I’m often looking for the best investments to make money. After all who doesn’t want that? Throughout each year, a stock can skyrocket to success. While it is rare, some even double or triple in value in a matter of days. During late 2013 and through 2014, investing in Plug Power was one of the fastest ways to double $1,000, and ended up being one of the best investments to make money. Here’s how it happened.
In many cases, investments take time to pay off big. Reaching a 20 percent return on investment may take a few years or more, depending on the specific investment. However, that doesn’t mean it isn’t possible to earn 20 percent in two weeks or less.
Can You Earn 20 Percent in Two Weeks?
In short, yes, it is possible to earn 20 percent in two weeks. In fact, I’ve had a stock hit that above level of return in a matter of days.
I invested in Helios and Matheson Analytics Inc. when the company chose to acquire a majority stake in MoviePass, the movie theater subscription service. Over the course of a few days, my investment earned closer to a 100 percent return, all because I made the right move, at the right time.
While I can’t guarantee that you’ll have that level of success, there are things that investors can do to try and find similar opportunities.
Keep an Eye on the Headlines
News-worthy events can have a significant impact on a stock’s value. When a company does something that the public receives well, their stock price may rise as a result. Positive attention can draw in new investors and encourage current investors to put more money into the company, leading additional buying action to push the price up.
Similarly, negative press also affects a stock price, potentially serving as warning signs of future trouble or an upcoming opportunity. If investors view the company negatively, some will choose to sell. This can drive the value of the stock down, at times quickly.
However, if a strong company is the subject of negative headlines, a downturn in value may actually be an opportunity. When Facebook was at the center of a data scandal, prices fell dramatically. However, they also recovered fairly quickly, and those who bought during the low point saw a pretty quick profit.
Join Stock Groups Online
Stock groups and forums can be full of helpful information. Often, a single person can’t keep an eye on every stock with potential, so the group can fill in your knowledge gaps. Plus, they serve as a mechanism for monitoring investor sentiment, as people are often more than willing to express their emotions and give their opinions online.
Look for groups with investors who dedicate themselves to a variety of niches that are outside of your area of expertise. For example, if you commonly focus on the tech sector, seek out groups with people who feel as passionately about financial service, pharmaceuticals, or other industries that represent your personal blind spots.
This approach allows you to gather information outside of your core area with relative ease. However, even if the person seems like an expert in an industry, always take their advice with a grain of salt. No one can guarantee success, but they may give you some interesting ideas that are worth checking into more thoroughly.
Have an Exit Strategy For A Great Return on Investment
Often, if you are looking for investments that can earn 20 percent quickly, you are taking on a significant amount of risk. You may be counting on a new product or acquisition to be a success, or that a company can recover fast from a negative event, both of which may not come true. If a societal trend is involved, then it needs to last long enough to reach your goal, and that isn’t never a sure thing.
As a means of mitigating risk, it’s wise to have a solid exit strategy. You may want to designate stock values where you’ll sell no matter what, allowing you to walk away with a certain amount of gain or escape before losses get too great. If you prefer, you can base these numbers of the profit or loss percentages, something that may make the concept more accessible.
How to Calculate Profit on Investment
When you want to calculate the profit on an investment, you need to subtract the sale price from your purchase price. For example, if you made a share purchase for $10, then sold for $18, that’s a gain of $8.
To figure out the percentage, you divide the gain by the original price, then multiply by 100. In this case, that’s 8/10, which results in 0.8. When you multiply by 100, it comes to 80, which represents 80 percent.
However, it doesn’t take into account any fees you may incur while making trades, so you may need to work those into the equation. To do so, subtract the fee from the gain before dividing by the purchase price.
For example, if you use the example above and have an $8 gain, but also owe a $2 fee, then you subtract the $2 and end up with $6. Divide that by the original price ($10) to get 6/10, or 0.6. After multiplying that by 100, you’ll see your profit is 60 percent.
The formula can help you determine not just your profit, but also points where you may want to sell an investment based on your goals. Ultimately, it’s a pretty handy calculation for investors, so consider saving it for future reference.
Do you know how to get the best return on investment? Tell us about your experience in the comments below.
A term coined by Peter Lynch, a legendary fund manager, “tenbaggers” are investments that appreciate to 10 times their initial purchase prices. Usually, they represent stocks with incredible growth potential, but also a lot of risk. Not everyone has the stomach to strive for a tenbagger but, if you do, here are some insights into what to look for and my story of how I landed one. So here we go, here’s how to get a 10-bagger.
New Survey Shows Complacency About Identity Protection
According to Javelin Strategy and Research, identity theft has risen for four consecutive years. Approximately 16.7 million people were victims of identity theft in 2017, accounting for $16.8 billion in losses. Given constant news stories about security breaches, there’s no indication that 2018 will break that trend. Read More
The vast majority of people who have even considered investing some of their money understand that diversification is important. It allows you to limit your financial risk by ensuring that all of your cash isn’t sitting in a single stock or another investment vehicle. That way, should a negative event harm one investment’s value, all of your money isn’t lost.
However, there is also a pervasive misconception about investing. Many believe that you need a specialized skill set to diversify a portfolio. In reality, there are options that handle the diversification part of investing for you.
Index funds don’t represent a single stock, bond, or other form of investment. Instead, they attach to larger markets, reflecting a number of investments in a specific category. By choosing index funds, you automatically have a level of diversification. Plus, you may even see higher gains that you would with individual stocks and bonds.
If you want to diversify your investments, here are some funds worth exploring.
Standard & Poor’s 500 (S&P 500)
The S&P 500 index tracks the market capitalization of the 500 largest companies in the United States. This means the fund isn’t tied to a single company or even industry, automatically providing a level of diversification.
Additionally, the S&P 500 index has largely experienced gains over time, typically beating inflation. While all markets fluctuate, over the long-term, gains are more common. Since the creation of the financial markets, the S&P 500 has averaged roughly 6 percent in growth. If you look at more recent times, it may be closer to 10 percent without the reinvestment of dividends. If you are reinvesting your dividends each quarter, these numbers can actually be substantially higher, even reaching into 14 percent territory.
While there are never any guarantees when it comes to investments, most markets trend upward. By selecting the S&P 500 index fund, mitigating risk during low points is easier, and long-term gains are incredibly likely.
An international index fund operates like any other stock-oriented index. However, instead of comprising of US companies, it focuses on international markets.
By adding an international index fund to your portfolio, you achieve an additional level of diversification. Now, your investments aren’t tied to a single country’s economy, which may help should the US experience a financial crisis.
Additionally, international markets may have higher growth potential than the US market, allowing you to achieve more substantial gains. Emerging markets tend to be higher risk but can experience rapid growth as the country or countries continue to develop. Most brokers issue ETFs and mutual funds that track a group of stocks in a specific country or set of countries that are expected to experience high growth.
However, some international markets are also in similar positions to those in the US, so you don’t necessarily have to take on a lot of risk if you want to explore these options.
Bonds are a more conservative investment vehicle, providing the ability to achieve a fixed and predictable income. The concept focuses on being able to access the money on a regular schedule, largely when a bond reaches maturity.
However, you don’t have to invest in individual bonds to get the income-generating benefits. Instead, you can build wealth with a level of diversification by selecting a bond index. For example, an ideal bond fund for some investors may be the VBMFX. That is an index that invests in bonds of from some of the largest and most creditworthy companies in the country. It is similar to the VOO, but better suited to fixed-income goals.
It’s important to note that investing solely in bonds or bond indexes typically isn’t an ideal strategy for investors who aren’t retiring in the near future. Bonds increase in value at a slower rate when compared to stock, making them less suitable for key growth periods in life.
Ideally, you want to find a balance that meets your needs, goals, and expectations, investing some in stocks and some in bonds. Where that point lies will also depend on your risk tolerance. Some may be comfortable with 80 percent in stocks and 20 percent in bonds while others may find a 60/40 split to be a better approach. In the end, you have to choose a percentage that’s right for you, and there isn’t a magic number the guarantees success.
Real Estate Investment Trusts (REITs)
Real estate is an excellent diversification source. Buying a property can be riskier than some other investment vehicles, but it may also provide opportunities to make much higher returns than paper asset markets (VOO), including in the 20 to 25 percent range.
The large return is the result of selling the asset once market prices increase after 3-10 years. However, incidents like the recent housing market crash in 2008 can occur again, leading to low returns or even losses.
REITs or real estate investment trusts, provide a way for retail investors to invest real estate without actually purchasing property themselves. This can lower the cost of entry into the real estate space as well, as you don’t have to buy an entire property on your own. Essentially, these funds pool capital for real estate investing, collecting money from a variety of investors.
REITs should pay around a 10% dividend because they need to pay out at least 90% of their income as dividends. If you have less than $100 to invest, REITs may be a great option for you.
Bonus Investment Approach: Dollar Cost Averaging
Dollar cost averaging isn’t an index fund, but an approach to investment that can help you accumulate wealth. It involves investing the same amount of money into an index on a set schedule, usually monthly or every two weeks.
The approach tends to be more effective than attempting to time the market, an approach that many consider to be more of a myth than a legitimate technique. For example, if you hold all of your money and try to invest it all on an annual basis, if there is a subsequent crash, you’ll likely experience heavy losses. However, by regularly purchasing shares regardless of whether the index is up or down, you hedge some of that risk.
Ultimately, investing in indexes is a smart move if you want to maintain a diversified portfolio with greater ease. Plus, it’s an option available to anyone, making it ideal for new and seasoned investors alike.