So, you are in your 30s and at the peak of your strength and maybe your earning power. At this period (between 30 and 39 years), you are likely working and earning a decent income and in the process of building a decent life for yourself, especially because life’s responsibilities are still relatively lighter on you. It’s at this time that you settle down to your choice career and possibly establish a foundation upon which you build until retirement comes calling.
However, there are several major life events that often happen around this time that require a good chunk of savings. Such events include marriage, having and raising children and even buying or building your first home. Interestingly, this is also the time in your life to think seriously about investment either in preparation for retirement or financial freedom.
That said, here are seven tips for saving and investing in your 30s and taking advantage of perhaps your highest-earning years to date.
1. Have a clear knowledge of your financial standing and plan with it: This is the time to take deliberate and conscious effort to assess your family (or individual) income and possible monthly expenses. This will give you a realistic idea on how much to keep aside for savings and investments without going broke by the 3rd week of the month. It will also tell you where to cut down where necessary. Know what you earn, know what you spend and dedicate a certain percentage of your income to savings and investments without fail.
2. Have a solid financial plan and stick to it: Your 30s are a good time to put a solid financial plan in place. There are always unexpected things that come up, but you should know your short- and long-term goals and have a plan to get there. Short-term goals might be planning for kids or buying a house, while long-term goals typically focus on retirement.
If you don’t have one already, make sure you have an emergency fund saved for any major unexpected costs that may arise. This includes hospitalization, loss of a job, unexpected home repairs, sudden automobile expenses and any other unplanned expense. Experts suggest having at least three to six months’ worth of expenses saved.
3. Take risks, build a strong and lasting portfolio: In your 30s, you have a high tolerance for investment risk and can therefore, afford to be an aggressive risk seeker. Don’t be afraid to take risks. Go for equities or equity-oriented funds that can deliver supreme returns over time. Market volatility burns less when you invest for long-term. Diversity is strength and having a mix of equity and debt funds or schemes can work well.
4. Stick with stocks for long-term goals: As an individual in his 30s, you have a high-risk tolerance hence you still have time on your side to make up for market losses. This makes long-term investments in portfolios like stocks a right fit for you. Over the long run, stocks have returned about 9-10 percent annually on average for investors, but that return doesn’t come in a straight line. Volatility is part of investing in stocks and you’ll want to be sure you have the risk tolerance for it.
However, a big benefit of investing in your 30s is the amount of time you still have for money to compound before you reach retirement age. Use this long-term horizon to your advantage and consider investing in stocks through ETFs and mutual funds.
5. Potentially build wealth by purchasing a home: Your 30s is the best time to be aggressive in building your own home.If you rent instead of owning a home, you’re not building equity. For most people, a home is the largest asset that they own. So, purchasing a home may be able to help you earn equity, and save for the future by having an asset. Keep in mind that home ownership is not for everyone. Make sure you’re ready to embrace the good and the bad that comes with owning a home and are ready to tackle maintenance issues that you may be used to having a landlord take care of.
That said, a perfect opportunity to own a home in your 30s is provided by PWAN Stars with the launch of The Cynosure Apartments, a smart apartment in Sangotedo, the fastest growing real estate investment destination in Lagos. The Cynosure comes with a lot of offers that makes it better than any housing estate that you know of. Reach us today to talk further about it.