I was reading a book for a while now and it was a good book on investment. Then i realize how much i can benefit everyone with this book. So i decided to write about some tactics to double your investment. There’s something about the idea of doubling one’s money on an investment that intrigues most investors. It’s a badge of honor dragged out at cocktail parties, a promise made by over-zealous advisors, and a headline that frequents the covers of some of the most popular personal magazines.
Perhaps it comes from deep in our investor psychology – the risk-taking part of us that loves the quick buck. Fortunately, doubling your money is both a realistic goal that investors should always be moving toward, as well as something that can lure many people into impulsive investing mistakes. Here we look at the right and wrong ways to invest for big returns.
The Classic Way – Earn It Slowly
Perhaps the most tested way to double your money over a reasonable amount of time is to invest in a solid, non-speculative portfolio that’s diversified between blue chip stocks and investment grade bonds. While that portfolio won’t double in a year, it almost surely will eventually.
Considering that large, blue-chip stocks have returned roughly 10% over the last 100 years and investment grade bonds have returned roughly 6%, a portfolio that is divided evenly between the two should return about 8%.
The Safe Way
Just like how the fast lane and the slow lane on the freeway eventually lead to the same place, there are both quick and slow ways to double your money. So for those investors who are afraid of wrapping their portfolio around a telephone pole, bonds may provide a significantly less precarious journey to the same destination.
But investors taking less risk by using bonds don’t have to give up their dreams of one day proudly bragging about doubling their money. In fact, zero-coupon bonds can keep you in the “double your money” discussion.
The Speculative Way
While slow and steady might work for some investors, others may find themselves falling asleep at the wheel. They crave more excitement in their portfolios and are willing to take bigger risks to earn bigger payoffs. For these folks, the fastest ways to super-size the money may be the use of options, margin or penny stocks.
Stock options, such as simple puts and calls can be used to speculate on any company’s stock. For many investors, especially those who have their finger on the pulse of a specific industry, options can turbo-charge their portfolio’s performance. Considering that each stock option potentially represents 100 shares of stock, a company’s price might only need to increase a small percentage for an investor to hit one out of the park. Be careful and be sure to do your homework; options can take away wealth just as quickly as they create it
The Best Way to Double Your Money
While it’s not nearly as fun as watching your favorite stock on the evening news, the undisputed heavyweight champ of doubling your money is that matching contribution you receive in your employer’s retirement plan. It’s not sexy and it won’t wow the neighbors at your next block party, but getting an automatic 50 cents for every dollar you deposit is tough to beat.
The Bottom Line
There’s an old saying that if “something is too good to be true, then it probably is.” That’s sage advice when it comes to doubling your money, considering that there are probably far more investment scams out there than sure things.
While there certainly are other ways to approach doubling your money than the ones mentioned so far, always be suspicious when you’re promised results. Whether it’s your broker, your brother-in-law or a late-night infomercial, take the time to make sure that someone is not using you to double their money.