The S&P 500 returned about 10% per year between 1928 and 2014. That's a fantastic return -- proof that compounding over long periods of time can create life-changing amounts of money.
But there are other ways for millions of Americans to use their money to create returns that far exceed that of the stock market. And in some cases, their investment returns are guaranteed.
Sounds too good to be true, right? It's not. Let's look at three easy ways to guarantee yourself a double-digit return.
1. Pay off high-interest consumer debt
Millions of Americans depend on consumer debt to fund their lifestyle, which has created a staggering amount of credit card bills. A recent CardHub study projected that credit card debt will exceed the $1 trillion mark for the first time ever this year. That means the average U.S. household owes more than $8,500 to credit card companies.
That's a scary number, especially when you consider that the average interest rate on variable credit cards right now is 16.02%, according to bankrate.com.
If you have a bunch of high-interest credit card debt hanging around, you can guarantee yourself a double-digit return by simply paying down your debt.
2. Take advantage of your 401(k) match
One of the biggest money mistakes millions of workers make is failing to sign up for their employer's retirement plan. That could prove to be a costly decision in many ways, but the biggest loss is missing out on the employer match.
A 2015 study from mutual-fund giant Vanguard revealed that almost every 401(k) plan offers some type of employer match. One of the most common offerings is a 50% match on up to 6% of the employee's salary. That means participants can earn a 50% return on their money just by signing up. It doesn't get much sweeter than that.
The majority of Americans, it seems, have taken action. Vanguard's data showed that 77% of workers are actively contributing to their plan each year, with an average deferral rate of 6.9%. If you're in that 23% of unenrolled workers, you could be missing out on guaranteed free money.
3. Make your home more energy efficient
I'm a huge fan of spending money on products that help you use less energy. The returns on the investment can be huge.
One change that's both simple and extremely cost effective is to switch your lighting needs to CFLs or LEDs. These newer bulbs use as much as 80% less energy and can last up to 25 times longer, giving anyone with outdated technology the chance to score an amazing return on his or her money.
Beyond changing light bulbs, there are a huge number of easy projects that can save you a bundle on your home energy costs:
- Plugging leaks in doors and windows.
- Installing a programmable thermostat.
- Wrapping a blanket around your water heater.
- Adding insulation to your attic.
- Sealing any forced-air ductwork.
- Replacing old windows with energy-efficient models.
- Adding storm windows and doors.
- Upgrading your water heater to an on-demand unit.
One of the best ways to get started is to hire a professional to perform a home energy audit. In many states, these audits are free of charge, thanks to your local utility. You'll get a report that details all of your potential cost savings and an estimated payback period. Any project that recoups your investment in less than 10 years will provide you with a double-digit return, and that's not even accounting for any rebates or tax incentives that can really turbocharge your return on investment.
I had an energy audit performed a few years ago and was amazed at the opportunities to save money. My utility company was willing to upgrade all of my light bulbs to LEDs for free and even subsidized 75% of the cost of insulating my attic up to R-50. As soon as the work was completed, I saw my electric and heating bills plunge, providing me with a return on investment in the triple digits.
If any of these options are available to you, they should probably be your first consideration for investing your money. They may not be the most exciting investment opportunities out there, but there's no doubt that the returns can be huge.