How To Double Your Money (2024)

The pitch of taking your money and doubling it is often central to the worst scams. However, in investing, the goal of doing so isn't just a tease to lure in the gullible—it's an achievable target with the right strategies and, most importantly, patience. As such, while multiplying your wealth might conjure images of high-risk gambling or complex financial instruments, you should think instead of prudent, time-honored strategies that have worked for many before.

In financial terms, this means achieving a 100% return on your initial capital. This can be done through capital appreciation, dividend reinvestment, compound interest, or a combination. The time it takes to double an investment can vary from a few years to several decades, depending on the approach and market conditions. It's important to note that while these strategies have historically shown potential for significant returns, all investments carry risk, and past performance doesn't guarantee future results.

With those essential caveats in mind, this article explores five proven strategies for potentially doubling your money through investing. From leveraging the power of compound interest to capitalizing on emerging prospects, we'll examine methods that cater to different risk tolerances and time horizons. As we explore these strategies, we'll see that the key to doubling your money isn't listening to some con artist tell you about some boondoggle only they know about. Instead, it often lies in diversification, patience, and a clear understanding of your financial goals and risk tolerance.

Five Ways to Double Your Money

Doubling your money is a realistic objective for most investors, and it's not as daunting a prospect as it may seem. There are a few caveats, however:

• Be honest with yourself (and your investment advisor, if you have one) about your risk tolerance. When the market plunges 20%, it is the worst possible time to discover you don’t have the stomach for volatility, which could damage your finances.
• Don’t let greed and fear hurt your investment decisions.
• Avoid get-rich-quick schemes that promise “guaranteed” sky-high results with minimal risk. There’s no such thing.

In this table, we've taken some of our best strategies for maintaining the discipline you'll need, followed by five ways to double your money:

1. The Classic Way

Older investors might remember classic 1980s Smith Barney commercials in which British actor John Houseman informs viewers that “they make money the old-fashioned way—they earn it.”

That statement isn't too far from the truth, but it's the kernel of the most traditional way of doubling your money. The time-tested way over a reasonable amount of time is to invest in a solid, balanced portfolio that’s diversified between blue-chip stocks and investment-grade bonds.

The 60/40 Portfolio

The is the most widely followed index of blue-chip stocks. It's returned about 9.8% annually (including dividends) from 1928 through 2023. Investment-grade corporate bonds returned 6.7% annually over the same period. Hence, a classic 60/40 portfolio (60% equities, 40% bonds) would have returned about 8.6% annually. A 60/40 portfolio should double in roughly nine years and quadruple in approximately 18 based on the Rule of 72 (which is covered in greater detail below).

However, significant volatility generally comes with such sterling results. You should brace yourself for occasionally sharp drawdowns, such as the 35% plunge in the S&P 500 within six weeks in 2020 as the COVID-19 pandemic erupted worldwide.

Investments with far higher returns than the historical norm can also cut the potential for future returns. The S&P 500 recovered from its 2020 plunge in record time and powered its way to record highs by 2024. It returned a jaw-dropping total return of 100% from 2019 to 2021 alone—though that's, of course, not a guarantee of future results.

What About Real Estate?

Real estate is perhaps the oldest way to build wealth. However, it's far less attractive when housing prices in North America are at or near record levels, as in the mid-2020s. Increases in interest rates also reduce the market in real estate and thus its appeal for investing.

Nevertheless, the prospect of doubling one’s money often proves irresistible to many investors during a real estate boom. That's because mortgage financing provides massive leverage with which to juice returns. This may explain why a 2024 Gallup survey found that Americans favor real estate more than any other investment, even in a high-interest rate environment.

How Leverage in Real Estate Works

Suppose you pay 20% down on a $500,000 investment property. This would involve putting down $100,000 and mortgaging the remaining $400,000. Now, let's say the property appreciates by 20% to reach $600,000. In this case, your equity in the property would soar from $100,000 to $200,000, resulting in an incredible 100% return on the initial investment.

This demonstrates the immense power of leverage in real estate investing. However, it's crucial to remember that this simplified example doesn't consider mortgage payments, property taxes, maintenance costs, or potential rental income. In addition, while leverage can magnify gains, it can also amplify losses. In the above example, if the property's value had declined, the losses would have been significantly magnified.

2. The Contrarian Way

Even the least adventurous investor knows that there comes a time when you must buy, not because everyone is getting in on a good thing, but because everyone is getting out.

Just as great athletes go through slumps, the stock prices of otherwise great companies do as well. This accelerates as fickle investors bail out. This recalls Baron Rothschild's supposed quip that savvy investors “buy when there is blood in the streets, even if the blood is their own.”

This is called contrarian investing, a strategy based on the belief that herd mentality among investors can lead to wrongly priced securities. When employing this approach, you seek out assets that are out of favor and potentially undervalued and then sell them when the market improves. The core principle of contrarian investing is simple: buy low, sell high. However, the challenge lies in identifying genuine prospects amid market pessimism.

Contrarians look for solid companies or sectors experiencing temporary setbacks, negative publicity, or cyclical downturns. These situations often create buying opportunities as other investors flee, driving prices down to attractive levels. For example, during the 2008 financial crisis, shares of many fundamentally strong banks plummeted due to widespread fear. Investors who recognized the long-term value in these institutions and bought shares at depressed prices saw their investments more than double as the economy recovered. Similarly, contrarians who invested in technology stocks after the dot-com bubble burst in the early 2000s were well-positioned for significant gains in the subsequent tech boom.

While contrarian investing requires fortitude of steel, discipline, and careful analysis, contrarian investing can double your money when successfully executed with discipline. However, contrarian investing isn't without risks. It requires thorough research to distinguish between temporarily undervalued assets and those facing fundamental, long-term challenges. Analyzing financial statements, competitors, and industry trends is crucial to ensure the investment has genuine recovery potential.

Patience is also crucial in contrarian investing. It may take time for the market to recognize the value in out-of-favor assets, and investors must be prepared to weather short-term volatility. In addition, diversification is essential: betting too heavily on a single contrarian play can expose an investor to significant risk.

3. The Safest Way

Just as the fast lane and the slow lane on the highway will eventually get you to the same place, there are quick and slow ways to double your money. Bonds can be a less hair-raising journey to the same destination if you prefer to play it safe.

Zero-Coupon Bonds

Zero-coupon bonds may sound complicated for the uninitiated, but they’re simple to understand. You buy a bond at a discount off its eventual value at maturity instead of a bond that rewards you with a regular interest payment.

One hidden benefit is the lack of reinvestment risk. Standard coupon bonds come with the challenges and risks of reinvesting the interest payments as they’re received. There’s only one payoff with zero-coupon bonds, which is when the bond matures. On the flip side, zero-coupon bonds are very sensitive to changes in interest rates and lose value as they rise. This is a risk factor to be considered by an investor who doesn't intend to hold a zero-coupon bond to maturity.

US Treasurys: A Guarantee To Double Your Money

Series EE Savings Bonds issued by the U.S. Treasury are another attractive option for conservative investors who don't mind waiting a couple of decades for the investment to double. Series EE Savings Bonds are low-risk savings products that are only available in electronic form on the TreasuryDirect platform. They pay interest until they reach 30 years or you cash them in, whichever comes first.

In high-interest rate environments, when banks credit depositors upward of 5% in annualized interest, EE Bonds may seem less attractive in the short term. However, they come with a specific guarantee: the Treasury pledges to double your initial investment if you hold the bond for 20 years, effectively providing a guaranteed return of about 3.5% compounded annually. This guaranteed doubling can make Series EE bonds an appealing long-term, low-risk investment option, especially for conservative investors or those saving for specific long-term goals.

4. The Speculative Way

Slow and steady might work for some investors but others find themselves falling asleep at the wheel. For those with a high degree of risk tolerance and some investment capital they can afford to lose, the fastest way to supersize the nest egg may be the use of aggressive strategies. These include options, margin trading, penny stocks, and cryptocurrencies. But all of them can wallop your nest egg just as quickly.

Speculating With Options

Stock options can be used to speculate on any company’s stock. They can turbocharge a portfolio’s performance, especially those with their fingers on a specific industry's pulse.

Each stock option is a right to 100 shares of stock so a company’s price might have to increase only a small percentage for an investor to hit one out of the park. Care should be taken; you'll need to do your homework before trying it.

If this interests you, review Investopedia's "Essential Options Trading Guide."

Speculating With Crypto

Cryptocurrencies have become a popular way for speculators to make a quick buck as Bitcoin and other digital tokens have become more mainstream.

As of the third quarter of 2024, Bitcoin had an annualized return of nearly 46% over the previous five years and 64% during the last 10. But this has come with extreme volatility and hefty drawdowns. For instance, in 2018 BTC lost more than 72% of its value and then fell in 2022 by over 62%.

Unfortunately, the cryptocurrency arena is also a fertile hunting ground for scammers, with many fraudsters targeting crypto investors. If you're interested in investing in crypto, you'll need to take the utmost care, especially if the currency involved isn't part of mainstream investments like Ether and Bitcoin.

A 2024 FINRA report found that 70% of crypto-related communications it reviewed hasn't followed its rules against unclear, distorted, or dishonest marketing. That compares with 8% in similar studies of other investments. Promoters are trying to "capitalize on the promise of easy money, without providing the detailed investor protection disclosures required by the registration provisions of the federal securities laws,” said Gurbir S. Grewal, director of the SEC's Division of Enforcement.

Below is a chart of the volatility of Bitcoin, showing the rewards and the drawbacks for investors—all depending on when they enter and exit from investing in the asset:

Other Ways To Speculate in the Stock Market

Those who don’t want to learn the ins and outs of options but want to leverage their faith or doubts about a particular stock can buy onmarginor sell a stock short. Both of these methods allow investors to essentially borrow money from a brokerage house to buy or sell more shares than they have. This, in turn, raises the potential profits substantially.

Extreme bargain hunting can turn pennies into dollars. You can roll the dice on one of the many former blue-chip companies that have sunk to less than a dollar or you can sink some money into a company that looks like the next big thing. Penny stocks can double your money in a single trading day. Just keep in mind that the low prices of these stocks reflect the sentiment of most investors, and thus the view of most is that some literally aren't even worth a dime.

5. The Best Way To Double Your Money

It’s not nearly as much fun as watching your favorite stock get the headline treatment on the news section of your favorite platform. Still, the undisputed heavyweight champ for doubling retail investors' money is an employer’s matching contribution in a 401(k) or another employer-sponsored retirement plan.

The 401(k) Match

For instance, an employer might match $0.50 for every $1 that you contribute, up to a certain percentage of your salary. Vanguard estimates that about four in 10 companies have 401(k) matching contributions of up to 6% of their employees’ wages. Only 10% of companies offer more than that.

Peter Lazaroff, an Investopedia 10 Top Financial Advisor, told us he advises anyone who listens to put all they can into their 401(k) to get the maximum match. It’s a risk-free way to grow your money and not leave part of your compensation on the table, he said, if you're fortunate enough to have that employee benefit.

“Meeting the match doesn’t necessarily mean you have to sacrifice other financial goals, such as paying down debt or establishing an emergency fund,” he said. “You can still chip away at debt and put away small amounts in an emergency fund if necessary. But securing that employer match is crucial.”

Even better is that the money you put into your plan comes right off the top of what your employer reports to the Internal Revenue Service (IRS). Each dollar invested costs most Americans only 65 to 75 cents.

Doubling Your Money in Individual Retirement Accounts

You can still invest in an individual retirement account (IRA), either a traditional or a Roth, if you don’t have access to a 401(k) plan. Like those plans, these also decrease your taxable income. You won’t get a company match, but the tax benefit alone is substantial. A traditional IRA has the same immediate tax benefit as a 401(k). Roth IRA contributions are taxed in the year the money is invested, but no taxes are due on the principal or the profits when the money is withdrawn at retirement (as long as you meet the age and time-invested requirements).

Either type of IRA is a good deal for the taxpayer, but think about that Roth IRA if you're young. Zero taxes on your capital gains is an easy way to get a higher effective return. The government will even effectively match a part of your retirement savings if you have a low income. The Retirement Savings Contributions Credit reduces your tax bill by 10% to 50% of your contribution.

The Importance of Time Horizon and Risk Tolerance To Doubling Your Money

Your investing time horizon is a significant determinant of the amount of investment risk you can handle. It's generally dependent on your age and investment objectives.

Young professionals likely have a long investment horizon to take on significant risks because time is on their side to bounce back from any losses. But what if they’re saving to buy a house within the next year? Their risk tolerance will be low in this case because they can't afford to lose much capital if there's a sudden market correction. This would jeopardize their primary aim of buying a home.

Conventional investing strategies suggest that people in or near retirement should have their funds deployed in safe investments like bonds and bank deposits. However, that strategy carries its own risk when there are low interest rates, including the loss of purchasing power through inflation. A retired individual in their 60s with a decent pension and no mortgage or other liabilities would probably have more tolerance for risk.

An investment that can double your money in a year or two is undoubtedly more exciting than one that may do so in 20 years. The issue is that an exciting, high-growth investment will almost certainly be far more volatile than a staid and traditionally stable financial product. The higher the volatility of an asset, the riskier it is. This increased volatility or risk is the price an investor pays for the allure of higher returns.

How Long Does It Take to Double Your Money?

The Rule of 72 is a well-known shortcut for calculating how long it will take for an investment to double if its growth compounds annually. Just divide 72 by your expected annual rate of return. The result is the number of years it will take you to double your money.

The Rule of 72 provides a fairly accurate estimate of doubling time when dealing with low rates of return. However, that estimate becomes less precise at very high return rates as can be seen in this chart. It compares the estimates for “time to double” (in years) generated by the Rule of 72 with the actual number of years it would take for an investment to double in value.