I will try to provide as much details as possible from the get-go.
I (22M) am approaching graduating from college with a degree in engineering in the next six months with zero student debt. My needs are fulfilled, and I currently have about $15k in the stock market.
My parents do well financially and would help me if things were to go bad, so I would say I can undergo a moderate amount of risk on investments.
Due to some unfortunate circumstances, I will soon be receiving around $20k. I would like to invest this money for the long term, and kick off saving for retirement. My thoughts at the moment are leaning toward an index fund, as it seems more reliable than stocks. My main questions stems from two options that I see
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Invest this $20k into an index fund as a lump some.
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Dollar cost average this $20k into the market (ex: $1000/month for 20 months).
Option 1. seems to have a higher risk/reward outlook. I could get the money into the market sooner, to start earning ASAP. The market is currently in a low spot, so it appears to be a good time to invest. I am hesitant, so the pandemic may continue on for longer than anticipated, causing another downturn that has longer lasting effects as companies are not able to survive prolonged losses.
Option 2 seems safer, as the steady investment would allow me to not loose money if the market dropped suddenly after I invest. If the market doesn’t drop, I’m not getting the benefits of having the extra months of compound interest on the initial investments.
Thoughts? Any suggestions outside of my specific question are also welcome.
Submitted April 23, 2020 at 10:42PM by Daxom https://ift.tt/3bDSQLu
