3 Investing Tricks to Double Your Money

Armed with these strategies, you can double — or even triple — your money.

piles of australian $100 notes, wealth, get rich, rich australian

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Want to double your money? There's no shortage of suggestions for how to do that out there. Some will urge you to gamble, invest with borrowed money, chase high-flying stocks, try to time the market, or speculate in commodities and futures. Others will suggest the lottery or penny stocks or other ways that are so risky you'll likely lose money.

If you really want to double your money, though, and do it with your precious, hard-earned dollars, it's best to stick with unassailable methods.

The Rule of 72

It's hard to argue with math, and there's a simple mathematical trick that can help you figure out how long it will take to double your money -- the Rule of 72. Per the rule, if you divide 72 by an annual growth (or interest) rate, you'll get the number of years it will take to double your money.

If you expect a 10% annual return, for instance, divide 72 by 10 and you'll see that it'll take about 7.2 years to double your money. The rule works well, except when you're dealing with extreme numbers. An expected 72% growth rate might suggest doubling in a single year, but that would take a 100% growth rate. Check out the table below, to see the rule in action.

Growth Rate

Years to Double

2%

36.0

3%

24.0

5%

14.4

7%

10.3

10%

7.2

12%

6.0

15%

4.8

20%

3.6

25%

2.9

Data source: Calculations by author.

Basically, though, doubling your money, or increasing it to any degree, depends on three simple factors:

  • How much money you invest
  • How long it has to grow
  • How rapidly it will grow

By using any or all of those levers, you can influence how your money grows. Let's take a closer look at how you can adjust those levers:

No. 1: Save and invest more

It's obvious, but of course, in general, the more you invest, the more you can amass. The table below shows the different sums you might amass over various periods by investing $5,000, $10,000, or $15,000 annually:

Growing at 8% for

$5,000 invested annually

$10,000 invested annually

$15,000 invested annually

5 years

$31,680

$63,359

$95,039

10 years

$78,227

$156,455

$234,682

15 years

$146,621

$293,243

$439,864

20 years

$247,115

$494,229

$741,344

25 years

$394,772

$789,544

$1,184,316

30 years

$611,729

$1,223,459

$1,835,188

35 years

$930,511

$1,861,021

$2,791,532

40 years

$1,398,905

$2,797,810

$4,196,716

Data source: Calculations by author.

Many of us can't just sock away $15,000 or more each year, but you can still probably invest more than you're currently investing, and you can aim to increase your annual contributions to various savings accounts from year to year.

If you want to get aggressive about it, which is smart for many of us, especially those who have started late or who want to try to retire early, find lots of ways to spend less and consider picking up a side gig to earn a little more -- all to facilitate more investments.

No. 2: Invest for a longer period

The same table, above, shows the incredible power of time. Doubling the number of years in which your money can grow is likely to more than double how much you amass, thanks to the magic of compounding.

If you're not a spring chicken anymore, you may not have 25 or 35 years before retirement, but you can still amp up your savings by saving more each year -- and/or boosting your growth rate.

No. 3: Earn a greater rate of return

The growth rate is the last lever you can tweak. You can't simply produce a high growth rate, though. In general, risk and return are interrelated, with low-risk investments (savings accounts, government bonds) tending to offer low growth rates and high-risk propositions (junk bonds, lottery tickets) offering high (possible) rates.

Consider aiming for solid middle ground, by focusing much of your long-term money on stocks. Over long periods, stocks have handily outperformed bonds, and the stock market has averaged annual returns of close to 10% over long periods. You can hope to do better by carefully selecting a range of individual stocks, but that takes skill and knowledge and a rational temperament. For most of us, it's hard to beat a simple low-fee broad-market index fund or two, such as one that tracks the S&P 500.

The table below shows what a difference the growth rate makes, for annual investments of $10,000:

Growing for

Growing at 6%

Growing at 8%

Growing at 10%

10 years

$139,716

$156,455

$175,312

15 years

$246,725

$293,243

$349,497

20 years

$389,927

$494,229

$630,025

25 years

$581,564

$789,544

$1.1 million

30 years

$838,017

$1.2 million

$1.8 million

35 years

$1.2 million

$1.9 million

$3.0 million

40 years

$1.6 million

$2.8 million

$4.9 million

Data source: Calculations by author.

The tables above not only show how you can double your money, but given enough time and a solid rate of growth, how you might triple or quadruple it, as well!

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on International Stock News

Semiconductor chip on top of piles of mini US and China flags.
International Stock News

Tariff negotiations could derail Nvidia's China business. Here's why I'm not worried about It.

New export controls around China could serve as a serious headwind for Nvidia.

Read more »

A head shot of legendary investor Warren Buffett speaking into a microphone at an event.
International Stock News

Warren Buffett-led Berkshire Hathaway has 21% of its $276 billion portfolio in 1 stock that's up 644% in 9 years

Investors need to know what company this is. Perhaps it deserves a closer look for your own portfolio.

Read more »

Two IT professionals walk along a wall of mainframes in a data centre discussing various things
International Stock News

Amazon just sent a massive warning to Nvidia investors

A new AI investment from the cloud computing leader could signal a shift in its strategy.

Read more »

A woman sits at her computer with her chin resting on her hand as she contemplates her next potential investment.
International Stock News

Countdown till Nvidia's earnings report: What to expect?

Nvidia reports Q1 earnings on May 28.

Read more »

A man in a suit face palms at the downturn happening with shares today.
International Stock News

Which Magnificent 7 company was threatened with fresh tariffs over the weekend?

The news was not well received by investors.

Read more »

Man charging an electric vehicle.
International Stock News

Why June will be a make-or-break month for Tesla

Next month's launch will have huge consequences for Tesla's stock.

Read more »

A head shot of legendary investor Warren Buffett speaking into a microphone at an event.
International Stock News

26.4% of Warren Buffett's $258 billion portfolio is invested in 2 leading artificial intelligence stocks

Let's check out these two AI leaders that Buffett loves and consider whether they're still buys today.

Read more »

Hand with AI in capital letters and AI-related digital icons.
International Stock News

Could Nvidia stock help you retire a millionaire?

The reality is Nvidia should see strong sales growth for quite a while.

Read more »