New to the world of investments and need some tips to help you get started? Check out these 9 super helpful tips on investing in your 30s.
Did you know that by the time you’re in your 30s you’re nearing the peak of your earning years? This means you should be putting your money where it will do you the most good.
The question is, where exactly is that? If you’re thinking about investing in your 30s but don’t know where to start, not to worry. Here is a great list of 9 essential tips for successfully investing in your 30s.
Get ready for some serious growth.
1. Begin with a 401(K)
The first place anyone’s investing should start is with a 401(K). Most employees will match your contributions up to a certain cap. This means if you start investing in a 401(K) in your 30s, (or better yet, your 20s), you’ll be making a nice chunk of change off your employer.
Another great reason to invest in a 401(K) is that those contributions come straight out of your paycheck. No taxes are applied to your 401(K) before your contributions are made.
When you contribute to a 401(K), you have a high annual contribution limit of $19,500.
If you’re working for a large company, they will sometimes provide access to R share classes of mutual funds.
2. Create an Emergency Fund
Sadly, emergencies happen. Floods, fires, deaths, accidents. In your 30s is the best time to start an emergency fund. You’re making more money than in your 20s and have more to set aside in the case of an unwanted and unexpected event.
The last thing you want is to have an emergency and be unable to access any of your savings because they’re all locked into a 401(K).
A good rule of thumb is to have at least 6 months of funds in your account if you’re single. If you’re married or have children, you’ll want to adjust to make sure you have enough savings to cover the needs of your whole family.
3. Diversify, Inexpensively
Investing is less dangerous if your investments are not all in one place. It may be tempting to dump all your savings into Apple stock, but if you really want to be safe and successful, diversifying is key.
There are two important aspects to diversifying. First, make sure you have enough money to put into a variety of places. Second, use index and exchange-traded funds.
The odds are, you’ll receive several raises during your 20s and 30s. This should help you with having enough funds to spread around in various investments.
As for investing in index funds, these usually track 500 of the biggest companies in the U.S. Investing in a fund like this will pool your money with other investors to buy you stocks in these top companies.
4. Don’t Be Afraid to Take Risk
When you’re in your 20s and 30s, you have many years before retirement. This means you have more opportunity for growth and for rebounding if you take a risk that doesn’t pan out.
The greater the risk, often the greater the reward. This is only a really safe bet when you’re in your 30s and have time to recover from economic downturns or changes in your investments.
What does this look like? It means you should be investing about 70%-80% of your long-term savings into stock mutual funds or stocks.
This will give your money far more chance to grow, and grow big over the next 30-40 years before you opt for less risky kinds of investment prior to retiring.
5. Obliterate Debt
Dave Ramsey isn’t wrong. Debt is probably the number one challenge to financial success for individuals in their 20s and 30s. Before you can truly start saving anything, you need to obliterate all debt.
Most debt is at a high APR. Any money spent on interest is money down the drain. It’s money that could be put into savings or mutual funds where it can grow.
If it requires cutting credit cards, getting professional help, or even hosting a garage sale, do your best to get out of all debt ASAP.
6. Invest Outside of “Retirement”
Investing in your retirement is a great place to start. In fact, it’s absolutely essential. However, some young people get so focused on investing in their retirement, that they aren’t willing to look at other additional options.
Don’t forget to take a look at your future. The not-so-distant future in your 30s could mean things like your kids’ college educations, weddings, family vacations, or a down payment on a house.
So, absolutely invest in your retirement. But, don’t forget that there will be other large expenses that should be saved for and invested in long before you’ll use those retirement funds.
7. Invest in Something That Won’t Lose Value
Some financial advisors suggest investing in something that never loses value. Silver and gold are common products to invest in as they keep their value over the decades.
Precious metals in general can be a great investment. Cmi-gold-silver.com is a place to learn about investing in gold. While silver is less expensive to invest in, gold is worth more.
8. Tax Diversify with a Roth IRA
If you’ve already got a 401(K), it may be wise to supplement your investments with a Roth IRA. As mentioned, 401(K) funds aren’t taxed at the time you invest them. However, this means you will be taxed at the time you withdraw them upon retirement.
One of the perks with a Roth IRA is that you are taxed on the funds before you invest them. This means once you withdraw them during retirement, you won’t be taxed.
Your money will also grow without any taxes while it’s in a Roth IRA.
9. Invest in Real Estate
If you’re financially able and have done your best to eliminate other sources of debt, consider purchasing a home. Renting doesn’t build equity in a home or property.
For most individuals, their home is their largest asset owned.
Mortgage rates and down payments have hit a low during COVID-19. If you’re interested in building equity to help you save for the future by having a valuable asset, purchase a home instead of renting.
Investing in Your 30s: Start Today
Investing in your 30s will always be a wise move. Start with eliminating your debt and then talk with your employer about a 401(K).
If you’re looking for more hacks, tips, and ideas on creating a successful life in your 30s, browse the Lifestyle portion of our blog.
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