If you’re in your 30s and just dipping your toes into the world of investing, you’re in good company. A Gallup Poll reveals that 28% of Americans don’t start investing until this decade. It’s easy to look back with regret, wishing you’d started earlier, but the truth is, your 30s present a unique opportunity to take control of your financial future. This article will guide you through the key aspects of investing in your 30s, from overcoming challenges to making smart investment choices.
How Did We Get Here?
Many factors can contribute to a delayed start in investing. Maybe you were unsure of your path after high school, which led to a postponed college education. Or perhaps you struggled to find a stable, well – paying career after college, bouncing from one low – wage job to another. Unexpected life events, like health issues or family emergencies, could have derailed your financial plans. On the flip side, positive life events, such as having a child, can also consume your resources and leave little room for savings. But regardless of the reasons, the important thing is that you’re ready to start now.
Balancing Investing With Life Events In Your 30s
Your 30s are often filled with significant and costly life events. Marriage is a common milestone, with the median age for men tying the knot at 29 and women at 27. Weddings don’t come cheap, with an average price tag of $26,645. Then there’s the decision to start a family. The average age of women having their first child is on the rise, with over 30% now doing so in their 30s. The costs associated with childbirth and raising a child are substantial, with an average delivery costing $10,000 and an estimated $245,000 needed to raise a child to 18.
Despite these expenses, it’s possible to balance present needs with future investments. It requires careful planning and a shift in mindset. In your 20s, saving might have been a more straightforward affair. But in your 30s, you need to master the art of financial balance, ensuring you’re not neglecting either your current obligations or your long – term goals.
Understanding Your Goals & Being Real With Yourself
The first step in successful investing is clarifying your financial goals. These typically include taking care of your immediate needs, safeguarding your family, saving for retirement, and planning for major life events. Building an emergency fund to cover at least six months of expenses should be your top priority. This fund acts as a financial safety net, protecting you from unexpected setbacks.
Financial organization is also crucial. Tools like Empower can help you keep track of your finances, ensuring you know exactly where your money is going. Once you’ve secured your own financial stability, it’s time to think about your family’s future. Documents like a will and trust, along with life and disability insurance, are essential for protecting your loved ones in case of unforeseen circumstances.
With these bases covered, you can focus on retirement savings. Maxing out contributions to your 401(k) or 403(b) and IRA should be a key goal. And remember, if you have extra income from a side hustle, there are specialized accounts like SEP IRAs or Solo 401(k)s that can boost your savings.
Do You Need A Financial Advisor?
In your 20s, the value of a financial advisor might be limited. But in your 30s, if you’re feeling overwhelmed by the complexities of financial planning, seeking professional help can be a game – changer. A fee – only financial planner is ideal, as they’re focused on your best interests without the potential conflicts of interest that can come with commission – based advisors.
Certain life events, such as getting married, changing careers, having children, planning for college, approaching or entering retirement, are great times to consult a financial planner. They can help you create a plan that adapts to these significant changes. If you’re mainly interested in investing, robo – advisors offer a convenient, automated alternative for managing your investment portfolio.
What Accounts Should You Be Investing In?
Retirement savings should be a top priority in your 30s. To make the most of tax – deferral benefits, follow this order of operations: First, contribute to your 401(k) up to the company match— it’s like getting free money. Then, max out your IRA. After that, go back and max out your 401(k) again. If you’re eligible for an HSA, treat it as another valuable retirement savings tool and contribute the maximum amount. For side income, consider SEP IRAs or Solo 401(k)s. Any remaining funds can be invested in a standard brokerage account.
How Much Should You Invest?
The amount you should invest depends on your goals. Starting in your 30s means you’ll need to save more than if you’d started in your 20s to reach the same financial milestones. For example, to have $1 million by 62, you’d need to save $3,600 per year starting at 22. But if you start at 30, assuming an 8% annual return, you’ll need to save $6,900 per month. These are just guidelines, and in today’s economy, aiming for more than $1 million for retirement is often a wise choice. The key is to save as much as you can and find ways to increase your contributions if you’re not on track.
Investment Allocations In Your 30s
Your investment choices should reflect your personal goals and risk tolerance. In your 30s, saving is still the foundation for building wealth. A diversified portfolio of low – cost ETFs is a smart strategy, similar to what robo – advisors recommend. Portfolios like the Boglehead’s Lazy Portfolios offer great examples of how to structure your investments, but be sure to choose commission – free ETFs that fit your budget and investment needs.
Investing in your 30s may come with its challenges, but with the right approach, you can build a solid financial future. It’s never too late to start, and every step you take today brings you closer to your financial goals.
