What is the best investment? If we reflect on this question soberly and actually really try to define this mythical creature in the best of all possible light, it would have to be an investment that has a high return and zero risk. Let's look a little closer at this thing, the best, ideal investment, because if we can define it better, we can maybe start looking to see if we can indeed find one.
Most investors use the humble bank deposit as a benchmark to compare all other investments. The reason why the bank deposit is seen as the be all bench mark is because it is considered the safest place to put ones money and also, by default the least likely to make you rich.
Indeed a return in the single digits, where the typical overnight cash rate is around 7% historically, one can expect to wait several hundred years before their seed capital would approach anything near what would be considered as wealth.
So theoretically, if we can find another investment that is as safe as a bank term deposit, but that has a return of say 100% per year, (which would make one rich very rapidly) This would be designated as the best investment in history or the ideal investment.
A 0 dollars turns into .4 million if you doubled it just 14 times or applied 100% compounded. That is why doubling your money is such a holy grail. To double your money you are stretching at the way upper limits of sanity, but still within the realm of possible. Here is a clue. Here is the essential to doubling your money but maintaining the required safety of actually getting your money back.
Whenever you invest with such ambitious goals of doubling your money, you must secure assets equal to in value equal to the value of your investment. It is as simple as that. If you maintain that rule in all your investments you may be as ambitious as you wish with your compounding goals and never fear the risk factor.
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