How to double money? Invest it in right investment options.
But focusing on wealth creation is more important than making money.
The best investing tips we can give to our reader is to concentrate on wealth creation.
If quick-money comes in easily, it goes out even quicker.
Saving and investment is the foundation of all wealth creation.
In order to save properly one must create a budget.
How to double money? All investors has this notion running in their brains.
Very often I find myself subconsciously dragged in the discussion of doubling money by investing.
The idea of how fast we can double our money makes us even more curious.
Needless to say that if we are doubling our money in 20 years its not worth.
But if we only knew how to double our money in a year, we for sure it will attract lot of attention.
Whether we accept or not, but all investors desire to double our money faster.
For this if we need to take more risk then we will take it.
In stock market people speculate heavily with their money with objective of faster multiplication.
But in this article are not going to discuss factors of speculation.
We will see only those options which are pure investment option.
If we can learn to double our money by investing, we will emerge as clear winners in long term.
I call speculators as gamblers.
They are not investors, as investors do not gamble, they take calculated risks.
All investors shall aim to double their money by investing them wisely.
This is one milestone that will keep you charged and going.
Without goals, for sure, you going to end nowhere.
So all investors must set a target of doubling their money by investing.
Here we see how to double our money by investing.
#1. Invest in Balanced Funds
Investors shall accumulate all types of productive assets.
Assets we shall look for cane be:
- Real estate,
- Mutual funds,
- Debt Linked Schemes,
- Gold etc.
But it is not easy for common investor to be able to effectively manage so wide variety of asset types.
For me the best solution will be to opt for a balanced fund.
Investing in a balance fund through SIP route will give maximum benefits in long term.
A balanced fund usually give an average return of 9% per annum.
Which means your money gets doubles in nearly 8 years.
- Expected Returns: 9-10% p.a.
- Years to double money: 7-8 years
#2. Invest in Undervalued Stocks
There are moments in stock market where stocks market index falls very steeply.
I am talking about moments like:
- The great depression of 1927,
- .com debacle of 2001 and
- US debt crisis of 2008.
At these times prices of some best quality stocks fell disastrously.
These are the moments when there is maximum pessimism in the market.
In these moments of mayhem everybody seems to be busy in only selling their holdings.
Investors sell their stocks and keep their money parked in risk free schemes.
Some may even keep hard cash in their closet.
This is what is a point of Maximum Pessimism.
But value investors do just the opposite of what majority does in these situations.
Value investors buy more stocks in moments of maximum pessimism.
In year 2009, I saw a stock which was trading at 170 levels and within a matter of one 12 months its value rose above 400 levels.
It means, in less than a year, there was a possibility of doubling the money.
One year back the same stock was trading at 650 levels and now at 410 levels.
The point I am trying to make is that, if we concentrate on buying value stocks, doubling our money will be easy.
The problem here is that such moments do not come very often and we have to wait for long period.
But still this market gives lots of opportunity to those investors who tracks the stocks very intently.
#3. Invest in safe options
First buy a safe investment option and then wait. Let the power of compounding show results.
Precarious investors likes playing safe by investing in debt linked investment options.
These people who believes in consistency and income generation instead of fast growth.
Investing in a safe investment option like a bank deposit can give a post-tax return of 6% per annum.
By using the power of compounding you can calculate that your money will be doubled in next 12 years.
No doubt this is a slow method of doubling our money.
But the predictability of returns by investing in debt linked plans are far higher.
- Type: Debt linked plan of mutual funds.
- Expected Returns: 6% p.a.
- Years to double money: 12 years.
#4. Invest in Stocks Like a Gambler
Believe it or not but most of the people in stock market falls under this category.
They buy stock and “hope” that its market price will appreciate in future.
The hope is, one day they can sell their holdings for profit.
Such investors never bother to know about investing basics.
They simply buy stock by getting influenced by an external agency, without doing any stock evaluation themselves.
This form of investing is highly unpredictable.
I personally feel that potential investors should not follow this investing strategy.
Trained stock market traders use “Future and Options” to add some certainty to this speculative form of investing.
But I will suggest that normal investors need to first learn this trade and then venture into this form of investing.
#5. Put your money in retirement scheme
Let your employer take care of your investment.
Most likely, they will invest your hard earned money in retirement plans.
By the way in India, it is compulsory for service class to invest in retirement schemes.
It not only gives the income-tax advantage buy also develops a retirement corpus.
Suppose an average person has a basic salary of Rs 10,000/month.
As per rules 12% of basic salary (Rs 1200) will be deducted towards contribution to retirement plan.
The same amount of money i.e. Rs 1200 per month will be contributed by your company to your retirement fund.
Now this saving will also earn you post-tax return of approx 5.5% per annum.
From this table you can see that, your money is getting doubled, in less than one year, even without taking any risk.
Now we know what is the best way to double our money.
Employee funded retirement plans are the fastest and safest option.
But in retirement plans we have a limitation of saving only 12% of basic salary.
But when it comes to value investing, there you will have no limitation.
You just need to know how to do stock analysis and time the market.
What I have discussed here is the most commonly used investment options.
One use then and see the money double as fast as possible.