[jIM_Ohio]

steps 1-3 are solid.

step 4 could use some work- either more information or different general advice.
step 5 I flat out have issues with.

step 4. A person could do much worse than finding an S&P 500 index fund. I personally thing slightly more information would provide much better advice.

What is the money at step 4 going to be used for? If it's the 10 yr annoiversary vacation in 2-3 years, then I would not touch the stock market. If it's for a 7 year event, I might consider S&P 500 index fund with 50% of investment. If money is for retirement, or something you'll want in 10-20 years, then investing in the stock market is acceptable.

Be prepared for a wild ride on the S&P 500. It generally trends upward 10% per year on average. Keep in mind several years show a 15% return to the positive side.... which means there will be occasional years of -5%, -10% and -25%. Be prepared for the ride down (on occasion).

Other possible solutions- large cap value funds. May not give the 15% positive returns of the S&P 500, but probably won't see -25% either. 8-12% returns to me are JUST FINE.

step 5- waiting for $50,000 before diversifying is not the direction I go. T Rowe Price charges a $10 fee for accounts less than $5000. So once fund A has $5000 in it, I'd suggest opening a second fund after initial fund has $5000. Once total balance is $10,000, the fees on all accounts (funds) are waived.

fund A- contribute 100% of contributions to this fund until it reaches $5000. This is your CORE fund. S&P 500 index fund, large cap value fund or something similar.
fund B, Open this when fund A reaches $5000. Contribute 50% to fund A and 50% to fund B. Continue until fund B has $5000. Fund B could be a mid cap, small cap or international large cap fund.

weighting is 75% fund A, 25% fund B total assets now exceed $10,000

open fund C, D E and maybe F. contribute equally to these and still contribute to funds A and B. A is your core fund and should be the largest holding. Fund B is second core. Core means different things to different people.

C,D,E and F are considered complimentary. Mid Caps, Emerging markets, tech funds. Whatever you are interested in. As you learn while investing in A and B, you will get ideas. Explore once the core is solid.