Doubling your savings is an exciting and realistic goal to aim for. There are several strategies that can help you achieve this. Start exploring these five tips below to get there fast.
1. Earning the old fashion way.
The classic way to double your savings over a reasonable amount of time is to invest in a solid, non-speculative portfolio, which is diversified between blue chip stocks and investment-grade bonds. Your money will not double in a year, but it will do so eventually, in a low-risk manner. The average growth is about 8% a year.
2. Buying through slumps.
In brief, this tip is the contrarian way. When everyone is getting out, you get in. The stock prices of great companies occasionally go through slumps. Smart inventors, then, go on a buying spree. Of course, there is no point in buying garbage stocks. Just that, sometimes, good investments are oversold and it creates opportunity for wise investors.
3. Going the safest route.
If you have no tolerance for risk, the safest way to double your savings is through bonds. The U.S. savings bonds are a classic example. Note that zero-coupon bonds are better than standard coupon bonds. With the former, there is no reinvestment risk.
4. Super sizing your money
Slow and steady is ideal for some people, but others find it too boring. A faster way to super size your money is through margin trading or penny stocks. This can grow your savings at an accelerated phase. Stock options can be used to speculate on any company’s stock. This kind of investment is risky, so be careful. Do your homework before giving it a try.
5. Investing in a retirement plan
The best way to double your savings is to invest in a 401(k) with your employer matching your contributions. It is not as exciting as trading stocks but it is hard to beat an automatic $0.50 for every dollar you save. Alternatively, you can invest in a traditional IRA or a Roth IRA. There is no company match, but the tax benefit alone is substantial.