Content of the material
- How to Double Your Money With Real Estate
- 1. Rent By Room
- 2. Fix and Flip
- 3. Short-Term Rentals
- 4. Buy and Hold
- 5. Use Property Investment Data
- The quickest way to double your money
- 3. The Safe Way
- The Rule of 72
- Can an Investor Use All Five Ways in the Quest to Double Ones Money?
- How to Double $10k Quickly
- How To Use the Rule of 72 To Estimate Returns
- 5. Trade options
- Rule of 72 vs. 70
- 2. Invest in an SP 500 index fund
- What is the Best Way to Double Your Money?
- How To Double Your Money
- Five ways to Double Your Money
How to Double Your Money With Real Estate
One of the best ways to double your money is by investing in real estate. Nearly all real estate investments double in time because properties naturally appreciate in value.
There are five ways to double your money with real estate:
Rent By Room
Fix and Flip
Buy and Hold
Use Property Investment Data
1. Rent By Room
If you’re renting out a residential property to tenants, you might consider renting out the property by the room—rather than renting the entire house to a single tenant. This is an excellent way to increase your cash flow and maximize your property’s return.
Some markets are well-suited for renting out individual rooms. The best markets are college towns and high-density urban areas, and these locations see a greater number of tenants seeking short-term leases, or where tenant turnover is higher.
The higher rent might turn off some tenants. You could make the rental more attractive by improving the property or offering utility-free living (these are good properties for installing solar panels.
2. Fix and Flip
A fix and flip is one of the best ways to generate high returns in real estate. It also enables you to generate a high return in a very short amount of time.
The hardest part about executing a fix and flip is finding ways to keep the renovation costs down. It’s best if you can learn how to do basic renovation work yourself—like flooring, painting, or landscaping.
You should only hire contractors to do highly specialized work, like roofing or plumbing. When you’re hiring a contractor, find a balance between best-quality and lowest cost. You don’t need to turn the home into a Bel-Air mansion—you only need to make it nice enough so that it sufficiently improves the value of the home.
3. Short-Term Rentals
Short-term rentals are often more lucrative than long-term rentals. Short-term rentals enable you to charge higher prices more frequently. This is especially true of vacation rentals.
It’s possible that a vacation rental can generate as much money in one week as a leased property can generate in one month. If you own a property in an ideal location, you can make a ton of money by renting it out to travelers.
The tricky part about short-term rentals is that you’ll have to do cleaning and repairs more frequently—and if you don’t carefully manage these costs, they can siphon quite a bit of your revenue.
As with doing a fix and flip, you’ll want to find a middle ground for hiring cleaning/repair services or property management services. A property management company might take between 10% and 25% of your revenue, but they’ll also perform the necessary advertising and administrative work that you need to keep your bookings high.
4. Buy and Hold
“Buy and hold” is the most traditional real estate investing strategy. You’ll buy a property and hold it for an extended period until it appreciates. Your profit will depend on how much your property appreciates.
The key to buying and holding is finding a property in an up-and-coming neighborhood, especially those undergoing redevelopment.
Buy and hold is a long-term investment strategy. You should prioritize this strategy if you’re trying to save for retirement and looking for steady and reliable returns. But it’s also a good diversification option for short-term investors—it’s safe to employ one or two buy and hold properties to counterbalance a string of fix and flips. Chris Nddie, Co-Owner & Marketing Director at ClothingRIC, suggests that “you can potentially double your money if you find a good rental property and keep it for a long time. You’d not only be able to earn monthly cash flow, but you’d also benefit from any real estate asset appreciation”.
5. Use Property Investment Data
Property investment data can help you make informed investment decisions. Investment data will give you insight on:
Pricing trends for national and local markets
The demographics and interests of homebuyers
Federal and state legislation that may affect the housing market
Keeping up with this data is an everyday task for real estate investors. Get in the habit of checking real estate news every day before you get the day started or go to sleep. You can study market trends on numerous websites, like Zillow.com or Realtor.com. Bookmark them and visit them often.
Additionally, you can use a real estate calculator to help you budget for your real estate investments.
Property investment data can give you the foresight to make wise investment decisions—and to double your money.
The quickest way to double your money
If you’re trying to double your money in under a year, your best bet is searching for ways to decrease your spending and increase your income. These are activities where you have greater control and short term change is possible.
Sure, you can also consider investing in cryptocurrencies or angel investments, but the risk is always a lot higher and we wouldn’t recommend putting your life savings into volatile investments.
However, if you aren’t in a rush and are looking for long-term solutions, investments that work when you sleep and offer high rates of return are the best solution.
With something like P2P investing, you don’t need to research any companies or rebalance your portfolio, and returns are a lot higher than other investment vehicles such as savings accounts, bonds and even the stock market.
Setting up an account is free, quick and easy – and with Swaper you’ll get your returns deposited in your account every month.
3. The Safe Way
Just as the fast lane and the slow lane on the highway will eventually get you to the same place, there are quick and slow ways to double your money. If you prefer to play it safe, bonds can be a less hair-raising journey to the same destination.
Consider zero-coupon bonds, for example. For the uninitiated, zero-coupon bonds may sound intimidating. In reality, they’re simple to understand. Instead of purchasing a bond that rewards you with a regular interest payment, you buy a bond at a discount to its eventual value at maturity.
One hidden benefit is the absence of reinvestment risk. With standard coupon bonds, there are the challenges and risks of reinvesting the interest payments as they're received. With zero-coupon bonds, there's only one payoff, and it comes when the bond matures. On the flip side, zero-coupon bonds are very sensitive to changes in interest rates and can lose value as interest rates rise; this is a risk factor to be considered by an investor who does not intend to hold a zero-coupon bond to maturity.
Series EE Savings Bonds issued by the U.S. Treasury are another attractive option for conservative investors who do not mind waiting a couple of decades for the investment to double. Series EE Savings Bonds are low-risk savings products that are only available in electronic form on the TreasuryDirect platform. They pay interest until they reach 30 years or the investor cashes them in, whichever comes first. Although the current rate of interest is a paltry 0.10% for bonds issued between November 2021 and April 2022, they come with a guarantee that bonds sold now will double in value if held for 20 years. The minimum purchase amount is $25, while the maximum purchase per calendar year is $10,000. Savings bonds are exempt from state or local taxes, but interest earnings are subject to federal income tax.
The Rule of 72
The Rule of 72 is an easy strategy you can use to determine how long it will take for an investment to double based on a fixed rate.
To use this method, all you have to do is take the number 72 and divide it by the rate of return you expect to receive. The number you get back is a rough estimate of how many years it’s going to take for the investment to double.
Here’s a good example: Let’s say you invest in a specific index fund known as the Mid-Cap Growth Fund from T. Rowe Price (RPMGX), which has returned a whopping 14.91% for investors over the last 10 years. Using the Rule of 72, you would find this fund might let you double your money in 4.82 years. That’s pretty amazing if you ask me.
But all funds are not created equal. Imagine for a moment you invested in VanEck Global Hard Assets (GHAAX) instead, which has featured an average return of .67% over the last 15 years. Using the Rule of 72, you would probably be shocked to find that you could double your money with this fund in 107 years. Obviously, that is not going to do you much good!
With all this in mind, one problem with the Rule of 72 is the fact that, the higher the rate of return is, the less accurate it becomes. This is due to the fact that, by and large, short-term investment returns are incredibly volatile and hard to predict. With that in mind, my suggestion is you never use the Rule of 72 as a “hard” rule. Instead, use it as a rough estimate of what you may be able to earn on an investment.
Can an Investor Use All Five Ways in the Quest to Double Ones Money?
Yes, of course. If your employer matches contributions to your retirement plan, take advantage of that perk. Invest in a diversified portfolio of stocks and bonds and consider being a contrarian when the market plunges or rockets higher. If you have the risk appetite and want some sizzle on your steak, allocate a small portion of your portfolio to more aggressive strategies and investments (after doing your research and due diligence, of course). Save on a regular basis to buy a house and keep the down payment in a savings account or other relatively risk-free investment.
How to Double $10k Quickly
If you have $10k to invest and want some quick returns, investing in websites might be your best option.
For example, my personal finance website now makes thousands of dollars each month in passive income.
You can purchase a website from sites like Flippa or EmpireFlippers to start making money online.
How To Use the Rule of 72 To Estimate Returns
Let’s say you have an investment balance of $100,000, and you want to know how long it will take to get it to $200,000 without adding any more funds. With an estimated annual return of 7%, you’d divide 72 by 7 to see that your investment will double every 10.29 years.
Here’s an example of other rates of return and how the Rule of 72 affects your investment:
However, the calculation isn’t foolproof. If you have a little more time and want a more accurate result, you can use the following logarithmic formula:
T = ln(2) / ln(1+r)
In this equation, “T” is the time for the investment to double, “ln” is the natural log function, and “r” is the compounded interest rate.
So, to use this formula for the $100,000 investment mentioned above, with a 6% rate of return, you can determine that your money will double in 11.9 years, which is close to the 12 years you'd get if you simply divided 72 by 6.
Here's how the logarithmic formula looks in this case:
T = ln(2) / ln(1+.06)
If you don’t have a scientific calculator on hand, you can usually use the one on your smartphone for advanced functions. However, the basic calculation can give you a good ballpark figure if that’s all you need.
5. Trade options
Trading options is one of the fastest ways to double your money – or lose it all. Options can be lucrative but also quite risky. But to double your money with them, you’ll need to take some risk.
The biggest upsides (and downsides) in options occur when you buy either call options or put options. You could make two, three or four times your money or more. Here’s a quick overview of the two major kinds:
- A call option gives you the right, but not the obligation, to purchase a stock at a specific price by a specific date, at the option’s expiration.
- A put option gives you the right, but not the obligation, to sell a stock at a specific price by a specific time, at the option’s expiration.
You’ll pay a price to own an option contract, and that premium could increase many times in value. The downside is that the option could expire completely worthless. So you won’t want to risk all your money on the single throw of the options dice.
Traders also have the choice of lower-risk but less-lucrative options strategies, too. And while you’re at it, there’s no reason not to minimize your trading costs by going with a top broker.
Rule of 72 vs. 70
The Rule of 72 provides reasonably accurate estimates if your expected rate of return is between 6% and 10%. But if you’re looking at lower rates, you may consider using the Rule of 70 instead.
For example, take our previous example of a 2% return. With the simple Rule of 70 calculation, the time to double the investment is 35 years—exactly the same as the result from the logarithmic equation.
However, if you try to use it on a 10% return, the simple formula gives you seven years while the logarithmic function returns roughly 7.3 years, which has a wider discrepancy.
As with any rule of thumb, the Rules of 72 and 70 aren’t perfect. But they can give you valuable information to help you with your long-term savings plan. Throughout this process, consider working with a financial advisor who can help you tailor an investment strategy to your situation.
2. Invest in an SP 500 index fund
An index fund based on the Standard & Poor’s 500 index is one of the more attractive ways to double your money. While investing in a stock fund is riskier than a bank CD or bonds, it’s less risky than investing in a few individual stocks. Plus, the S&P 500 is composed of about 500 of America’s largest and most profitable firms, so it’s a strong option for long-term investing.
The S&P 500 also has an attractive long-term return, averaging about 10 percent annually over long periods. That means that, on average, you’ll be able to double your money in just over seven years. That said, the return in any single year is likely to be much different – higher or lower – than the average. And the S&P 500 can go through long losing streaks too. For example, the index had a negative return during the 2000s. The S&P 500 made up for it in the 2010s, returning 252 percent – more than tripling.
It’s easy to buy an S&P 500 index fund and you don’t need a lot of expertise to invest this way.
What is the Best Way to Double Your Money?
Depending on your risk tolerance, the best way to double your money is through the stock market or real estate assets.
These asset classes are extremely reliable and have been proven to make you money over the long haul.
While these methods will require some patience to double your money – it’s well worth it.
How To Double Your Money
The Rule of 72 teaches us that a wonderful investment that produces high returns will help double your money fast.
I like to target an average annual growth rate of 26%.
This means my money will double every 3 years. But you can’t get these high returns with just any investment. You have to pick the right companies that will generate great returns year over year.
To get a great return on your money, first, you have to learn how to invest. Join me at my next Free Investing Webinar to learn, not only the basics of investing but also know how you can find incredible companies that will give you that 26% annual return.
Once you know this, you’ll be able to experience the magic of compound interest for yourself and double your money in no time.Phil Town
Phil Town is an investment advisor, hedge fund manager, 3x NY Times Best-Selling Author, ex-Grand Canyon river guide, and former Lieutenant in the US Army Special Forces. He and his wife, Melissa, share a passion for horses, polo, and eventing. Phil’s goal is to help you learn how to invest and achieve financial independence.Summary
Article NameThe Rule of 72: Learn How To Double Your Money with Compound Interest DescriptionUse The Rule of 72 to make better investing choices by figuring out how long it takes investments to double. Start benefiting from compound interest now! Author Phil Town Publisher Name Rule One Investing Publisher Logo
Five ways to Double Your Money
Once you’ve determined your goals and timeline, and assessed your risk tolerance, you can fine many strategies online to double your money. So, work with your advisor, and consider these.
- The Rule of 72: Every investor should know the Rule of 72. It’s a classic investment tool that can help you gauge how long it will take for an investment to double in value if its growth compounds annually. Just divide 72 by your expected annual rate of return. The result is the number of years it will take you to double your money. The higher the growth rate, the less time it will take to double your investment. Examples are: 72 / 2% growth = 36 years, 72/4% growth = 18 years, 72-20% growth = 3.6 years. The estimate is less accurate for very high return rates.
- The slow and steady classic way: This means investing your money in a solid, balanced portfolio that’s diversified between blue-chip stocks and investment-grade bonds. Some advisors are rethinking the balance right now, given all the market volatility, but most investors still work with this model. So, talk to your advisor about your best options and asset mix because there may be ways to improve on the traditional model while protecting you in these uncertain times.
- Bond investing: A good portfolio should have a diversified mix of stocks and bonds. That will protect you if there’s a recession or a company that you’ve invested in doesn’t do well. Bonds don’t generate very high returns, but they’re safer than individual stocks and their returns are usually consistent. So, this is a very safe, conservative strategy and rates are slowly climbing again. There are a variety of bond options, so ask your advisor about them and what would provide the best mix in your portfolio.
- Buy oversold stocks: Many stocks can be good to buy when everyone else is getting out. You need to know what you’re doing to play this game because you don’t want to end up with garbage stocks that waste your money. There are times when good investments are oversold, which then presents an opportunity for investors who have done their homework. Valuation metrics, such as price-to-earnings ratio and book value, can help you gauge whether a stock has been oversold, but you’ll probably need your advisor’s help to find and interpret those to get the best value for your plan.
- Invest in company pension plans, RRSPs, and TFSAs: One of the best ways to grow your money is to maximize your contributions in your company pension plan, if it still has one and your employer matches, or maximizing the annually allotted allocation that you can put in a registered retirement savings plan (RRSP) or tax-free savings account (TFSA). If you haven’t used those yet, check with your advisor or the Canada Revenue Agency about how much you can invest as there are annual and overall limits. But, the earlier you start, and the more you maximize your contributions, the more that compounding interest will work for you and double your money over the longer-term.
- Start a side business: You can increase your income, and double your money, by starting a “side hustle” in something that you enjoy and may already do in your spare time. This could mean selling some of your skills or the results of your hobbies, like woodworking, writing, crafts, or knitting. If you maximize your social media and marketing to sell what you produce, and write off the expenses at tax time, you can save and invest all that you earn and soon see your money start doubling.