If you're looking to double your money in a short amount of time, you'll need to take some risks. Investing in dividend-paying stocks and ETFs is one of the best ways to do this. The rule of 72 is a general rule that says how long it will take to double your money with a fixed interest rate. If you divide 72 by the annual rate of return, it will tell you how many years it will take you to double your investment.
If you're not taking advantage of your employer's 401 (k) contribution, you're missing out on free money. Consider getting a free 401 (k) plan analysis with Blooom to optimize your portfolio for retirement. Many banks have emerged that only operate online, such as Ally or CIT Bank, that pay interest 10 times or more than those of a large bank like Chase or Wells Fargo. You can also keep your savings from the emergency fund in an online account, allowing you to earn more than 2%.
Although the interest rate on USAA's savings accounts is low at 0.1%, you can move most of your savings to other places where you can get a decent return. An index fund based on the Standard & Poor's 500 Index is one of the most attractive ways to double your money. While investing in a stock fund is riskier than a certificate of deposit or bank bonds, it's less risky than investing in a few individual stocks. The S&P 500 is comprised of some 500 of the largest and most profitable firms in the United States, making it a solid option for long-term investing.
Many employers give money to employees just to contribute to their own retirement account. For example, employers may match a small percentage of what you add to the account, so that you contribute 5 percent of your salary and your employer adds another 5 percent. That's the easiest, lowest-risk way to make money, and you still get all the great benefits of a 401 (k) plan. Divide 72 by the annual rate of return to calculate how long it will take to double your money. For example, if you get an annual return of 8 percent, it will take about 9 years to double.
So, the higher the return, the faster you can double your money. Above all, it's important to remember that you don't need to make the riskiest operations (those that are more like gambling than investments) to accumulate fortune. You have high-return options that can limit (but not eliminate) your risk, such as a house, S&P 500 funds, and the 401 (k) counterpart.
