Doubling the amount of money you earn from working would take a lot of effort. Most of us don’t have that many hours in a day. But the beauty of investing is you can easily double your money (or more) without too much work, as long as you’re patient.
Your primary goal as an investor is to grow the amount of money you start with into a much larger amount. But you also want to do so in a way that doesn’t require more risk than you can stomach.
If you’re looking to double your money, here are four proven ways to invest.
1. Get your full 401(k) match
If your employer offers a company 401(k) match, taking full advantage is probably the easiest way to double your money. Many companies match your contributions dollar for dollar, up to a certain percentage of your salary.
For example, they may match 100% of your 401(k) contributions on up to 5% of your salary. In that scenario, you’re doubling your money before it even gets invested, and it has the opportunity to grow even more. If your employer offers a smaller match — say, 25% or 50% — investing in your 401(k) is still a great way to double your money, even though it will take a bit longer.
Note that a 401(k) is a type of investment account, not an actual investment. You’ll still need to decide how to invest the money. The average 401(k) plan offers between eight to 12 investment options. Two of the most common choices are mutual funds and target date funds.
2. Invest in the S&P 500 for the long haul
Another proven way to double your money over time is to invest in an S&P 500 index fund. These funds use the S&P 500 index as a benchmark and attempt to track its performance as closely as possible. The index is made up of 500 of the largest domestic stocks that together account for more than 80% of the U.S. stock market’s value.
By investing in S&P 500 index funds, you’re betting on the growth of the U.S. stock market. Historically, that’s been a winning bet. In the 92-year period between 1928 and 2019, the S&P 500 index produced positive one-year returns 74% of the time. Over a 20-year holding period, S&P 500 returns have never been negative.
Had you invested in an S&P 500 index fund at rock bottom after the COVID-19 crash of March 2020, you would have doubled your money already. These results aren’t typical, though. Average stock market returns are about 10% per year. At that rate, you could expect your initial investment to …….