Make millions from thousands

Investing in an index tracking fund is a good, solid way to build wealth. But if you don't want to wait 50 years to make a million, you'll need to take a few chances.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investing in an index tracking fund is a good, solid way to build wealth. But if you don't want to wait 50 years to make a million, you'll need to take a few chances, writes The Motley Fool

We could show you how to turn your thousands into millions through investments in solid, well-known companies.

Commonwealth Bank of Australia (ASX: CBA) and CSL Limited (ASX: CSL), for example, have provided long-term investors with some outstanding returns over the last decade or more.

Turn thousands into millions
But can such returns turn your thousands into millions? Yes, eventually. An investment of $10,000 would turn into $1 million in 30 years if it grew at an annual average of 17%.

But that's a fairly steep rate to count on for your share investments — a number to which only a select few master investors can aspire.

It's safer to have more conservative expectations — perhaps closer to 10%, the stock market's historical average annual return over most of the past century.

A Fine Balance
So, what should you do if you don't want to wait 50 or more years to make millions? Here's one option: Take a few chances.

With most of your money, you shouldn't take silly risks. Consider stuffing much of it away in an index tracking fund.

A low-cost fund should earn you close to the market's historical return over long periods of time. You might also try the SPDR S&P/ASX 200 Fund (ASX: STW) or the Vanguard Australian Shares Index Fund (ASX: VAS), index tracking exchange-traded funds (ETF).

Either of these options will instantly invest your money in 200 or more major Australian companies, such as BHP Billiton (ASX: BHP), Telstra (ASX: TLS), Insurance Australia Group (ASX: IAG), Treasury Wine Estates Limited (ASX: TWE) and Extract Resources (ASX: EXT), to name but a few.

But once you've done that, take a few chances and supplement your index with growth shares. If you want your money to grow faster than average, consider plonking a chunk of your nest egg in a variety of individual companies.

This strategy should help moderate volatility, and it can also allow you to do well with carefully chosen companies.

Aiming For The Stars
You might want to keep an eye out for young, dynamic companies that are breaking the rules as they grow and prosper.

The kinds of companies we're talking about are tomorrow's Cochlear Limited (ASX: COH), Fortescue Metals Group (ASX: FMG), and TPG Telecom (ASX: TPM). Each of those companies has redefined themselves with innovative products and services.

Even Telstra Corporation Limited (ASX: TLS) was a rule breaking company once, too, bringing mobile phone coverage to the masses at an affordable price. Just try to imagine a world without mobile phones.

Find A Few Rockets
Seeking out and investing in rule breaking companies requires patience and entails risk. However, just one growth rocket has the potential to supercharge an otherwise stodgy index strategy.

If you're interested in adding some turbo-boosters to your own portfolio, consider signing up to receive The Motley Fool's free investing newsletter, Take Stock.

Interesting stocks on our radar to date include Maverick Oil and Gas Limited (ASX: MAD) and Integrated Research Limited (ASX: IRI). Click here to sign up to Take Stock for free.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »