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Doubling your money is not an easy task for most people. Sure, there are several ways, but are there any efficient & faster ways to do it?
In this article, we will explore 3 ways to double $5,000 dollars starting from less risky to more risky ways.
The methods I am about to share with you are based on the assumption that you already have $5,000 dollars lying around and want to double them.
So, without any further ado, let’s get started!
Method 1: Invest your $5,000 (Safe & Slow)
Investing is a sure-shot way to increase your money within a given timeframe. There are many types of investments that you can follow to keep growing your money steadily.
In this method, we will learn about some of the safer & less risky options to double $5,000 dollars. However, note that the lesser the risk, the slower the returns.
Let’s take a look at some of the ways to double $5,000 dollars risk-free—
NOTE: Depending on your country, these financial instruments might or might not be available to you OR they might not be called the same as mentioned.
1. ETFs
ETF stands for Exchange Traded Funds. It is a risk-free investment option. It is a type of security that tracks an index, a commodity, or a sector, and it can be bought or sold as a normal stock would.
A very well-known ETF is the S&P 500 that you may have heard of before. It tracks the market cap of the top 500 publicly-traded companies in the U.S.
If we look at the average annual returns of the S&P 500, it hovers around 8% – 12%.
Now, if you were to invest your $5,000 dollars in the S&P 500 ETF at the annual rate of 10%, you could double your money in just 8 years.
Here’s a table showing the compound interest gained every year till it doubles—
| Years | Future Value (in USD) |
|---|---|
| Year 0 | $5,000.00 |
| Year 1 | $5,500.00 |
| Year 2 | $6,050.00 |
| Year 3 | $6,655.00 |
| Year 4 | $7,320.50 |
| Year 5 | $8,052.55 |
| Year 6 | $8,857.81 |
| Year 7 | $9,743.59 |
| Year 8 | $10,717.94 |
Here’s how to invest in ETFs—
Step 1: Create a brokerage account
Before you can start investing, you’ll be needing a brokerage account in order to use it to buy and sell stocks. There are many brokers who provide commission-free trades. You can go with Charles Schwab, TD Ameritrade, E*Trade, to name a few.
Step 2: Choose the right ETF(s)
After successfully opening your brokerage account, you have to choose the right funds to invest in. As mentioned above, you can go with an S&P index fund.
Kindly do thorough research before investing your hard-earned money.
Step 3: Sit back, relax, and watch your money grow
Now that you’ve invested your money into an S&P index fund, you just have to sit back and forget about it.
Don’t mind the occasional dips and rises in your portfolio value, that’s totally normal. Just be patient and your investments will grow slowly.
As we calculated above, on average you’ll see 10% annual growth. According to that, if you invest $5,000 dollars, it will double to $10,717.94 within just 8 years.
2. Mutual funds
A type of financial instrument that includes a pool of money collected by investors to invest in securities like bonds, stocks, and other assets.
Here’s how you can double $5,000 dollars by investing in mutual funds—
Step 1: Open a brokerage account
The first step is to open a brokerage account to be able to buy and sell funds.
If you take part in a retirement plan at work, like 401(k), then you don’t need to open an account, you’ll already have access to mutual funds.
If not, your can try Charles Schwab, TD Ameritrade, E*Trade, as mentioned above. But keep in mind, you’ll not get tax benefits by joining an online broker like these.
Step 2: Choose the right fund(s)
Now you need to choose a fund to invest your $5,000 dollars in. We’ll be going to be using the index fund S&P 500 as an example for mutual funds as we did in ETF.
You can go with any S&P 500 fund by Vanguard, Fidelity, Schwab, etc.
As mentioned in the ETF section, you can get similar returns here too, i.e., around 10% annual returns.
Step 3: Sit back, relax, and watch your money grow
Just like in ETF, you just watch it grow over time. No need to worry about small dips and gains, keep your money invested and it will grow in double amount eventually.
If we run the calculations, you can double your $5,000 dollars at an annual return of 10% within 8 years of the initial investment as we saw in the example above.
3. Invest in the stock market
Investing in the stock market is simply buying shares of publically listed companies, which means you own a little of that company and hope for it to grow so that you may also profit from it.
NOTE: Investing is different from trading in the stock market. We will learn about trading in the coming sections.
In order to get started with investing in the stock market, you’ll need a brokerage account. You can work with the same brokerage account as we discussed in the previous sections.
Step 1: Open a brokerage account
Before you can start investing in the stock market, you’ll need an online brokerage account.
There are many options to choose from, some of them are—Merrill Edge, E*Trade, Tradestation, and more.
Please do some research about the brokerages before creating an account with them. Make sure their commission rate is lower and they have been in the game for longer.
Step 2: Learn about the stock market
After creating a brokerage account, you’ll need to gain some knowledge about the stock market.
Don’t just start buying stocks from popular companies right away. Make sure to do thorough research about the company you are choosing to invest in.
You can watch YouTube tutorials, buy courses on Udemy, Coursera, etc. Read online about it. There are plenty of sources to learn from.
Step 3: Start investing
Now, that you have gained enough information about the stock market, it is now time to start investing in some shares.
Make sure to choose the right companies with long-term projected gains. As of now, you can try researching companies like Tesla (TSLA), Johnson & Johnson (JNJ), Apple (AAPL), Alphabet (GOOGL, GOOG), Amazon.com (AMZN), etc.
Also, it is important to diversify your investment portfolio. You may already have heard that you should not put all your eggs in one basket.
The same applies to any kind of investment plan. Make sure to invest small amounts of your money in different company shares. So that you would have a better chance of not losing everything if one or two companies’ shares go down.
Now let’s talk about how you can double your $5,000 dollars by investing in the stock market.
The average return of the top 500 companies in the US within 1 year is around 10%.
Assuming you have invested your $5,000 spread across a bunch of companies which on average give you a 10% return every year, you will be sitting at $10,717.94 in just 8 years. 🙌
Method 2: Invest your $5,000 (Risky & Fast)
1. Trade in the stock market
Trading in the stock market is a risky job to do. If you don’t have the proper expertise and don’t know the nitty-gritty of the market movements, you should learn about all the basics first.
If done right, you can double your money as fast as you can imagine. On the flip side, you can lose all of your money as fast as you can imagine too.
So be mindful and learn everything you can before you proceed with trading.
Step 1: Open a trading account
The first step is to open a trading account. There are many online brokers you can create an account with, including, but not limited to, E*Trade, Tradestation, Merrill Edge, Fidelity Investments, and more.
Please do your research and choose the best online broker for your needs.
Step 2: Learn to analyze the market
After you’ve opened a trading account, you now will have to learn to analyze the market as thoroughly as possible.
There are a lot of places, both online and offline, where you can learn plenty about the stock market. You can start with YouTube videos, Udemy courses, books on the stock market, and so on.
Step 3: Practice first
Now, after you’ve learned the nitty-gritty of the stock market, you would now be tempted to get your feet wet and start trading. But trust me, it is not a good idea.
You should first start practicing what you learned about the market with a demo or practice account online. Investopedia’s Stock Market Simulator is a good place to get started.
Step 4: Start trading
Now, after you’ve practiced enough on your demo account, it is now time to start trading for real on the platform of your choice.
A good day trader earns about 6% – 10% returns in a month.
If we assume the average return rate to be 8% per month, your $5,000 investment would become $5,400 by the end of the first month.
If you keep going without any hiccups, ideally, you could double your $5,000 dollars and get to $10,794.62 within 10 months!
Method 3: Start a business
There are countless businesses you can start with a $5,000 dollars investment. We will be discussing a few of them in this article.
Let’s start with the first one—
1. Start a dropshipping store
Dropshipping is a business model in which you create an online store and sell products directly to your customers, i.e., you don’t have to own any inventory. The products are shipped from a third-party supplier to your customers directly.
Starting your own dropshipping store that could help you double $5,000 is definitely possible.
Let’s take a quick look at how you can start your own dropshipping store using Shopify—
Step 1: Choose a niche
The first step to making money with dropshipping starts with choosing a niche. Think about what kind of products you would want to sell to a specific audience. For instance, “mobile gears for travelers”, or “gift items for couples”, etc.
Here’s a list of some niches that you can choose for your dropshipping business (source: Shopify):—
- Health and personal care
- Wardrobe and accessories
- Kitchen and grocery
- Home and bedroom
- Office products
- Tools and home improvement
- Camera and cellphone accessories
- Gaming
- Car accessories
Step 2: Find a supplier
Once you’ve finalized your niche, it is time to find a supplier.
There are many online websites that bridge the gap between suppliers and retailers. One of the most popular and the most used among them is Alibaba and also its customer-centric counterpart Aliexpress.
Step 3: Create your store
The next step is to create your store using Shopify (or any other similar platform).
Here’s a video showing how you can create a dropshipping store from start to finish, step by step:—
Step 4: Advertise & promote your store
In order to get your newly created store in front of interested people, you’ll have to promote your store using social media or Facebook ads, etc.
You can start with Instagram shoutouts and then move on to scaling your store with Facebook ads. That’s what most successful dropshippers have done to make a lot of money with dropshipping.
Most of your $5,000 dollars are going to be invested in ads themselves.
You can learn to run ads on these platforms by yourself with the help of YouTube videos or you can find courses on learning platforms like Udemy, Skillshare, etc.
Or, the second option is to hire people to create and run ads for you.
NOTE: Make sure you hire the right people to promote your store and not the first person you find on Fiverr. Most of such freelancers don’t do a good job, so it is recommended that you learn it yourself, but if you don’t have time or you don’t want to do it, you should consider hiring from marketplaces like Upwork & Freelancer.
Step 5: Rinse & repeat
Once you’ve started running ads and gotten sales. It is time to double down and put more money into the products that are selling the most.
You can get your $5,000 investment back in no time and then whatever money you make after that is profit.
It depends on the way you spend your $5,000 dollars, but you can double it as fast as within 15-30 days.
Final thoughts
Congratulations on getting to the end of this article!
By now, you have learned so many ways to double $5,000 dollars, be it the safe and risk-free methods or fast but a bit risky ones.
If you have any queries regarding anything, please feel free to comment your thoughts down below.
Tell us which method you think is good for you and why. See you in the next one. 👋
