How to Use the Rule of 72 to Double Your Investment
You want to know how to double your money right? Well, while it sounds like a trick, there are actually plenty of ways to legitimately double your money.
And you don't need even need to risk losing money by gambling or investing in penny stocks!
How to Double Your Money Using the Rule of 72
I'm going to show you how long it will take you to double your money—with the rule of 72.
The rule of 72 uses annual returns to estimate how long it will take to double your money when you invest it.
Here is roughly how long it would take you to double your money given the following annual returns:
- 2% – 36 years
- 3% – 24 years
- 5% – 14.4 years
- 7.5% – 9.6 years
- 10% – 7.2 years
- 15% – 4.8 years
- 20% – 3.6 years
- 50% – 1.44 years
- 100% – 0.72 years
You get the picture, now I'll explore three ways to double your money.
1. How to Double Your Money in Stocks
You can effortlessly double your money every few years by investing in stocks through a broker like Webull.
The US stock markets grow by 10% annually (on average) and have for the past 100 years.
Your money will double every seven years (on average) when you invest in stocks. Even better, your money will start to grow faster and faster over time—thanks to our friend compound interest.
A $10,000 investment would grow to $19,487 in seven years. Giving you an extra $9,487, as you can see below.
After another seven years, your $19,487 will nearly double to $37,945.
Your money has now grown by $18,458 in seven years (compared to $9,487 in the first period).
And finally, after another seven years, your $37,975 investment would have grown to $74,002!
Your money has now grown by an extra $36,027 (compared to $9,487 the first time) without any extra work on your part!
Thanks to moneysmart.gov.au for their awesome compound interest calculator!
Investing in stocks is a great way to double your money, but there are two other great methods I want to share with you.
If you wanted to get started in the stock market, you can get a free stock, valued up to $1600 when you invest $100 with Webull here.
2. How to Double Your Money with Real Estate
There are many ways to double your money with real estate, and nearly any real estate investment will double in value when given enough time.
You’ll need a large budget and a lot of time to double your money fast in real estate.
Here are two ways to double your money in real estate:
1. Double Your Money Using Fix and Flip
The fix and flip strategy is for investors who have a large budget.
Fixing and flipping involves buying cheap houses, renovating them, and then selling for a profit.
The fixing and flipping strategy is one of the most lucrative ways to double your money in real estate—but it also requires a lot of work!
2. Buy and Hold
The buy and hold strategy is another way real estate investors like to grow their money.
But your profits with the buy and hold strategy are highly dependant on property appreciation.
Buy and hold investors will typically purchase a house in an up and coming area, and sell when the demand for real estate has increased in the area!
You can also generate cash while you're waiting for the house to appreciate by leasing it out to tenants.
This will provide you with monthly rental income and a potentially large profit when you sell the house!
Here is a great resource if you want to learn more about making money in real estate.
3. How to Double Your Money with Bonds
Your age, investment goals, and risk tolerance should determine your mix of stocks and bonds within your portfolio.
If you don’t fit the profile of an equity investor (young, working full-time, high tolerance for risk) you should consider buying bonds.
How Will My Money take to Double in Bonds?
Your money will take roughly 12-14 years to double by investing in bonds, given an average bond yield of 5-6%.
While investing in bonds isn’t the fastest way to double your money—you’ll still get there in the end.
Why Invest in Bonds?
I bet you’re wondering “why would I want to invest in bonds if my money grows slower than stocks?”
Well, bonds are typically safer investments, and they don’t experience the sort of volatility that stocks do.
Bonds will provide you with a regular source of income—while allowing you to sleep well at night!
A Final Note
There's an old saying that if “something seems too good to be true, then it probably is.” No matter which investment strategy appeals to you, this advice rings true.
Whether it's your stockbroker, your lecturer or your dad, take the time to do your own research.
Don't forget you can get a free stock, valued up to $1600 when you invest $100 with Webull here.
