How to double your money in the stock market? Today we will be looking at four different ways you can double your money you have in the stock market. The idea of doubling your money is very intriguing to investors. It is a badge of honor. Being up 93% doesn’t sound as exciting as being able to say that you doubled your money. Before we continue you should first know about the Thumb Rule 72.
What is Thumb Rule 72?
Using Rule 72 or Thumb Rule of 72 gives you the estimation of two things:
- The time period to double your money at given rate of return.
- The rate of return at which your money will be double at given time-period.
Suppose you want to invest in Bank Fixed Deposit at an interest rate of 8% p.a. Then according to Rule 72, your invested cash will get doubled in seventy 72/8 = 9 years. This way if you make investments of Rs.1 lakh in Bank Fixed today then you may get Rs.2 lakhs in case you stay invested for nine years.
Similarly, if you wish to double your money say in 5 years then you should contribute cash at the rate of 72/5 = 14.40% p.a. to accomplish your objective. This implies on the off chance that if you have Rs.1 lakh and you require Rs.2 lakhs in 5 years than you should invest it in the money-related products which give you return at 14.40% p.a to accomplish your objective.
Though Rule 72 offers you rough estimates however it becomes very useful at the time when you have no access to a calculator or do not know much about compounding or discounting.
Here are four common ways people invest to double their money.
#1. Compound Interest + Time
This is the old school way of doubling your money. This is the strategy of investing your money in a solid portfolio of blue chip stocks that pay dividends as well as high-quality investment grade bonds. The idea behind this is the interest earned from your investments will earn interest as well. It takes time to double your money with this strategy. Most blue-chip stocks pay quarterly dividends, and you will be reinvesting those dividends back into more blue-chip stocks. Large blue chip stocks have returned roughly 10% over the last 100 years and investment grade bonds have returned 6%. A 50/50 split would give you an average return of 8%, meaning you would double your money every 9 years.
#2. Be Greedy when others are Fearful
This strategy is based on the teachings of Warren Buffett. The stock prices of great companies occasionally get out of whack. This is called a bear market. This is a time when stocks go on sale. When good investments become oversold, buy them. Bear markets provide easy opportunities for the disciplined investor to double their money.
#3. The Safest Way
The safest way to double your money is through bonds. This is also the slowest way to accomplish this. Treasury Bonds are as safe as they come. At the minimum, the Treasury guarantees that a Series EE bond’s value will double after 20 years. Investing solely in treasury bonds is a very slow and safe way to double your money. There are bonds out there with a higher rate of return than treasury bonds, so this can be accomplished sooner than 20 years.
#4. Through Speculation
Some investors fall asleep when they think about the slow and steady method of investing. They are excitement junkies that are willing to take bigger risks for a bigger potential reward. These investors take advantage of speculative investment vehicles like options or penny stocks. Stock options are used to speculate the price of the stock of a company. Speculative investors typically double their money fastest, when they are right. The thing to remember about speculative investing is that these types of investments can take away wealth just as fast as it is generated.
Learn how to invest in the stock market…
FREE *STOCK MARKET* GUIDE: https://goo.gl/8XE9gq
Virtual Stock Exchange: https://goo.gl/dDwG2t
The books I recommend-
#1 BOOK I RECOMMEND (Wealth): http://amzn.to/2CWDMYa
#2 BOOK I RECOMMEND (Mindset): http://amzn.to/2ECnOmo
#3 BOOK I RECOMMEND (Happiness): http://amzn.to/2AY8gas
#4 BOOK I RECOMMEND (Investing): http://amzn.to/2mtVrPZ
#5 BOOK I RECOMMEND (Tony Robbins): http://amzn.to/2AW6xCn