The 30s are possibly the most important decade in our lives. It’s when most significant decisions—such as buying a house and starting a family—are made. The 30-something years are also crucial for investing. This is the time to start working towards lofty goals like retirement, buying a family home, or setting aside cash for children’s college education in the future.
The 30s are a great time to invest because you can afford to take risks. These are the years the average income earner can bet on riskier investments like stocks. Even if there is a loss, the investor is young enough to work and make up for it.
There are also downsides to investing in your 30s. Most millennials may jump right in without considering returns versus the risk. Read ahead for important tips on how to invest in your 30s smartly:
Add More Stocks to the Portfolio
The prime working years are the perfect time to invest in stocks. The stock market is notoriously volatile, but the risk can enormously pay off. While it’s difficult to say exactly what type of stocks to invest in during this time, do your research and learn about which industries look promising.
Healthcare and tech stocks, in general, do amazingly well. So do unconventional assets like marijuana stocks, which are rising in value because of changing legislation. Watch the news and read the papers to find out which stocks are on the rise. Don’t buy stocks keeping short-term returns in mind. Assess the overall health of the company and the industry to benefit the most.
Open an IRA
The 30s are the perfect time to start investing outside of a 401(k). It’s highly recommended to open an individual retirement arrangement (IRA) during these years. An IRA is the best way to save for retirement in more ways than one. First, an IRA allows the account holder to invest with tax benefits—a major plus.
IRAs are also excellent vehicles for investing without worrying about strategy too much. If you want more control of how your money is invested, then you can try a self-directed IRA. The point is, opening an IRA in your thirties is the best way to secure your finances for later years. Your investments would have longer to compound when you start early, and the assets are automatically rebalanced once you set a target date of retirement.
Get into an ETF
An exchange-traded fund or ETF, is a financial instrument like a mutual fund, but trades like a stock. An ETF can be a major asset to add to a diverse investment portfolio. A single ETF can add hundreds of stocks to your portfolio. When you do this, your finances are protected against the volatility of individual stocks to some extent. ETFs pay off in the long term, and when you get one in your thirties, your returns have decades to compound.
The simplest way to find investment success in your thirties is not to complicate the process. Essentially, know what really pays off. Take risks, but balance it out with your ability to work and capacity to save. Above all, have realistic expectations.