At Journey With Money, we don’t promise get-rich-quick schemes. But is it possible to double your money in a relatively shorter period of time?
I want to talk about 2 ways here.
1. Strive for Higher Rate of Return
I talked about the wonder of compound interest and how compounding interest/return over a long time builds tremendous wealth. Let me introduce you to the rule of 72 as well to yet again visualise this power more clearly.
Basically the rule of 72 says if you divide 72 by the rate of return of your investment, the result is approximately the number of years it takes to double your money.
For example, if your investment return is 24% per annum, it takes about 3 years (72/24 = 3) to double your capital. If you start with $100,000, it doubles every 3 years. By the end of 9 years, you have $800,000! How wonderful this is.
However, if the rate of return drops to 1% (think fixed deposit), it takes 72 years to double your money. By the way, it may not be enough to cover inflation.
It is thus imperative that you learn ways to achieve higher rate of return. If you simply invest in index fund (e.g. S&P500) over a long term, the annual return is about 7 to 9%. Investing in good dividend counters and REITs in Singapore will get you 5 to 9%. Not too bad.
I propose that you work on getting yourself educated on the investment methodologies progressively and do what you are comfortable with. As you are ready, I do want you to explore using options as part of your stock investment tool-kit as it can enhance your returns. I can achieve > 2% return per month most of the time and first documented it here before.
2. Leveraging on Major Market Correction
Nobody knows when a crash will happen. Since 2009 however, market like the US market has gone up to a level which is deemed to be too expensive. Do read my articles and do remain invested but also have cash ammunition to tap on the opportunities which will be presented.
If you want to double your money, this particular correction cycle just may help you do that much quicker.
A quick recap of the rule of 72 in this video.
I hope you gain something useful from this article and do contact us for no-commitment discussions if you would like to know specifics which are not covered well here.
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