- Choosing the right investments is critical to building wealth.
- With the right strategy, you don’t need to worry about how market crashes will affect your investments.
Investing in the stock market can be challenging. There are seemingly endless investment opportunities, the stock market is prone to volatility, and choosing the wrong stocks could destroy your long-term savings.
Fortunately, there are ways to make your money grow with very little effort. With these three strategies you can maximize your profit potential while limiting your risk.
1. Invest in S&P 500 ETFs
Some investors enjoy picking stocks and researching different companies, while others are not comfortable with it. If you fall into the second category, index ETFs can be a fantastic option.
Index ETFs are collections of stocks bundled into a single investment that track certain stock market indices, such as the S&P 500. When you invest in an S&P 500 ETF, you are investing in all of the stocks within the S&P 500 itself.
If you have enough time, you can easily double your money with this type of investment. Historically, the S&P 500 has had an average return of around 10% per year since its inception. This means that while the index has experienced significant volatility over the years, the record highs offset the dips, resulting in returns of around 10% per year on average.
So if you invested $ 10,000 today, how long would it take to double your money? If you didn’t make additional contributions and had an average annual return of 10%, you would reach $ 20,000 in savings in about 8 years.
Also keep in mind that S&P 500 ETFs are a “set it and forget it” type of investment. So all you have to do is invest your money and then sit back and wait.
2. Keep your investments as long as possible
While some investors use short-term strategies to make money (such as day trading), these tactics can be extremely risky. And often they look more like a game of chance than a real investment.
One surefire way to generate wealth is to buy solid investments and hold them for the long term. If the companies you invest in are strong, they will likely grow over time. As they grow, their stock prices should rise too, and your portfolio will appreciate in value.
If you’re investing long-term, you don’t have to worry about stock market volatility either. Strong companies are more likely to weather market turmoil and their prices should rebound. If you fill your portfolio with strong stocks, you can be sure that your investments will bounce back no matter what the market does.
Investing in the stock market can be scary. But with the right strategy, you can easily double your money and increase your savings significantly.
The article 2 Best Ways to Double Your Money first appeared on The Motley Fool Germany.
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This article was written in English by Katie Brockman and on 7/14/2021 at Fool.com released. It has been translated so that our German readers can take part in the discussion.
Motley Fool Deutschland 2021
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