My son is currently 2 and I've been setting aside money each week from a paycheck into a savings account. The plan is to give him the money when he is 18 for him to use as he sees fit (within reason of course). I've decided against a 529 plan because the only benefit from it would be the taxes. This will be an automatic investment plan. I'll be dollar cost averaging the whole time with whichever ETF I choose. Also, I do have a small amount that I'll be using to buy in initially but think I'm going to hold off for a bit with the current market conditions. I know you can't time the market but I don't think this type of market is sustainable much longer. If I'm wrong then hopefully it doesn't cost us too much. This account won't have hundreds of thousands in it (20K would be nice) so it's not that big of a deal. I'd rather him not have to use it strictly for school because who knows what he'll want to do with his life.
Anyway, I'm trying to decide on where to invest the money. I'm not afraid of having risk since the money has 16 years to grow/recover. The simple answer is investing in an ETF like SPY or VOO. What I'm curious about are growth ETFs like MGK, VONG, VUG and VOOG. These all show impressive growth over the past 5-10 years when compared to SPY and VOO. I realize it's because of the larger exposure to tech and that it could all change at some point especially given the current situation with COVID. It seems like a no-brainer to choose one of these to have the money grow the most for my son in this time-frame but I'm not sure if I'm missing anything.
Is it really this simple? Would choosing a growth ETF and holding it for 10 years then switching to VOO be more reasonable? Lets say that the tech sector doesn't grow as much in the future as it has been then the exposure should change to a higher growth sector correct? I know it depends on a lot of factors but I just want to see if my understanding is correct.
Submitted June 19, 2020 at 10:16PM by SomeDudeAtHome321 https://ift.tt/2BmcRJd
