Does an index fund count as diversifying?
nickelplate: It is impossible to answer this question without knowing what kind of index fund you are investing in ("large, broad index fund" does not say much). For example, if you buy an S&P 500 index fund, you are not indexing the stock market. You're just indexing a bunch of blue-chip US stocks, and you don't have exposure to asset classes such as bonds, small cap equity or foreign equity.If you will need the money in 3-6 years you should not put it in the stock market. If you want to fund an early retirement then there are a lot more variables into this equation that you do not seem to take into consideration. What is "early"? How much money will you need into retirement? What other source of income besides savings will you have during retirement? Do you intend to raise a family? Etc. It is impossible for anyone to answer these questions for you. This is why you should learn about the stock market, and about personal investing in general, if you want to make informed decisions about making your money work for you.I very strongly suggest that you read "A Random Walk Down Wall Street" by Burton Malkiel.