4 Fastest Ways To Double Your Wealth Through Investing and Saving in 2024
Written by
John Csiszar
Edited by
Carly Brashears
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Doubling your wealth through investing and saving can be a tall order, but the longer your time horizon, the more likely you will succeed.
More: 3 Things You Must Do When Your Savings Reach $50,000
If you’re looking to get wealthy fast, however, you’ll have to take some more risks. Which way you should go depends on a number of factors, from your investment experience to your risk tolerance, investment goals and available capital.
If you’re looking to get on the path to building more wealth in 2024, here are some of the options you can take.
Regularly Add to an S&P 500 Index Fund
No less than the “Oracle of Omaha” himself, Berkshire Hathaway CEO Warren Buffett, has often touted the appeal of low-cost index funds for most investors. In fact, Buffett has instructed the trustee of his estate to put 90% of his wealth into index funds after he passes on behalf of his wife. The reason? “There’s been no better bet than America.”
While the U.S. market has its ups and downs, over the long run, it hasn’t lost money over any rolling 20-year period.
Generally speaking, the real value of investing in the stock market is the power of long-term, compounded returns. If you can invest $500 per month at a 10% return for 30 years, you’ll end up with a nest egg of over $1.1 million — but the bulk of those returns will come in the final few years. On a short-term basis, you’re not likely to double your money overnight investing in these large-cap stocks, but the S&P 500 has posted single-year returns as high as 46%.
Invest in Rental Real Estate
Rental real estate is the path to true wealth, according to financial personalities like Jaspreet Singh. If you can generate enough passive income to cover all of your expenses in life, you’ll never have to work again. Of course, it takes a while to get to this level, but if you start small and ramp up, you can use rental real estate to double your wealth. Over time, if you purchase good properties in the best locations, you’ll also benefit from capital appreciation.
One of the main advantages of real estate is that it allows you to use leverage to amplify your gains. For example, imagine that you buy a rental property for $500,000. You may only have to put down $50,000 or less to own it. If the property appreciates by 10% to $550,000, you’ve effectively doubled your investment in a single year, with your rental income ideally covering your mortgage payments and even putting a bit extra into your pocket. This is a simplified example that doesn’t take into account things like taxes and fees, but the principle remains the same.
Prudently Speculate
If you’re really looking to double your money, you might have to get a bit more aggressive with your investments. Of course, with high potential reward comes high risk. If you’re going to dabble in more speculative investments, you’ll have to be prepared both financially and emotionally for the fact that you might lose your entire investment.
Cryptocurrency, for example, has been a battleground over the past decade between those who think it will be a world-changing investment and those who think it’s inherently worthless. With such passionately varied opinions, it’s only natural that crypto is extremely volatile. While you have the potential to double your money quickly with certain cryptocurrencies, you also run the risk of losing everything.
Options are another high-risk, high-reward type of investment that can quickly double in value but also run a high risk of expiring worthless, as about 30% do. Options can also lose money as rapidly as they can earn it. But if you have the stomach and the financial knowledge to trade options, their leveraged nature can provide handsome gains in a short period of time.
Max Out Your 401(k)
Your 401(k) might not seem like it’s a great place to double your wealth, but it’s actually the easiest source of free money that you’re likely to find. Most employers match at least a portion of their employees’ contributions to a 401(k) plan, and that amounts to an immediate 100% return on the money you’ve put in.
Imagine, for example, that your employer matches 100% of the first 6% of the salary that you contribute to a plan. This means that if you earn $50,000 and put in $3,000 to your plan, your employer will kick in another $3,000 automatically. Not only do you immediately double the amount you put into your plan, you also get to earn investment returns on those employer contributions as well. This is why financial advisors typically recommend contributing at least as much to a 401(k) plan to get your full employer match.
Pro Tip: Use Expected Earnings and the Rule of 72
A “back-of-the-envelope” tip for investment returns that advisors have used for years is the “rule of 72.” To use this rule, take 72 and divide it by your expected investment return. This will tell you how long it will take for your money to double in value, using compounded returns. So, for example, if you use the oft-quoted 10% annual return for the U.S. stock market, you should expect your money to double every 7 years or so. If you only expect to earn 4% per year on an investment, it will take 13 years to double your money.
The “rule of 72” is only an approximation, and the higher return you generate, the less accurate the timeline becomes. For example, it takes a 100% return to double your money in a year, but using the rule of 72, you would expect it to double in about three-quarters of a year. But as a general estimate, the math is solid. Use it as a guide when trying to determine just how much of a return you would need to provide the profits you desire — and whether or not reaching for that return is realistic.
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