Here we are, in our 30s, and we’re just getting started investing. Honestly, it’s been a long path here for most – so congrats on making it. You are probably making more money now than you ever have before, but you also have more challenges.
In our 30’s many things are in our head like having more kids, building a home, changing careers, starting new businesses, dealing with loss, retirement plans, etc. so it is very important to make strategy and plan accordingly.
So here there are some tips for investment planning…
1. Identify your future expenses
Ideally, an individual should plan based on his/her future expenses. You can roughly identify your future life events and expenses and then plan accordingly where to invest and what to invest and how much you need to invest.
2. Start with your retirement plan
firstly, start with any retirement plan, whether it is with your employer or you can do by yourself. It has two benefits, first is that when will you retire you will have enough funds and the other is the tax benefit.
3. Beat the inflation
Typically, we believe that our only aim to get rich over the long-term, so that we can enjoy the luxuries of life. It is seen that people lock savings in the following three: Savings account, Fixed deposits, Piggybank
These investments are great when it comes to liquidity but when it comes to returns, they barely generate anything. Sometimes the returns are lower than inflation Which technically means an investor is losing money’s value. So, for a 30-year old – the objective should be to identify expenses and treat inflation as an enemy.
Well, you’re in your 30’s, your mantra of wealth creation should be investing in assets that would beat inflation and multiply rapidly with time. Thus, selecting products like stocks, equity mutual funds, or real estate should enable you to beat inflation.
4. Take risk
As young people have a long-time horizon before retirement, which means they can worry less about short-term volatility. That allows them to accept risks that should lead to higher average returns over the long term. So, at this age, we should invest in stocks and mutual funds.
5. Maintain liquidity
liquidity forms a very important factor in deciding your investment option. Ensure the instruments you sell are liquid enough. Liquid, here indicates that the instrument can be bought and sold in the market easily.
6. Pay your debts first
Before you start investing, you need to clear off that education/car loan. Thus, if you are carrying costlier loans like a personal loan or holding a credit card, try repaying them first within the due date.
7. Buy Health Insurance
Now that you’re getting older, you need to think about health insurance. Even if you live a healthy lifestyle, there are reasons to have health insurance. If you have kids, you need health insurance. You can then put money into a Health Savings Account, earning you a tax deduction and allowing the money to grow tax-free as long as you use it for qualified expenses.
8. Maintain emergency Fund
You should maintain an emergency fund at least for 6 months to take care of your family expenses. This should be parked in liquid instruments that are highly safe.