3 investment ideas that could double my money

The beauty of the stock market is that I can make money in many different ways. The most important thing is to buy the stock and get the value. However, I can also profit from dividend income from stocks, and other ways. As I try to get 100% return on my money, this is my favorite investment idea right now.

Back to the races

The first idea is the growth compounding strategy. This includes me buying growth stock options over time. When I look at the five-year historical return of some growth shares such as Apple, Amazon, Netflix and more, I can forecast using 10% average annual growth rate.

Let me invest £1,000 in a selection of five current UK growth stocks. It may seem like it will take me a decade to double my money. This is wrong. Thanks to the benefit of compounding, it will take just seven years to reach £2,000, assuming a 10% growth rate (which, of course, I know is not guaranteed).

It’s about investing in the long term, so be patient! Clearly, growth stocks are riskier. To potentially enjoy big returns, I have to accept that some of these companies will fail.

Count the money

Another idea I have is to try to double your money by receiving dividends. At first glance it may seem like it will take forever to build rewards.

This is true if I choose to take the dividend and spend it now. But what can speed it up is reinvesting that money to buy more shares. For example, let’s say I invest £1,000 in one share with a 6% dividend yield. I’ll get £60 over the next year (assuming dividends don’t change).

Instead of keeping this £60, if I buy more shares in the company, I will have a price of £1,060. The following year, this made me £63.60!

I think I can pick the dividend stalwarts with an average yield of 6%. This may include stocks such as BT Group and British American Tobacco.

From reinvesting dividends, I can double my money in just over 11 years. I must remember though that the risk is that stock prices fall over this time, which could mean that the value is less than double.

Investment ideas from the pros

Finally, I can use a professional money manager to try and help me achieve above average returns.

This was highlighted again in 2020 when the stock in Scottish Mortgage Investment Trust (SMT) doubles in a calendar year. Of course, the FTSE 100 and other markets are doing well. But it was the smart choices of the fund managers that caused the trust’s value to double over that period.

Last year was a very different story, although the professionals lost their Midas touch (SMT shares fell 34%). But I think it’s clear that this market area has the potential to generate a lot.

I would take £1,000 and split it between traditional trusts like SMT, but also include some private equity exposure such as HarbourVest Global Private Equity.

I aim to put all three ideas this year, using that particular stock.