3 Proven Ways to Double Your Money | personal finance

(Katee Brockman)

Whether you’re saving for retirement or just trying to build wealth for the future, being strategic with your money can help you maximize your earnings. It’s easier than you think to double your money, and these three strategies can help you increase your savings with little or no effort on your part.

1. Take advantage of matching contributions

If you have access to a 401(k) and your employer offers matching contributions, this is essentially free money. By contributing enough to earn the full match, you can instantly double your retirement savings.

Over time, the employer contribution can add up substantially. Say, for example, he makes $50,000 per year and his employer will match his 401(k) contributions up to 3% of his salary, or $1,500 per year. Let’s also assume that he is earning an average annual return of 8% on his investments.

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At that rate, that $1,500 per year will add up to about $170,000 after 30 years. After 40 years, it would amount to approximately $389,000, and that’s not including his own contributions.

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2. Let compound interest do the work for you

Compound interest it is essentially when you earn interest on your interest. It can help your money grow exponentially over time. When you take advantage of compound interest, you can effortlessly double your money.

For example, let’s say you invest $1,000 right now and are earning an average annual return of 8% on your investments. Even if you don’t make any additional contributions, you’ll double your initial investment in about nine years.

If you want your money to grow faster, you can invest a small amount each month. Let’s say that in addition to your initial investment of $1,000, you also invest $100 per month. Assuming you’re still earning an average annual return of 8%, here’s roughly how much you’d have over time:

  • $2,000 in less than a year
  • $8,500 over five years
  • $19,500 over 10 years
  • $60,000 over 20 years

The more time you spend on your money growing, the more you will earn. After a few decades, you will double your money over and over again.

3. Shop during market downturns

While it may sound counterintuitive, market downturns are one of the better opportunities to buy. This is because stock prices are lower, which not only gives you the opportunity to buy quality stocks at a discount, but also creates more growth opportunities when the market eventually recovers.

If you only invest when the market is up, you are buying when stocks are at their most expensive. You can still earn a significant amount over time, but you’re also limiting your earnings, compared to if you had bought during recessions.

Exactly how long it will take to double your money will depend on the individual stocks you buy, as well as the market as a whole. But the lower stock prices are, the more you can potentially earn when the market recovers.

It is possible to double your money in the stock market, even if you are not an experienced investor. By taking advantage of your employer’s 401(k) matching contribution, investing during recessions, and keeping your money invested as long as possible, you can earn more than you think.

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