How to Invest Money to Become Double
- 1). Set a realistic time frame. The most important tool that investors have at their disposal is time. Doubling your money is easy if you are patient. If you're looking to double your money in a month, you may be setting an unrealistic goal, especially if you are a part-time investor without specialized knowledge. Doubling your money in 10 years isn't nearly as difficult and can be done using a variety of investment products.
- 2). Pick the right investment. There are more investment products available than there is time to learn about all of them. Each person has to first evaluate his risk tolerance. Doubling your money using a savings account takes much longer than if you were to use the stock market. With the potential of bigger gains come bigger risks and possibly more time spent researching and managing your investments. It's better to fall short of doubling your money than it is to lose money from being too aggressive.
- 3). Do your research. If you choose to use stocks as your vehicle, you will need to spend a lot of time researching and picking your stocks. You will need to know how to put together a diversified portfolio, evaluate company metrics and continue that research throughout the entire time you own the stock. Doubling your money in the stock market in a short period of time is possible. If you would have done your research in March 2009 and found Morgan Stanley, you would have doubled your money by December of the same year. While it is not a good idea to expect these results, this shows the power of exhaustive research.
- 4). Understand the IRS. The IRS will take a significant amount of your earnings, depending on the investment product you pick. If you pick stocks, you want to hold them for more than a year to avoid the large taxes associated with short-term gains. If your time frame is long term, you should look at certain IRAs or 403bs that have much less of a tax burden. Additionally, if you are going to be trading frequently, find a broker with low commissions.
- 5). Use the Rule of 72. If you are using a fixed income investment product, you can use the Rule of 72 as a guide. The Rule of 72 says that if you divide 72 by the annual rate of return, the result is the number of years it will take you to double your money. For example, if you invest $1,000 at a 5 percent annual interest rate, it will take you just over 14 years to double your money.
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