Make Millions From Thousands

could write this article the usual way -- by showing you how to turn your thousands into millions through investments in solid, well-known companies. Microsoft (Nasdaq: MSFT  ) , for example, has returned an average of 23% annually over the past 20 years, while Walgreen (NYSE: WAG  ) has averaged 15%. Not too shabby.


A fine balance

With most of your money, you shouldn't take crazy risks. Consider socking much of it away in a broad-market index fund, such as the Vanguard 500 Index (VFINX). That low-cost fund should earn you close to the market's historical return over long periods of time. You might also try S&P 500 Depositary Receipts, an exchange-traded fund also known as SPDRs (pronounced "spiders"). Either of these options will instantly invest your money in 500 major American companies, such as Intel (Nasdaq: INTC  ) and Merck (NYSE: MRK  ) .

But once you've done that, take a few chances and supplement your index fund with growth stocks. That's what I'm doing in my own investment account. I don't want all of my money in an index fund, because I'd like my portfolio to grow faster than average. Instead, a chunk of my nest egg sits in a variety of individual stocks.


Aiming for the stars

The kinds of companies I'm talking about are tomorrow's MasterCard (NYSE: MA  ) , Automatic Data Processing (NYSE: ADP  ) , and Comcast (Nasdaq: CMCSA  ) . Think about how different the world was before them. We had to carry enough cash or checks to pay for whatever we wanted to buy, and we had to have the funds available. Companies had to prepare their own payroll and manage their own employee benefits, no matter the cost. Television was limited to just a few stations you could pick up with your antenna.

Even Ford was a Rule Breaking company once, daring to make a luxury item available to the masses at an affordable price. Just try to imagine a world without cars.

Find a few rockets


This article was originally published July 7, 2006. It has been updated.

Longtime Fool contributor Selena Maranjian owns shares of Microsoft and an S&P 500 index fund. Intel and Microsoft are Motley Fool Inside Value recommendations. Ford Motor is a Stock Advisor selection. Automatic Data is an Income Investor recommendation. Motley Fool Options has recommended buying calls on Intel and a diagonal call strategy on Microsoft. The Fool is investors writing for investors.


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