October 2, 2019

(upbeat music) – How’s is goin’ today, guys? So today we’re going to be talking about how to double your money. Now I’m gonna be honest with you guys. For those of your who think
this title sounds familiar, It’s because I already did this video. But this was when I was kind of experimenting with my channel, and as a creator it’s tough because you’re trying to
deliver the information in the best way possible. So I had made the mistake of
just doing a vlog type video where I kind of recited
what I was going to say and just recorded the information that way because in my mind I was like
well, this must be better because it’s less filler material and more of the actual facts. But at that point it’s a very
boring and robotic video. And despite the fact that it
was getting a lot of views, I just was bothered by it
because I’m like you know what? This isn’t my style. This isn’t why I started YouTube. I didn’t start a YouTube
channel to read off a script. And I really appreciate you guys for calling me out on that, because you guys did
not hesitate to tell me that I was really, really screwin’ up. And I will never go back
to doing that again, so don’t worry about that. But because I kind of
wanted to start over here, I decided to just redo this video. So for those of you who
have seen it already, I apologize about the repetition, but just for my own
reasons I wanted to redo it because I just wasn’t
happy with that video. And after watching it a
couple times I’m like, you know what? This is not interesting. This is just boring. At that point you might as
well just read an article. What’s the point of watching a video if someone’s just gonna basically
read information to you? So time for a redo of this video. I appreciate those of you who are watching it for a second time. Maybe you’ll grab
something else out of it. But how to double your money. There’s basically four ways people do this through investing. And there may be some
variations of these ways that may not fall under
these exact categories, but they’re close enough, so I’m breaking it down into
four different common ways people do this. I’m gonna tell you basically
how much time it takes relatively to do these things
and these are all basically it takes a different amount of time based on how much risk
you’re comfortable with. So number one is compound
interest plus time. So basically this is when you invest in long term investments
that compound over time. So this is when your interest
earns you more interest. I know I’ve done a lot of videos about compound interest lately. So you probably have heard this if you’ve been watching
videos on my channel. But basically I’m just gonna
go through one quick example which is blue chip dividend stocks. For those of you who don’t know, blue chip stocks are basically the stocks of the well established companies. Basically the titans of the industry. They’re usually the top
three of their industries. So they are companies
that have been around for a very long time and they are their leaders
of their actual industries. So as a result these stocks
are relatively low risk, so they don’t have much movement. So basically what they
do is they pay dividends as a way to reward shareholders
and keep them around. So this is a regular
quarterly cash payment that they pay out. And one way to take advantage
of compound interest is to take those dividends and reinvest it back in stock of that company. So that way those
dividends that you earned will earn you more
dividends in the future. Also known as interest
on interest, basically. You’re earning dividends from dividends. So this is one of the very
common ways people take advantage of compound interest. So basically a common way or
a common investing strategy is to invest in blue chip stocks as well as investment grade bonds. Basically blue chip stocks are
a little riskier than bonds so you’re kind of, you know,
diversifying a little bit to kind of mitigate some
of that risk out of there. But you could absolutely, if you’re a young person especially, go all in on blue chip stocks. That’s not a bad strategy either. But let’s talk about this 50/50 strategy. It’s a very common
strategy people recommend. So basically on the last
100 years on average blue chip stocks have paid out 10% And on average investment
grade bonds have paid out 6%. Now guys remember this
is based on 100 years of smoothing of that data. So I’m not telling you
that you’re gonna see a 10% return over the next
10 years and a 6% return over the next 10 years, this is based on 100 years of data. So there were a lot of
times when we were seeing more than 10% or a lot less than 10%. Or more than six or a lot less than six. But understand that if you’re
investing very long term that might be a figure you can rely on. But in the short term,
even 10 or 20 years, this figure may be out of whack. But I’m going on 100 years of data. So I wanted to explain that to you guys. But based on this if
you have a 50/50 split of blue chip stocks and
investment grade bonds you would have roughly an 8%
return on your investment. And if you have an 8% return you would double your
money every nine years. So if you follow this strategy
of investing in basically blue chip stocks and
investment grade bonds you could foreseeably double
your money every nine years if that trend continues and we’re seeing roughly those returns
over the next nine years. But this is looking at basically
a larger amount of time. So we would be more likely to
see you doubling your money every nine years if you look at it over many, many decades, basically. So number two is the Warren
Buffett investing strategy. This is a great strategy as well, guys. This is basically following
the concept of being greedy when others are fearful. Anyone who’s heard of Warren Buffett has definitely heard of
that quote of his before. Basically be fearful
when others are greedy. Be greedy when others are fearful. Essentially you don’t
want to follow the market. You want to do the exact opposite of what everyone else is doing. So basically you want to invest at the maximum point of pessimism or basically invest during a bear market when prices are scraping the bottom and everyone’s selling
and everyone is panicking, you want to be greedy when everyone else is
being fearful and selling. So while the price of a stock falls, the value of the actual stock does not. Basically, price is a factor of the supply and demand of that stock and when we’re in a bear market, everyone and their brother
is selling those stocks and that pushes pretty much all
of the stocks down in value. While the actual value of those stocks or the value that piece of
ownership of that company does not change. So when you recognize that we’re in a time when the actual value is
out of whack with the price, that’s a great time to buy and there are fantastic opportunities to double your money
when stocks go on sale in a bear market. So bear markets provide easy opportunities for investors to double their money. And I just want to provide you guys with one example here, okay? Now this is basically if you
timed the market perfectly which is absolutely impossible to do. So I’m not telling you guys
that you would have the ability to know exactly when the
market was gonna bottom out, but if you bought at a time
when the market was low, we’re looking at the S&P 500 Index. It bottomed out on March ninth
of 2009 closing at 676.53, and basically a little
over two years later, basically two years and one month later, the S&P 500 Index was at 1363.61, or a 102% return on
your money in two years. So somebody who invested in a bear market at the maximum point of pessimism when everyone was selling,
when everyone was panicking. If you buy at that point
you could double your money in a much shorter amount
of time than you would basically buying during,
basically just buying across different time periods. The best way to do strategy number one is basically setting aside
a certain amount of money and buying each month, that
way you’re taking advantage of dollar cost averaging. That way you’re basically
lowering the average price paid per share because
you’re buying it high, buying it in the middle and buying it low. I wouldn’t recommend a lump sum investment because you might actually buy high and that could lower your returns. But anyway I just wanted
to throw that in there. The only thing I’m going
to say about that though is that you don’t want
to try to time the market and wait for a bear market,
because you could miss many, many years of good
returns from a bull market. So honestly your best strategy
is to just consistently invest a little bit of money over time. But I just wanted to point that that out as a great way you can double your money is by investing heavily in
stocks during a bear market. The other thing you can do if you’re somebody who’s
investing in that 50/50 strategy if you feel that stocks are
significantly undervalued, you could basically
balance out your portfolio and go 75% stocks, 25% bonds. So sell some of your bonds
that have held their value and buy some of the stocks
that are under-valued at that point, but take advantage when those stocks return to normal values. So number three is gambling
with speculative bets. This is the way a lot of people
try to double their money. Some people are successful at
it, a lot of people are not. Many who are looking to
double their money fast are actually speculators
and not investors. And what I mean by that is that you are making high risk bets
with high returns possible. As a speculator you’re not investing on
the value of a company. You’re basically investing on a hunch or you feel that this will
go up in value significantly in the future. The best way to explain this is you’re investing based on
what you think will happen, not what is happening right now. So that is why when you look at something like the The
Intelligent Investor, he totally, Benjamin Graham totally separates speculators from investors, because they’re totally
different breeds of people. So most of us, including
myself, are investors, but some people have that
desire to gamble in them and they want those high-risk bets where they’re gonna
hopefully see high returns so they make speculative bets. Here’s a couple examples of these. This would be people who
speculate by buying penny stocks. People who are day trading. Now notice they’re not day investing, they’re day trading. So they’re basically
trading those price swings of very volatile penny
stocks in most cases. Leveraged ETFs, for example
they may have a leveraged ETF where if the S&P 500 Index goes up 10%, this ETF will go up 50% So in a five to one ratio. There’s also inverse ETFs where basically they’ll do the opposite of the underlying index it’s tracking. So if the S&P 500 Index went down 10% this leveraged inverse
ETF would go up 50%. So while there’s double upside potential, or even more in some cases, there’s also double downside
potential at that point. Another example of this is
very similar, margin trading. This is when you’re
buying stocks on margin. So your broker loans you money and you pay interest on that money. And you basically are buying stocks with borrowed money at that point. And there’s also betting on earning. So if you believe that
a company’s going to beat earnings expectations,
you pile in on that stock before they release earnings and hopefully you’re right about that. It’s a speculation. Hopefully you’re right about that and you make some money doing that. A perfect example of this guys, if you watch Jeremy from
Financial Education, he talks about how this is
something he used to do, betting on earnings reports
and he lost his shirt doing it. So a lot of people learn a valuable lesson when they’re making speculative bets. The biggest problem I have with this is, are you gonna be right every time? So maybe you’re right once or twice. Maybe you pick a couple good penny stocks. Maybe you bet on earnings and
you’re right a couple times. Are you gonna be right every single time? Because that’s not a
strategy you can rely on unless you’re gonna be
right most of the time. And that’s usually where
people run into trouble. Or maybe these strategies
work in a bull market that we’re seeing right now, but once we’re in a bear market, a lot of these strategies
are not going to work. What it comes down to is speculation is great when you are right but when you are wrong
you are usually wrong big. You can lose the money
just as fast as you make it with speculative bets. So that’s basically one way that people double their
money very quickly. You could see someone
you know buy penny stocks and see it triple in value in one day. So maybe they triple their
money in the course of one day. But you could also see that
person invest all of their money in a penny stock, and
the next thing you know the company goes bankrupt. So that’s one way people do it. I don’t recommend it. And I don’t do it, but I just
wanted to talk about it here as a way people double
their money with investing. Number four the final
way is playing it safe. This is the safest possible
way to double your money and this is investing solely
in high quality bonds. Now I don’t necessarily recommend this because a lot of us,
especially young people, we have the time and we
also have the stomach to handle some volatility. So you see better returns
when investing in stocks in general over the long term, but if you’re looking for a
super conservative investment and you want to investment in
the highest quality of bonds then you would probably
look at US Treasury bonds because these are as safe as they come. So basically if you invest in a Series double E US Treasury bond, it will double in value after 20 years. So every 20 years your investments in series double E bonds
would double in value. That’s a very long time and frankly I think most
of us can do better. But just another way people
frequently double their money is through investing in bonds. Anyways guys, that’s pretty
much all I got for this video. This is four common ways people double their
money through investing. If you guys enjoyed this
video please drop a like. And if you are new to my channel please consider subscribing to be notified of any future uploads and as always I thank you guys for taking the time to watch this video. (upbeat music)

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