Doubling your money is possible, and you don't have to win a bet in Vegas to do it. In fact, there are three reliable techniques you can employ to end up with twice the cash you started with -- or more.
Here's what they are.
1. Take advantage of an employer 401(k) match
If your employer matches 401(k) contributions at 100%, this is the best and easiest way to double your money -- guaranteed.
Many employers offer a 100% match up to a certain percentage of your salary. That means for each dollar you invest, the company gives you a dollar as well. Find out what your employer's matching rules are and make sure you're contributing up to the full amount necessary to earn every bit of free money available.
Of course, not all employers give you a 100% match. Some offer only 50%. But even though that means you won't quite double your money with each $1 you invest, you'll still get a risk-free contribution to your retirement account, so it's well worth taking advantage of.
2. Invest in an S&P 500 index fund
The S&P 500 is a financial index that tracks the performance of around 500 of the largest U.S. companies that are publicly traded. Over time, it's produced average annual returns of around 10%. That means if you invest in an S&P fund, there's a solid chance you will double the amount you invested over the course of around a decade.
Now, the S&P 500 index has historically gone up over time, but you aren't necessarily guaranteed to earn a 10% profit every year. There have even been some decades where you wouldn't have quite managed to double your money because returns were lower than anticipated for an extended time. But, with a long-enough time horizon, it's always been a proven winner.
3. Buy well-researched stocks you hold for the long term
The S&P 500 offers a low-risk way of doubling your money and is an ideal choice for people who can't or don't want to take the time to research individual stocks. But you aren't going to beat the stock market by investing in an S&P fund, and it can take a relatively long time to double your money.
Smart stock picks could sometimes earn you a 100% return on investment more quickly. But there are a few big caveats:
- You're taking a greater risk of loss when investing in individual companies rather than putting a small share of your money into 500 of the country's largest businesses.
- Picking stocks takes knowledge, time, and effort.
If you're willing to put in the work to become a smart investor, the best and most proven strategy for doubling your money is to buy shares of solid companies and hold onto them for the long term. Chasing short-term profits is far riskier and unlikely to consistently pay off, while responsible investing over time can almost always can be counted on to at least double your money eventually -- if you're disciplined enough to do it right.