What to Know About Investing While in Your 30’s
Your investing needs can change based on your life stage. What’s important to know about investing while in your 30’s?
From a new house to a new family member, your thirties can be full of many life changes. Having a solid financial foundation can make you feel more stable, allowing you to enjoy these changes. Check out these six tips for investing while in your 30’s.
Include financial talk as part of your wedding plans
Whether you’re getting married, or are considering committing to someone forever, be sure to get on the same page about finances. It’s helpful to talk with your partner about your monthly budget, and your short and long-term goals. Also, discuss what types (and dollar amounts) of purchase decisions you need to make together. Having these discussions earlier can help avoid confusion or conflict later, allowing you to be on the same page with your financial plans.
Childproof your finances
If you have children, or would like to one day, you know the importance of childproofing your house. But what about your finances? The same idea applies to planning for the cost of college tuition. The cost of college is continually increasing, so it’s important to consider how you want to contribute to their education. Are you looking to finance their whole tuition, or pay for a portion of the cost? Saving for education can impact your other savings goals, so it can be helpful to evaluate your budget. Does it still apply to the goals you want to accomplish?
The easiest way to save money is by taking the work out of it. Automate your investing to automatically transfer money each month to your savings, retirement, or investment portfolio. Consider setting a fixed dollar amount or a percentage to regularly contribute to your investment account. This is one of the basics of investing, and is also called “dollar cost averaging.” Dollar cost averaging is a way you can buy more shares when prices are lower, and less shares when prices are high. Using a regular schedule to invest can help you learn more about the market and become a seasoned long-term investor.
While looking at your portfolio, make sure you’re still on track with your retirement accounts. If your employer offers a retirement match opportunity, be sure you’re contributing enough to meet the match amount. Don’t leave free money on the table! Once you’re meeting any match requirements, see if you have the ability to maximize your retirement account contributions.
- A good place to start is with a 401(k). This type of account has a high annual contribution limit, and contributions are automatically deposited from your paycheck.
- After meeting any match requirements, consider if supplementing with a Roth IRA is right for you. With a Roth IRA, your contributions go in after tax, meaning your funds aren’t taxed in retirement. Your funds also grow-tax free in a Roth IRA.
Pay off debts
Before you can really grow your savings, it’s important to pay down any debt. Do you have any credit card debt or student loans? Your 30’s is the perfect decade to pay off your outstanding debts. There is a different between good and bad debt, like a mortgage is good debt that should increase your wealth in the long-term. Evaluate any debt, and start with the highest interest rate debt. Paying that down first will help you save money. If you’re carrying high-interest student loans, consider if refinancing would help decrease your payments. Even a half a percentage point can result in a considerable drop in your payment amount.
When you have any debts in a manageable spot, or paid off, start investing in your future. Focus on your retirement plan, children’s education, or any big trips you plan on taking. When planning for your retirement, you’ll need to consider inflation, Social Security benefits, health care expenses, and your saving and investing options. It’s also important to consider how much you currently have saved, and to calculate your monthly income in retirement.
Prepare your estate strategy
While it’s not fun to think about, consider your end-of-life documents and what you’d like to happen to your assets. It’s important to think about the assets you acquired, and the people for whom you care. Evaluate your life insurance policy, and talk with an attorney to establish a will. This will allow you to make end-of-life decisions now, giving you peace of mind.
You’ve probably heard the phrase “time is money.” This phrase applies while in your 30’s and you’re making plans for the future. Depending on your comfort level with risk, you have time to make riskier investments. While a risker investment doesn’t guarantee a large return, you’ll have longer to recover and not have to worry about short-term volatility.
Now is the time to secure your financial plan – consider your short and long-term goals, retirement, and health care expenses. By preparing for the future now, you’ll be able to enjoy the big milestones in your 30’s.
Meet with your financial advisor to talk about your financial plan, and make sure your current finances align with your future goals. As always, we’re here to help. Contact us if you have any questions, or if there’s anything we can do to help you.
Investing in your 30s, Edward Jones
5 Tips for Investing in Your 30s, Nerd Wallet
This material is intended for informational purposes only, and should only be relied upon when coordinated with specific individualized professional advice, as individual situations will vary.
A Roth IRA offers tax deferral on any earnings in the account. Qualified withdrawals of earnings from the account are tax-free. Withdrawals of earnings prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Limitations and restrictions may apply.
Dollar cost averaging involves continuous investment in securities regardless of fluctuation in price levels of such securities. An investor should consider their ability to continue purchasing through fluctuating price levels. Such a plan does not assure a profit and does not protect against loss in declining markets.