The roaring 20s might have passed you by, but you’re in the financial investing sweet spot right now: Your career is on track, you’re starting to save more money, and you’re focused on your future.
Maybe you’re dealing with pesky student loan debt, a hefty mortgage, and an ever-growing list of family expenses.
But time is on your side, and if you begin making smart financial choices and looking for ways to start investing now, you will reap the rewards later on.
Time Magazine said “Even small [investing] moves can make a huge difference long-term.”
So let’s get to it–here are 6 ways to start investing in your 30s.
How to Start Investing in Your 30s
A word of warning for those new to investing: Slow and steady wins the race. Excitement can drive new investors to put all their eggs in one (faulty) basket, burn out on investing, and miss major financial rewards. Starting slow and investing in small amounts over time will yield the highest rewards for new investors.
Check out the video from CNBC below for more details about investing incrementally in your 30s.
An alarming statistic for you to consider: Almost 40% of Generation Y say they will “never feel okay investing in stocks” after the financial crisis, according to MFS Investment Management. But portfolios mostly in stocks average gains of around 10.8% annually, while bonds average 4%.
Don’t let fear of losing money intimidate you from investing in the stock market. If you invest in a smart way, you only have money to gain. Time recommends that in your 30s, most of your portfolio should be in stocks (50% in US equities, ~30% in foreign equity).
Avoid cashing out
If a person leaves a job in their twenties, there’s more than a 50% chance they’ll choose to cash out their 401(k) to get the money right away. Smart, right? Not really.
Picture this: If your 401(k) had a $10,000 balance and you decided to cash out, you’d be left with around $7,000 once taxes and penalties were taken out. But roll that 401(k) into an IRA or your new employer’s plan (at a growth rate of about 6%), and you could see gains of more than $90,000 by the time you retire. That’s a nice little nest egg!
Just like having an accountability partner helps with losing weight, kicking addictions, and getting work done, it’s smart to have an accountability partner for investing. Choose a friend that knows what they’re doing and is committed to helping you succeed.
Check in with your accountability partner with updates on your portfolio and investments, and you’ll be less likely to start letting things slide or stop investing altogether.
Take a course
The more you personally know about investing, the better financial decisions you’ll make and the more in control you’ll feel. That’s why we recommend taking a course to teach you the basics and nuances of investing.
Tackle small debts
It might seem counter-intuitive, but paying off small debts before tackling larger ones is a smart financial tactic. You could pay on some large debts for years before seeing real results; Start throwing money at a small debt, though, and watch it completely disappear.
That’s peace of mind for you, and solid ground to start investing on. Did you enjoy our 6 ways to start investing in your 30s? Anything we left out? We’d love to hear your thoughts. Find us on Twitter @Conrecept and on Facebook!