Five ways to double your money

Check your timeline, risk tolerance, and these five tips to increase what you have

Five ways to double your money

Fraudsters often offer to help you “double your money”, which is a good scam to avoid. But, how can you do it yourself – whether it’s for the short or long-term?

What – and how – you can do that depends on your timeline and risk tolerance, as well as the investment’s attributes, too, which can also depend on its riskiness. But, here are some things to consider plus five methods that you can review with your advisor to ascertain the best for you.

Time and Tolerance

The time that you have to invest is extremely important because it depends on your age and investment objectives. Someone just starting a career has more time to double money for retirement than someone who is retiring and probably wants to keep assets safer. But, someone younger may not have as much time to double money to buy a house, so also need to be cautious.

Both scenarios will also impact your risk tolerance. If you’re far from retirement, you can afford to take more risk than if you’re close to it and will soon need the money. But, if you’ve only got a year or two to double your down payment for a house, then you’ll probably be more risk-adverse, too.

Investments that grow your money faster can also be riskier and more volatile. So, while a risky strategy might look like it can win you more money faster, it can also lose it faster. Beware of letting fear or greed govern your investment decisions. What you need is a good long-term financial plan that your advisor can help you develop, institute, and monitor to help you reach your goal.

Five ways to Double Your Money

Once you’ve determined your goals and timeline, and assessed your risk tolerance, you can fine many strategies online to double your money. So, work with your advisor, and consider these.

  • The Rule of 72: Every investor should know the Rule of 72. It’s a classic investment tool that can help you gauge how long it will take for an investment to double in value 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 higher the growth rate, the less time it will take to double your investment. Examples are: 72 / 2% growth = 36 years, 72/4% growth = 18 years, 72-20% growth = 3.6 years. The estimate is less accurate for very high return rates.
  • The slow and steady classic way: This means investing your money in a solid, balanced portfolio that’s diversified between blue-chip stocks and investment-grade bonds. Some advisors are rethinking the balance right now, given all the market volatility, but most investors still work with this model. So, talk to your advisor about your best options and asset mix because there may be ways to improve on the traditional model while protecting you in these uncertain times.
  • Bond investing: A good portfolio should have a diversified mix of stocks and bonds. That will protect you if there’s a recession or a company that you’ve invested in doesn’t do well. Bonds don’t generate very high returns, but they’re safer than individual stocks and their returns are usually consistent. So, this is a very safe, conservative strategy and rates are slowly climbing again. There are a variety of bond options, so ask your advisor about them and what would provide the best mix in your portfolio.      
  • Buy oversold stocks: Many stocks can be good to buy when everyone else is getting out. You need to know what you’re doing to play this game because you don’t want to end up with garbage stocks that waste your money. There are times when good investments are oversold, which then presents an opportunity for investors who have done their homework. Valuation metrics, such as price-to-earnings ratio and book value, can help you gauge whether a stock has been oversold, but you’ll probably need your advisor’s help to find and interpret those to get the best value for your plan.  
  • Invest in company pension plans, RRSPs, and TFSAs: One of the best ways to grow your money is to maximize your contributions in your company pension plan, if it still has one and your employer matches, or maximizing the annually allotted allocation that you can put in a registered retirement savings plan (RRSP) or tax-free savings account (TFSA). If you haven’t used those yet, check with your advisor or the Canada Revenue Agency about how much you can invest as there are annual and overall limits. But, the earlier you start, and the more you maximize your contributions, the more that compounding interest will work for you and double your money over the longer-term.
  • Start a side business: You can increase your income, and double your money, by starting a “side hustle” in something that you enjoy and may already do in your spare time. This could mean selling some of your skills or the results of your hobbies, like woodworking, writing, crafts, or knitting. If you maximize your social media and marketing to sell what you produce, and write off the expenses at tax time, you can save and invest all that you earn and soon see your money start doubling.