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.

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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.

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