If you want to invest in your 30s, consider riskier, but more profitable investment options
Entering into your 30s is a period when life begins to get more serious. It is a time when statistically, you have more responsibilities at hand, like taking on a mortgage, furthering your education, planning your wedding/ marriage and having kids.
This new level of commitment often comes with new costs, too. Moving into a new apartment, weddings and the obligatory honeymoon usually feature as key expenditures during this time of your life. Your responsibilities, and the financial pressure on your bank account grow by the day as there is a day care, schooling, rent and endless groceries to purchase.
At your thirties, the game begins to change when it comes to your finances. You are no longer in the joy ride of your twenties, where retirement seemed like a faraway imaginary life. Your thirties are the time to get serious about building a solid financial foundation for the rest of your life. However, do not fret if you are a little bit behind, it is not too late to get going. Time really is still on your side, and this is the reason you need to see the guide below to successfully direct your path.
1. PLANNING YOUR BUDGET WISELY
Having a good career/business provides a great opportunity to begin to invest in your 30s. Your income might rise, but also have it in mind that your expenses will also rise. It is imperative to have a budget in order to track your expenses and financial commitments as it aids you in putting aside cash for your future. As your income is coming in, it is advisable to have a budget planner. This will guide you through in order not to overshoot your budget or make costly mistakes.
As a young and hardworking youth with a good career/business, getting married, and having your own family is would be one of your top priorities, which doesn’t come at zero cost. If you are planning a wedding, bear in mind that an average wedding in Nigeria is up to N1,000,000, however it all depends on the locations and number of people you are inviting. Though some people go as far as taking a loan to cover the costs. But if you have a budget in place, it will enable you to know how much you are putting aside for your big day and how much you are locking up for the main journey which is the “Marriage”.
2. BUILD AN EMERGENCY FUND
Being in your 30s means without any doubt you want to be financially responsible, and you do not want an unprecedented event to rip- off all you have earned and saved.
So, to be able to invest in your 30s, it is advisable to set up a savings fund specifically for an unplanned event, which could range from high hospital bill that your insurance can’t cover, loss of a job, car expenses, catering for your siblings/parent or any other unplanned expenses. The whole idea is to aim to have at least six months’ expenses set aside in your emergency fund, as this will prevent you from tampering with your savings/selling some of your properties.
3. SAVE TO INVEST
If you want to invest in your 30s, consider riskier, but more profitable investment options because you’ve still got time on your side to ride out any short-term volatility. Riskier investments may ultimately yield higher returns over the long term, after all.
As the higher risk investments, such as shares or property, have the potential for higher returns over the long term, but also a greater risk of falling in value. This could result in a loss known as a negative return. Investments with a lower risk include cash and fixed interest, which are safer, but also offer lower returns.
4. PAYING OFF HIGH-INTEREST DEBT
Before saving to invest in your 30s, you should have a plan to pay off all your debts. Before you use your money to earn a 7 percent annual return, you should use your money to avoid a 15 percent accrual of interest on your credit cards. That does not mean you have to wait to start investing until all your debts are paid off; in fact, some debts with low-interest rates are good to keep. But you should work on getting high-interest-rate debt off your plate before focusing on other investments.
5. HAVE ANOTHER STREAM OF INCOME?
Being in your 30s is actually the peak when you start planning for your future, it is also a period you are faced with a lot of expenditure, whereby you will spend a lot on your wedding, raising a baby, paying for mortgage/rent, and house keep. Ideally leaving on paycheck sometimes isn’t enough to cover for these expenses, considering the job/business that you are in.
It is advisable to consider having another stream of income to be able to sustain you and your family. Being in your 30s comes with a lot of responsibilities and expectations from your family. Though not everyone is so lucky to have a good steady paycheck job, however you might contemplate on having another stream of income.
For example, if you own a car, you may decide to turn it into Uber, whereby you make use of it after the close of work/ weekends. Also, you may decide to venture on other side businesses like opening a laundering shop, Car wash center, Logistics business, Unisex wears shop, etc., whereby you employ a salesperson to help you manage it.
6. START YOUR OWN BUSINESS
If, in your 30s, you feel like you are ready for a change in your career, then change it. If you have spent 5, 10 or 15 years in one field, then it makes total sense that you might want to do something different. The thought of leaving a steady paycheck can seem very daunting. Business can take a long time to set up and turn a profit, so it seems like a huge risk to leave a regular salary for something completely known.
The danger of being an employee is that you never really know what is going on, or what is being said in the boardroom (unless you are in it). So that ‘stable’ job you thought you had, could actually be quite precarious. The second problem with being in a perceived ‘stable’ job, is that you may be spending all of your money each month, with the belief that you will keep receiving your paycheck each month. If you are made redundant and that paycheck disappears, you could be in real trouble.
However, if you want to start a business, you need to think of something that no one else has thought of. Something that will blow everyone away with your genius originality. There are so many successful businesses out there, cleaning companies, coaches, bookkeepers, graphic designers. Most of them are not original, but what makes them unique is the person who started them. Each one will have different branding, different customer service, different tone of voice. And that is what makes them stand out, not the idea itself.
7. CONSIDER BUYING A HOUSE
Buying a house isn’t the right move for everyone, and it can be a complex process. However, in markets with reasonable prices, it’s often financially advantageous to buy a house instead of renting, so you can start building equity instead of just losing your rent money every month. Choose a neighbourhood with high-growth potential to maximize the appreciation value of your home, and make sure to get a fixed-rate mortgage with a substantial down payment (so you can avoid paying PMI).
8. MAKE SURE YOU ARE PROPERLY INSURED
This is the time in your life when you start to realise how important having the right insurance policy really is.
You may well have life insurance wrapped in your super, usually through arrangements at work, but does it give you enough cover? Statistics show that the answer is probably not. Research reveals that the median level of life cover will provide just 38% of the amount needed to maintain a family’s standard of living after the death of a partner or parent. So, take the time to find out how much life insurance you need. The exact amount of cover you need depends on your circumstances.
9. INVEST IN YOUR EDUCATION
Getting more knowledge will help you redefine your skills and also give you an edge in your career. You may want more thorough, in-depth knowledge of a subject. Or maybe there is a particular skill missing from your professional toolbox. Whether it is a detailed part of a general field or a very specific skill set, not having this knowledge can hold you back from growing professionally. Or maybe there’s something you have always wanted to learn (for the sake of learning). Many people choose to finish their studies for personal development alone. While some want to further their education more (Masters/PHD), and also go into Professional courses like ICAN, ACCA and CFA, which in turn aids in self-development and also serve as a good ladder to aid you climb faster in your career.
10. SEEK FINANCIAL ADVICE
Sometimes dealing with the world of investment and insurance can be overwhelming, and it can be hard to know what to do. That’s where a trusted adviser can help explain what it all means. They can also help you consider options that are right for your circumstances and budget. Before investing or taking out insurance consider seeking advice from an adviser with the skills and expertise in the area’s that you need advice on.