7 Tips For Investing In Your 30s

Are you someone who has just entered the 30s club? Charging over a stable professional career with a hefty paycheck in hand? 

Well, that is one of the perks of being in your 30s. However, with higher salaries, the 30s also come with more responsibilities. It is a decade full of pivotal decisions, where you might buy your first house, try out new careers, plan out your marriage and kids, or even start a new business. It is a decade to pan out the possibilities and plan for your future. Moreover, your 30s can be a very good time to start planning your retirement.

As you navigate through these changes, it becomes increasingly important to come up with a reliable investment strategy to plan your future finances. 

Therefore, it is time to take control of money and head towards wealth creation.

So, do you want to grow your wealth and make accurate investment decisions that will benefit you in the long run?

If yes, then we have just the right plan for you! In this article, we will first understand why it is important for you to plan your financial journey in your 30s. For this we will look at financial goals, roles and responsibilities that you have to take in your 30s, etc. We will then cover 7 tips for investing in your 30s. 

Financial Planning In Your 30s

If you are in your 30s you are most likely earning a regular income from either a steady job or a successful business. This is the time when you can start thinking about your financial goals and aspirations. In the coming years you may start a family, buy a new home, etc. All of this needs strategic planning, which is not as hard as you may think. In the next section, we have covered 7 tips to help you invest in your 30s.

As a young professional who has just started to earn a livelihood, it is important that you manage your finances early on. This is the time to identify your short-term, mid-term and long-term financial goals and plan your investments accordingly. At this point, you may have an education loan to pay off, at the same time, you are yet to face the financial responsibilities that come when you start a family. At this stage in life you may not have very large financial commitments, and hence it is the perfect time to start saving and investing a significant chunk of your income towards building wealth in the long run.

Your short-term financial goals may include paying off credit card debts, education loans, etc. Your mid-term financial goals may include buying a house in the next 5 or 10 years, and your long-term financial goals would cover for your retirement plan, education of your children, etc. Besides all of this, it is important to have a rainy day corpus for any emergencies. Having your health, life, and assets insured is also a sound and crucial financial step.

Now let’s have a look at how much you should invest in your 30s.

How Much Should You Invest In Your 30s

Well, there is no fixed number for how much you should invest in your 30s. However, there are a few factors that will help you determine how much as per your own financial condition. Firstly, you should ideally try to save a significant chunk of your income in your 30s, considering your financial responsibilities towards your family may be low at this stage. Secondly, you should plan to invest more in your 30s than in your 40s or 50s as life progresses. This is because compounding works best in the long run. Simply said, the more time you give your money to grow, the more it grows!

7 Tips For Investing In Your 30s

Here are 7 tips to help you understand how to invest in your 30s:

1. Create A Budgeted Financial Plan

You should start by Identifying your future financial goals while you’re in your 30s. Be honest with yourself while identifying the requirements. Entertain every possibility of future expenditures and needs. Create a budget for every financial goal.

Divide the long-term and short-term goals to prepare a budget for both. Here, short-term goals can be buying a house or family planning, and long-term goals can be planning a world tour in your 60s or retirement planning.

Of course, the future will be dynamic, and not everything can go according to plan. However, having a plan provides a roadmap for achieving the goals. Having a financial plan will help you formulate the best investment plan for you.

2. Build Financial Discipline

Being in your 30s provides you with the financial freedom you always wanted. It's like giving adult money to a child. You want to purchase every gadget and riches you have always admired in your 20s.

But the 30s bring you more responsibilities than your dreams. Learn to cultivate discipline for your expenditures. Track and analyse your expenses periodically to minimise reckless spending. 

Do an optimal categorisation for the necessities and luxuries after planning for the savings and emergency funds. Alter the expenses according to the income and analyse them regularly. Once you have over your expenses, be strict with your spending habits and stick to them.

3. Contribute To Emergencies & Retirement Funds

Unexpected losses can arise at any given time. It is important to have an emergency fund, even after having savings or credit facilities. A general emergency fund can be created with small amounts from your paycheck dedicated every month to ensure your financial standpoint. It is advised to have a fund that covers at least 3-6 months of your living expenses.

While an emergency fund is essential for your financial well-being, retirement funds are another checkbox of your 30s. You can secure your financial future post-retirement by creating a retirement fund & contributing to it regularly. The earlier you start saving for retirement, the better your future will be.

However, it must be noted in red that never touch your retirement fund for emergencies, even in the utmost distress. You might stop the compounding of money. Also, you might risk financial stability in your 60s, when you may require it the most.

4. Create A Diversified Portfolio

One of the advantages of being in your 30s is that you’re brisk in planning your future finances. It gives a chance to make bold moves in the investment world. Diversify your investments over instruments such as asset leasing, stock, corporate bonds, commercial property, mutual funds, PPF, gold and other alternative investments. It helps you to mitigate the risk factors and to earn diversified & stable returns.

5. Try To Get Rid Of Debt

Debt is an important instrument when it comes to finances. It is important to understand the usage of debt instruments in your daily life. 

Analyse the credit facilities availed in the past few years. It is highly advisable to repay the high-interest debt as soon as possible. This helps you achieve financial freedom. 

Analyse the credit report regularly to close all the unused debt accounts and improve your credit score. This will help to avail the cheaper credit when you might actually need it, such as while purchasing a house.

6. Safeguard Your Finances

The future is very uncertain in nature. You cannot predict every possible expenditure that comes your way. However, you can stay prepared to deal with it. Protect your finances with appropriate emergency funds and insurance plans. 

Nowadays, employers provide the benefit of health and life insurance. But try to purchase a comprehensive plan that covers all general cases. Analyse your plans regularly and opt for the better plan available.

7. Build Wealth By Purchasing A Home

Purchasing a home is big decision, both financially and in general, in your life. While you may or may not be at a stage where you can afford to purchase a home right away, it is always advisable to plan and invest in a home for long-term wealth creation.

Unlike renting, buying a home can be a way to build wealth over time. A house is typically a person's most valuable possession, so owning one can contribute to financial security. However, homeownership is not suitable for everyone. It involves responsibilities like maintenance and repairs, which renters do not typically handle. Additionally, the overall cost of owning a home, including property taxes and upkeep, should be carefully considered when budgeting. 

Essentially, while buying a home can offer financial benefits, it is important to weigh these advantages against the potential drawbacks and responsibilities before making a decision. Even though a home may not be the most rewarding or best investment option out there, it can prove useful in times of uncertainty as well.

Also read: The Importance Of Starting Investing Early

Investment Options You Can Consider In Your 30s

If you’re in your 30s, you might be more focused towards moving forward in your career aspect and addressing the financial responsibilities.

So, it is best to have a balanced & diversified portfolio that provides short to long-term benefits.

Well, here are some risk-avert investment options that can diversify your portfolio and earn inflation-beating returns. 

• Asset Leasing

Asset Leasing is an alternative to regular investments such as stocks and mutual funds. It involves leasing assets to businesses/individuals to generate fixed monthly /quarterly returns.

With platforms such as Grip, you can invest in stock exchange-listed and rated opportunities from creditworthy partners which provides an IRR of up to 16%. These investments are rated and provide a diversified edge on your investments. LeaseX is one such product that allows you to lease mission-critical assets to different companies.

• Invoice Discounting

Invoice discounting is an investment where businesses sell their invoices to a third party at a discounted price than the invoice amount. When the invoice is due, the third party collects the full amount of the invoice upfront.

It is a short-term investment option with minimum tenure ranging from 30 to 90 days. It provides an average return of 10-15%. For a better invoice discounting option you can consider InvoiceX which is India’s first regulated invoice discounting product and comes with the benefit of diversification. Through InvoiceX you can invest in a pool of invoices and hence it mitigates the risk of investing in one single invoice. 

• Corporate Bonds

Corporate bonds are bonds issued by private or public organisations which raise money for a variety of reasons, such as M&A, expansion etc. These are debt-based securities with an annualised return of 8-12%. These bonds are from 5-15 years, where bonds with a tenure of below 5 years are short-term bonds, tenure with 5-10 years are medium-term bonds and above 10 years are long-term bonds.

• Public Provident Funds (PPF)

PPF is an excellent investment option for long-term investments. It enjoys tax exemption benefits for both salaried and self-employed people. It provides an average return of 7% with a maturity period of 15 years. It can be further extended by 5 years each time.

• Other Fixed-Income Schemes

You can also invest in tax-saving FD, debt mutual funds, and Sukanya Samriddhi Yojana to diversify your portfolio and earn a stable income.

Conclusion

The financial journey of your 30s is filled with many unknown responsibilities and obligations. However, you can glide through a strong financial plan. Understand your financial habits and optimise them for better decisions. Secure your future by mitigating investment risk. 

Be prepared with a diversified portfolio with alternative investments to deal with any uncertainty. Sign up on Grip and diversify your investments with new-age instruments providing an inflation-beating return on your investments!