By Andrey Dashkov, analyst, Casey Research
Do you know how much time it takes to double your money?
I can teach you a quick trick to help you find out.
Divide 72 by an asset’s rate of return, and the number you get is approximately how many years it would take to deliver a 100% gain.
However, this number may depress you…
Because most assets today don’t grow fast enough to support a healthy retirement.
Take government bonds. Right now, 10-year Treasuries have an interest rate of 2.81%.
Using our trick, if you divide 72 by 2.81, you get 25.6. This means you would need to wait almost 26 years to double your money.
Not good at all…
Fortunately, we’ve got an idea to help you get ahead on your savings.
Yields Are Still Punishingly Low
Back in July of last year, Casey Research expert Dave Forest made this point:
Back in the 1980s, we got paid about 15% on our savings. That’s pretty good. For the average retiree over 60, who holds about $172,000 in savings, that would have paid nearly $26,000 interest yearly.
But you can see how things have changed.
After 2008, yields plummeted to 2%.
A long-term chart of the 10-year Treasury yield shows you the direction interest rates have been moving in for the past 40 years.
The Fed has been hiking interest rates aggressively this year… or has it?
Its 10-year Treasury rate is about 2.8%, as I said before… which means that to double your money, you need to wait more than two decades.
This is a far cry from the 13% or higher yields recorded back in the 1980s.
So, we are stuck with historically low interest rates for now.
No wonder investors are desperate for higher returns…
Warrants Could Be the Answer You’re Looking For
The good news is there’s a way to get far more than a measly 2.81%.
In fact, even 125% seems on the low side of the potential returns that this kind of investment can generate.
I’m talking about a Casey Research favorite: warrants.
As a reminder, here’s how warrants work…
A stock warrant is a security that gives the holder the right (but not the obligation) to buy a share of stock at a fixed price.
The advantage to speculating with warrants is the leverage you get to a rising stock price. If a company’s stock is up 100%, it’s likely the warrants could be up 200% or more over the same period.
That’s one reason I love speculating with warrants.
Warrants aren’t long-term… but you can speculate on them and let them run. Within a couple of years or even a few months… you’ve already vastly increased your wealth.
Now, we don’t recommend selling all your bonds and putting that money into warrants… or putting a similar amount of money as you’d allocate to bonds into warrants . Instead, you can take, say, 5% of what you may have in bonds (or other lower-return but safer investments) and put that in warrants.
If the warrants perform similarly to how they have in the past, they could help boost your portfolio big time.
And some of the warrants in Dave’s portfolio have delivered outstanding returns…
One of them soared by 393%. At this rate, your investment would double in a little more than two months.
Another one returned 2,805%. Using the same rule of 72, you’d be able to double your capital in about 10 days.
And there was one that went totally ballistic and delivered a 4,942% return. Using the same rule, on average, you would double your money in about five days.
Note that these investments didn’t go up in a straight line.
But the fact is, Dave captured that 393% winner in less than 10 months. The 2,805% and 4,942% wins were in less than two years.
The potential these warrants have for your portfolio is difficult to overstate.
But if the warrants don’t pan out as expected, then you haven’t put a lot on the line. It’s a smart speculation – and Casey Research is all about that.
While mainstream investments such as bonds pay close to nothing, investors must look elsewhere. Warrants are a great place to start.
Analyst, Casey Research