Putting 6 figures into an index fund

Investing
#1

Would it be a good idea to put 100,000 into an index fund? I’m 24 years old. Also, do index funds distribute dividends?

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#2

Simple answer: yes and yes. I would look into VTSAX from Vanguard or the equivalent from Fidelity or Schwab. The bigger question for you in whether you’d like to lump sum invest or dollar cost average, though studies have shown it’s best to just get into the market sooner with the lump sum.

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#3

Thanks for the feedback Tom. From what I’ve read, the lump sum is the way to go.

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#4

I agree with Tom! Take a look at the investment growth calculator to put in your numbers. 7% is a reasonable forward looking, inflation adjusted projection of index fund growth:

And regarding lump sum vs dollar cost average, play with some numbers on the calculator here:

http://www.personalfinanceclub.dev.cc/lump-sum-vs-dollar-cost-averaging-calculator/

And yes, index funds pay dividends! The whole market is paying around 1.5% at the moment, so an index fund like VTSAX would pay you $1,500/year in dividends on that $100K investment (which I would suggest you reinvest to buy more shares).

I’d also take a look at target date index funds;

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