While your 20s can be a great time to make mistakes, learn, and grow, your 30s should be one of the best times to invest your money (if you haven’t already started in your 20s). Your 30’s should be a time you start choosing smart ways to invest your money. Investing in your 30s (and even earlier) is wise because you’ll still have 30+ years to save before you reach the traditional retirement age of 65.
Still, as most 30-sometimes hold off on major life milestones like buying a home, getting married, and having children, this can make it a challenging time to squeeze out extra money to save.
Investing something is always better than nothing and there are plenty of easy options for you to consider. Below are 5 smart ways to invest your money in your 30s.
1. Pay Off High-Interest Debt
If you have high-interest debt while you’re in your 30s, prioritize paying it off. With the average American household carrying $7,000 to $9,000+ of debt, paying off some of your balances could add a lot more back to your budget.
My go-to debt repayment strategy is to take a numbers-based approach and tackle the balance with the highest interest rate. That way, I’ll save more money over time. This is money that can be saved and invested in the market.
Consider your comfort level regarding your debt and current budget. Is money already pretty tight right now and would you rather have fewer bills? Develop a plan to aggressively pay down your debt so you can free up more money and invest in your future.
I’m not recommending you spend 7 years aggressively paying down debt and knock out your mortgage – unless this is a goal that you’re passionate about. But if you want to invest you need money to do so. With debt standing in the way, this can be challenging.
2. Max Out Your IRA or 401(k)
First off, if you haven’t opened a 401(k) or an IRA, go do that this week. A 401(k) is an employer-sponsored retirement plan with tons of tax benefits. Some employers even offer to match your contributions up to a certain amount so it’s basically free money.
If you don’t have access to a 401(k), open an IRA which is an individual retirement account. You can do this on your own through an online brokerage or robo-advisor. You don’t even need to have a financial planner so there’s really nothing holding you back from investing in retirement through these vehicles.
Of course, the earlier you start, the more time you’ll allow for compound interest to take effect. Once you get into your 30s, challenge yourself to max out these accounts to beef them up at a faster rate. The annual contribution limit for an IRA right now is $6,000 which is much lower than the $19,000 you can put into a 401(k) but it’s still a great option.
Adjust your lifestyle and make automatic contributions that you increase each year until you can contribute the maximum amount.
3. Open a Tax-Advantaged Brokerage Account
As you get older and your career evolves, you may start to become more and more interested in tax savings strategies. Tax-advantaged investments can help shield your taxable income while also growing your nest egg.
Consider getting an HSA which is a Health Savings Account. You must have a high-deductible health plan through your employer, but your contributions are tax-deductible and your assets grow tax-free. Plus, you can withdraw funds tax-free so long as they are for qualified medical expenses or to reimburse what you paid for a qualified medical expense.
If you’re self-employed or have a side business, consider opening a SEP IRA which allows contributions to be deducted from your taxable income.
Explore other investment options that will also help you save on taxes and grow your money.
4. Consider Real Estate Investing
Some people prefer real estate investing because owning actual property is tangible. However, you don’t have to flip hours or become a landlord to invest in real estate.
Consider real estate crowdfunding through a site like Fundrise. With Fundrise, you’ll invest your money with a pool of other real estate investors in order to own a portion of a property. You can invest in residential and commercial properties. It’s also recommended that you keep your money invested for at least 5 years to see the best potential growth.
5. Smart Ways to Invest in Yourself
Don’t waste too much time wondering where to invest your money or what cryptocurrency is trending for the moment. Investing is often a long-term process and you should be realistic about seeing results over time.
One of the absolute best ways to invest your money in your 30s is to invest in yourself. Thinking of advancing your career, invest in the education and resources you’ll need to make that happen. Going back to school for a certification or license can earn you a significant pay raise.
If you want to turn a passion project into a hobby or business, invest in yourself and the products you’ll need to make that happen. Take good care of your mental and physical health so you can continue to work over the next few decades if needed.
Your 30s is a great time to prioritize smart ways to invest in the future, but don’t forget to enjoy the present and live your life today as well. Prioritize minimizing debt and being intentional with spending so you can live on less than you make. When you’re spending less than you earn, it makes it easy to invest in some of the options mentioned above.