It sounds so simple – double your money! – but with exchange traded funds (ETFs), patience and some education, it can be done. Here are some ways how.
There are some tried and trusted paths you can take to double your money. By becoming familiar with them, it may help keep you from making impulsive investing mistakes, explains Ken Clark on Investopedia for Yahoo Finance. Here are Clark’s other ideas on doubling your money, along with some of our own thoughts:
- Tried And True. Perhaps the most time-tested way to double your money over a reasonable amount of time is to invest in a solid portfolio that’s diversified between blue-chip stocks and investment-grade bonds. It may not double in a year, but with patience, over time it could. Consider ETFs for the most cost-effective diversification around.
- Contrarian. There are times when some investors just know it’s time to buy, and that time can be when everyone else is selling. This is when the price-to-earnings ratio and the book value for a company are looking oversold and the timing may be right to get in. Consider this along with a trend-following strategy. Our own is to only invest in those areas that are above their 200-day moving averages.
- Safe. Bonds are a steady and slow way to get a safe return. For the uninitiated, zero-coupon bonds may sound intimidating, but there is no re-investment risk and all you do is wait for maturity. Bond ETFs can be a great way for investors to get wide exposure to the bond market at a lower cost.
- Speculation. For some less risk-averse investors, bigger risks can equal bigger payoffs. For those who thrive on taking big risks in the hopes of big payoffs, the markets offer a host of ways to do it: options, short selling, buying on margin, buying penny stocks.
- The Best Way. The 401(k) retirement plan is the way to go, as in many cases your employer matches your contribution – that’s virtually like doubling your money. While this is not glamorous or high-risk, getting an automatic 50 cents to $1 for every dollar you deposit is tough to beat. Read our special 401(k) report for more on this area and the role ETFs can play.
All in all, just remember that there is no “sure thing.” If it were easy to double your money overnight in the market, wouldn’t everyone be sitting on a pile of cash? However you choose to make money in the markets, whether it’s speculation, bonds or 401(ks), always be sure to have a reliable and simple strategy that you can stick to.
For more stories about trend following, visit our trend following category.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.