So, my dad left me some serious cash last year – around $150 grand! I’ve got my Roth IRA and rainy day fund sorted, plus I’m debt-free. Now, I’m looking to get smart about investing the rest. Schwab’s automated investing index funds or maybe some CDs – what do you reckon? Any other suggestions?
If I jump on the index funds train, should I drip-feed the money in or just chuck it all in at once?
Cheers for the advice, Money Minder!
Farewell,
Future Investor
Response from THE MONEY MINDER:
Hello There,
I am truly sorry to hear about the passing of your father. It’s commendable that you have taken steps to pay off your credit card and student loan debt, and it sounds like you are in a good financial position to make some smart investment decisions with the inheritance you received.
Given your situation, investing in index funds through Schwab automated investing is a solid choice. Index funds offer diversification and long-term growth potential. If you are looking for a more conservative option, CDs can provide guaranteed returns, albeit at a lower rate compared to index funds.
As for whether to invest the $150k all at once or dollar cost average over time, it ultimately depends on your risk tolerance and investment goals. Investing a lump sum may offer the potential for higher returns over time, but it also comes with the risk of market volatility. Dollar cost averaging can help reduce the impact of market fluctuations and provide a smoother entry into the market.
In the end, I recommend considering a balanced approach. You can invest a portion of the inheritance in index funds initially and then gradually invest the rest over a period of time through dollar cost averaging. This way, you can benefit from potential market growth while minimizing short-term risks.
All the best from THE MONEY MINDER.
