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The goal for investors is to make as much profit as possible – and doubling your money is an excellent hope.
Still, you can double your money without high risk or speculating on volatile stock markets.
Provided you have enough time, you can double your investment even with a low-risk or fixed-return approach, implementing a diversified portfolio strategy to reduce risk and generate stable, ongoing returns.
Multiple options are available, from conservative long-term approaches to aggressive, highly speculative investment, but most seasoned investors will focus on diversification through a healthy blend of bonds and stocks.
Table of contents
- The Reality Of Investing To Double Your Money
- How To Double Your Money Through The Stock Markets
- How To Double Your Money Through Property
- How To Double Your Money Through Low-Risk Bonds
- How To Double Your Money Safely
- How To Double Your Money By Investing FAQ
- Related Articles, Guides and Insights
- Questions or Comments?
The Reality Of Investing To Double Your Money
Before you invest a penny, you need to have a trading plan. An experienced investor or trader will only enter a position, buy an asset, or invest in a financial instrument after evaluating how it is likely to perform, calculating the risk, and ensuring it is consistent with a broader strategy.
One of the fundamentals is to consider your attitude to risk.
There is no right or wrong answer, but you need to decide whether or not you are prepared to accept risk in return for higher potential returns.
Every investment carries risk, but this can vary significantly with the likelihood of a loss and the scale of the possible loss. For example, one investment might have a greater chance of making a slight loss but only affecting a fraction of the original capital.
Another might be low risk, but in the worst-case scenario could lose everything you have invested.
A clear, methodological strategy is essential because it prevents you from making unwise decisions based on greed and fear. Knee-jerk reactions are the most common reason for a bad investment call, responding to sentiment, worry or uncertainty without consulting your overall investment objectives.
It is important to be cautious about any investment opportunities offering unusually high returns in a short timeframe, particularly without risk – this investment does not exist.
Scams and misleading sales techniques are more common than we may think, so any advice you take or products you buy should always be through a regulated, credible broker or investment adviser.
How To Double Your Money Through The Stock Markets
The traditional way to double your money is to play the stock market, creating a balanced, risk-averse portfolio with strong diversification, mixing bonds, stocks and shares in respected brands and growing companies with a long-standing market presence and solid financials.
Over the last five years, FTSE 100 stocks have achieved an annual return of 7.07 per cent on average, or 40.72 per cent overall, with the option to reinvest dividends earned and double down on your potential earnings.
Any stocks with an annual return of ten per cent or above are considered an excellent long-term investments. Still, it is best to look at annualised returns because it is natural for stocks to fluctuate between trading periods.
How To Double Your Money Through Property
Property investment is a long game, but one that has the potential to double your wealth. Of course, there are good and bad times to buy, but property presents a relatively safe opportunity during economic stability.
The Office for National Statistics (ONS) reports that:
- UK house prices grow 9.6 per cent in the year to January 2022.
- The average property was worth £24,000 more in January 2022 than a year before.
- London has the lowest annual growth, at 2.2 per cent, but properties in Wales grew 13.9 per cent in value in 12 months.
AllAgents has published a chart showing house price growth from 1975 to 2021, with the average property increasing from £104,242 to £271,100 in 2021 – a return of 160 per cent over 46 years.
However, if you invest at the right moment, you can double your investment in a shorter time frame. For example, in 1995, average property prices dipped to £114,368, but eight years later, in 2003 reached £243,768, more than doubling.
Another factor is the cost of mortgage payments and rental yield if you invest in a property to let out. You could double your money faster if you can achieve a higher rental income than the cost of financing the investment – or pay outright for the property.
How To Double Your Money Through Low-Risk Bonds
Bonds are one of the lowest-risk investment products, and although they take longer to produce a return, there is less exposure to a loss.
You receive a confirmed interest rate throughout the bond’s life and receive this annually, quarterly or monthly.
Tracker Bonds follow the Bank of England base rate and tend to run from six months to five years, often with investment thresholds of between £100 and £1 million. You might find that the interest rate offered increases with the value of your deposit.
Once the bond matures, you receive your capital back plus interest accrued and not yet paid, and the interest received will generally be much higher than you could make through a conventional savings account. So the longer you can leave your cash invested, the more you stand to earn.
Investors can purchase corporate or government bonds, and the current ten-year UK government bond offers a yield of 3.382 per cent, according to World Government Bonds.
While interest rates are not the highest, there is the assurance that bonds often double in value over 20 years or more.
How To Double Your Money Safely
Pensions aren’t the most exciting investment, but they are one of the most likely ways to double your money.
The best options are defined benefit employment pension schemes, where you are guaranteed an income for life, regardless of how long you continue to draw on your pension.
Any pension scheme with matched employer contributions is a good deal because you often double your fund.
Some pension funds allow you to adjust your risk level as you wish, so you can accept higher risk in return for higher gains, although it is wise to seek financial advice before you take any chances with your retirement fund.
If you join an auto-enrolment pension scheme, you need to contribute at least eight per cent of your earnings, and the employer must pay at least three per cent of that, although many will offer more as a staff retention incentive.
For example, if you deposit £40 every month, and your employer contributes £30, you also qualify for £10 tax relief – you have doubled your £40 investment into £80 immediately, notwithstanding interest earned on that fund before you retire.
How To Double Your Money By Investing FAQ
Investors use a standard formula called the ‘rule of 72’, which determines how many years it will take to double your money by dividing the anticipated annual return rate by 72.
For example, if you have a two per cent rate of return, it will take 36 years to double your investment. On the other hand, if the annual return rate is 50 per cent, you will double your cash in 1.4 years.
This calculation is a generalised idea rather than a guaranteed outcome. However, it works better for longer-term products with modest return rates because investments with higher returns also carry a greater potential to vary from the norm.
Crypto markets are considerably more volatile and unknown than any other, primarily because values are based mainly on speculation. In addition, the use case for many tokens is yet to be established or adopted on a wide enough scale to influence token prices.
Some investors have made millions through cryptocurrency, but it is not an option for conservative traders. The risk is much greater than a conventional route, such as property or stock markets.
The ideal approach will depend entirely on how much you wish to invest, how quickly you’d like to profit, and the degree of risk you are prepared to accept to get there.
Most seasoned investors do not use one approach but build a customised strategy that includes diversification, balancing higher-risk assets with fixed-rate bonds or another stable return investment product that offsets the potential for losses.
Every investment comes with risk. Even stable products such as bonds carry risk because there is a chance – probably minimal – that the bond issuer will be unable to pay the agreed yield or pay back the value of the bond.
Investors use various assessments to model the risk vs reward and decide whether the trade-off is acceptable and conforms to their investment strategy objectives.
Higher risks mean higher rewards and vice versa.
Time horizons show you how long you have until you expect to draw on your investment, whether selling an investment property, cashing in your stocks, having a bond reach maturity, or accessing your pension fund.
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