To invest in your 30’s or not to invest? The decision to invest is a no brainer. You’ll grow more in your thirties than in any other decade of your adult life. At 30, maybe you have recently had a child or have a great position working in your dream job. Ten years later, you’ve got a super, a mortgage, and are preparing to tie the knot. Your investment strategies should begin to take shape during these years as you plan for things like family planning and retirement. If you are not sure on whether investing in your 30’s is a viable option, allow Super Network to provide you with some wise words of investment wisdom.
Eliminate debt
The smartest way to be wealthy in your seventies is to get rid of debt in your thirties. It’s Econ 101 that the less you have to fork over to credit card companies and auto lenders every month, the more disposable income you’ll have to invest. The aim is to spare just enough cash to keep yourself entertained. There is no set formula to pay off your debt. Still, your overall financial situation and priorities are the primary factors of structuring a debt elimination plan. Here’s how most people tackle debt:
- High-interest (usually over 10%) debt, such as credit cards.
- Student or business loans that carry high-interest rates but may be tax-deductible.
- Lenders mortgage insurance (LMI) attached to your home mortgage.
- Low-interest rate, tax-deductible debt, such as a mortgage.
Tax-deductible debt isn’t all bad. However, as your career and tax bracket grows, you’ll find that some debt is a tax advantage. Some education debt, for example, may be a tax deduction, as is the interest on loans you took out for investment purposes.
Invest for the long term
In the world of the 24-hour news cycle, it’s difficult to not react to less than ideal economic reports and dips in the shares market. But, remember, keep your eye on your long-term financial goals. You should seek financial guidance when assessing the volatility in the shares market. The correct guidance will allow you to work out whether you should or shouldn’t react—and reevaluate if this strategy is working in your favour.
You have thirty years to build your wealth; a few slow quarters are not the end of the world. Historically, when the markets bounce back, the investors who stayed the course come out on top.
Finally, it’s okay if you have some aggressive investments—this is the time to take risks.
What are good long-term investments?
When you’re investing in your thirties, look at growth assets, like shares and real estate.
In the long run, shares can outperform other investments—and they pay semi-annual dividends. You can either keep your dividends as a cash account, or reinvest them to increase your capital.
Government bonds are old school, boring, and reliable, and that’s why you want them in your portfolio. Balance is the key to building a smart investment strategy in your thirties that pays off in your sixties, so make sure you have some long-term bonds in the mix.
Real estate investments deliver a double benefit, much the same as shares. You can have an income stream from rents as well as long-term gains in valuation. Real estate is also one of the most manageable assets to leverage when reinvesting. Just remember that property values do fluctuate, and be prepared for some market volatility.
Maximise your super
The magic of super is compounded returns. Every year your investments grow, your super balance should increase year upon year. Until you’re ready for retirement, and by then, that little bit of yearly compound returns add up to a rather astonishing sum. You can grow your super even more by contributing your after-tax income—that’s a great place to invest extra cash after you’ve paid down small debts.
Talk with Super Network or your financial advisor about how to put that extra tax income into your super while you’re still in your thirties. There are some tax advantages, but there are also limitations to what you can contribute.
Keep a cash cushion
In your thirties, investing may need to take a back seat so that you can build up a cash nest egg. Financial experts suggest a cushion of three to six months in expenses as a rainy day hedge. Stock that money away in an account that’s not too easy to access and pays a higher interest rate than a checking account. Money market funds are pretty good places to stow savings.
Don’t keep too much cash on hand, though. Savings rates are too low to even keep up with inflation, so you actually lose money if you keep too much out of your investments.
Estate planning
Here’s where the difference between 30 and 39 is really glaring. At 30, estate planning is for your parents, or even grandparents. By the time you’re looking at 40 around the corner, it seems prudent, if not downright necessary. At the very least, you need life insurance to ensure that should the worst happen, your spouse and young children are taken care of. At this age, term life could be a better investment than a whole life policy; you can invest those whole life premiums on your own for a better return. As you get older, you’ll want to plan more for your estate and your kids, but start with life insurance policies in your thirties.
Consult with an expert
Investing at any age can be tricky. But investing in your 30’s is an advisable measure for securing your future. The earlier you determine a plan for investing from your thirties onward, the easier it gets. Of course, once you set your strategy, you can trade individual assets within that grand scheme, but the hard part is over. Consulting an experienced financial advisor helps you lay the groundwork for your investment strategies. Learn about the various investment instruments available to you and how to design a portfolio that meets your goals for your thirties, forties—even your nineties by contacting Super Network today.
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