The Boeing Company (BA): How Investing in Stocks Can Make You Richer

Use index funds or exchange-traded funds to get easy diversification with modest investments. Broad-market Vanguard Total Stock Market ETF (NYSEARCA:VTI) makes a good starting point for many investors because it provides a mix of U.S. companies of all sizes, avoiding the need to have separate funds to add stocks of small and mid-size companies. Adding other ETFs can further diversify into stocks outside the U.S., with iShares MSCI EAFE Index Fund (ETF) (NYSEARCA:EFA) providing broad-based exposure to stocks in some of the largest economies in the world.

Look for short-term crisis situations with likely positive outcomes. For instance, The Boeing Company (NYSE:BA) took a big hit after its Dreamliner aircraft’s battery safety was compromised. For a few months, the aircraft was grounded, leading to intense investor fear. Yet the company rapidly resolved the problem, and investors have once again focused on the multitrillion-dollar potential for future orders over the next 20 years, rewarding value investors.

Be careful with high-priced, high-growth stocks. They can be the best performers in your portfolio, but you’ll suffer gut-wrenching moves along the way. Netflix, Inc. (NASDAQ:NFLX), for instance, soared to nearly $300 per share in 2011 before plunging 75% in the face of its ill-advised attempt to break up its DVD and streaming businesses into two separate companies. Just a couple of years later, though, Netflix has gotten its growth back, with higher prices having provided greater revenue and international expansion giving the company plenty of potential for future growth. The shares have more than quadrupled from their 2012 lows.

Step into stocks
Investing in stocks involves taking on more risk than many people feel comfortable with at first. But as a means to reaching your financial goals, owning stocks can help your money work a lot harder for you over the long haul.

The article How Investing in Stocks Can Make You Richer originally appeared on Fool.com and is written by Dan Caplinger.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Netflix. The Motley Fool owns shares of Netflix.

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