfolio and keep it for a long period of time. Following the tried and tested rule of 72, you can calculate how many years you have to wait for your money to double. Simply divide your investment’s annual returns by 72.
Taking the 72 rule into consideration, choose stocks and bonds that have reasonable expected annualized returns. If you choose to invest in stocks and bonds that yield modest 8% returns, you’ll double your money in about 9 years. If you are willing to wait longer, you’ll definitely earn more money over the years especially if you are able to choose the right investments.
2. Invest in zero-coupon bonds. Zero-coupon bonds are bonds that you can buy at rates that are lower than their face value. But instead of providing regular interest payments, these bonds will be repaid at face value when they mature. For example, you can purchase a $1,000 zero-coupon bond at half the price and be repaid the face amount when the bond matures. Aside from significant investment returns, another benefit of these bonds is that investors do not have to deal with fluctuating interest rates.
3. Invest in small businesses. Contrary to what most people may think, investing in small businesses can potentially produce good returns and if you’re lucky, the growth of your investment can be phenomenal. Aside from that, certain countries offer tax incentives for those who want to invest in small firms.