Your 20s may be filled with trial and error, learning and developing, but your 30s should ideally be the time to make smart financial investments, assuming you didn’t start during your 20s. This period of your life serves as the perfect opportunity to work out intelligent strategies to make your money work for you. It’s a good time to start investing, as you’ll have more than three decades left to save for retirement, typically at age 65.
Nevertheless, navigating your 30s can be tricky as many grapple with key life events such as buying a house, getting married or starting to have children. Consequently, it can be challenging to set aside extra funds for savings. Nonetheless, any investment, regardless of the amount, is beneficial, and there are many simple options to consider. Here are five clever investment strategies for your 30s.
1. ELIMINATE HIGH-INTEREST DEBT
If you’re battling high-interest debt in your 30s, make it your priority to clear it. With the average American household strapped with $7,000 to $9,000+ in debt, settling a portion of your debts could significantly boost your budget. My preferred debt repayment method is a numeric strategy; target the debt with the highest interest rate first. In this way, you can save more money long-term. This saved money can then be put towards savings and investments.
Consider your comfort level regarding your debt and current budget. Is money already stretched thin? Would you prefer to have fewer bills? If so, formulate a plan to aggressively pay off your debt, freeing up more cash for future investments.
2. MAXIMIZE YOUR IRA OR 401(K)
If you haven’t yet opened an IRA or a 401(k), take steps to do so as soon as possible. A 401(k) is a company-backed retirement plan offering significant tax benefits. If your employer matches your contributions up to a certain amount, this essentially is like free money.
In the event you don’t have access to a 401(k), set up an IRA, an Individual Retirement Account. You can manage this independently through an online broker or robo-advisor, thus there’s nothing stopping you from investing.
Starting earlier allows more time for compound interest to work. As you venture into your 30s, aim to fully fund these accounts.
3. ESTABLISH A TAX-ADVANTAGED BROKERAGE ACCOUNT
As you age and progress in your career, you may become increasingly interested in tax savings strategies. Tax-advantaged investments can reduce your taxable income while boosting your nest egg. Consider an HSA, or Health Savings Account, provided you have a high-deductible health plan through your employer.
If you’re a freelancer or run a side gig, consider a SEP IRA. These investment options can lead to significant tax savings and grow your money.
4. INVEST IN REAL ESTATE
Many individuals like the tangibility of real estate investment. However, you aren’t restricted to flipping houses or becoming a landlord. Think about real estate crowdfunding through platforms like Fundrise, which pools your money with other investors, allowing you to own part of a property.
5. INVEST IN YOURSELF
Instead of worrying about where to invest your money or chasing the latest cryptocurrency, keep in mind that investing is a long-term process. One of the very best investments you can make in your 30s is in yourself. If you’re considering moving forward in your career, spend on the necessary education and resources. Likewise, if you want to convert a passion project into a business, invest in yourself and the required products.
In conclusion, your 30s represent an excellent period to make smart investments for the future while still savoring the present. Lower your debt, be deliberate with your spending, and live within your means. If your expenses are less than your income, investing in the aforementioned options becomes substantially easier.
