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Fool Canada’s first 1,000%+ winner?

Our Chief Investment Advisor, Iain Butler, and a team of The Motley Fool’s most talented investors from across the globe recently embarked on an unprecedented mission:

To identify the 20 Canadian small-cap companies they believe have the best shot at earning investors like you gains of 1,000%+ over the coming years.

For the next few days only, you can get the names and full details on these 20 potential “10-baggers” when you join Iain and his team in a first-of-its-kind project they have dubbed Discovery Canada 2017.

How to Double Your Money Faster

Have you ever calculated how long it would take to double your money?

If you start by saving $300, a month, it would take you another month to double your money, and it’ll take you two more months to double your money again to $1,200.

The larger the amount of money you have, the longer it’ll take to double it. If you save $30,000, it’ll take you eight years and four months to double it to $60,000.

Double your money faster

To double your money in less time, you’ll need to get your money to work for you. If you use a savings of $30,000 (on top of continuing to invest $300 a month) to invest at a 7% rate of return from the market, it’ll only take you five years to double it to $60,000 (specifically to $64,131).

The higher your portfolio’s rate of return, the faster your money will double. To approximate the number of years it will take to double your money, simply divide the rate of return by 72.

Assuming a 7% rate of return, it’ll take about 10.3 years (72/7) to double your money.

In the fiscal years 2011 to 2016, Nike Inc.’s (NYSE:NKE) earnings per share (EPS) grew at a compound annual growth rate of 14.5%. In the next three to five years, its EPS are expected to continue growing at that growth rate.

Assuming Nike’s multiple remains constant, a growth rate of 14% coupled with a dividend yield of roughly 1% imply a rate of return of 15%. If these materialize, using the rule of 72, it’ll take a little less than five years for an investment in Nike to double.

Word of caution

No high-growth company can maintain double-digit growth forever. There will be periods when its growth will slow down, in which case its multiple would contract and its share price would likely fall.

Rule of 72 can be applied to dividend growth, too

By tracking the amount of passive income you earn from your investment portfolio every year, you can easily calculate the rate at which your income grows.

If you earned $1,000 of dividends in 2014 and earned $1,060 of dividends in 2015, your dividend-growth rate would be 5%. Assuming that growth continues into future years and you don’t invest more money, it’ll take 14 years and five months to double your income.

Conclusion

The rule of 72 is a simple approximation to estimate how long it takes to double your money by dividing the growth rate by 72. The higher the rate, the sooner you’ll double your money.

However, investors should keep in mind that generally the higher the rate of return you target, the riskier it may be because high growth is hard to maintain and definitely can’t be maintained forever.

Stock buy alert hits astounding 96% success rate!

The hand-picked investing team inside Stock Advisor Canada, recently issued a buy alert for one special type of "bread-and-butter" stock where The Motley Fool U.S. has banked profits on 23 out of 24 recommendations. Frankly, with an astounding 96% success rate that has delivered average returns of 260%, chances are this new pick could deliver life-changing returns as well. Because the team at Stock Advisor Canada fully embraces the same time-tested investing philosophies that have led to countless Motley Fool winners globally. So simply click here to unlock the full details behind this new recommendation and join Stock Advisor Canada.

*96% accuracy includes restaurant stock recommendations from Motley Fool U.S. services Stock Advisor, Rule Breakers, Hidden Gems, Income Investor and Inside Value since each services inception. Returns as of 5/27/16.

Fool contributor Kay Ng owns shares of Nike. The Motley Fool owns shares of Nike.

NEW! This Stock Could Be Like Buying Amazon In 1997

For only the 5th time in over 14 years, Motley Fool co-founder David Gardner just issued a Buy Recommendation on this recent Canadian IPO.

Stock Advisor Canada’s Chief Investment Adviser, Iain Butler, also recommended this company back in March – and it’s already up a whopping 57%!

Enter your email address below to find out how you can claim your copy of this brand new report, “Breakthrough IPO Receives Rare Endorsement.”

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