Investing in your 30s

If you didn’t begin on the pathway to wealth in your 20s, it’s not too late to start investing in your 30s. You’re young enough to enjoy the benefits of compound interest over another 30-plus years, and you’re wise enough to try and invest a significant portion of your income – an income that is likely much higher than it was in your previous decade.

Despite the fact that the average Australian takes on the responsibilities of marriage and family during this period, you can still make impactful financial decisions for a prosperous financial future.

At First Financial, we understand that each phase of life presents different challenges and opportunities. Whether you are settling down and starting a family or on a completely different journey, we are here for our clients no matter what decade they’re in. So, here are some of our tips for investing in your 30s.

Getting started with investing as early as possible is a smart move, and one of the main reasons for this is the power of compound interest. Compounding interest refers to reinvesting any earned interest into the same account, resulting in a cumulative growth effect. This process allows both your initial investment and the accumulated interest to generate further returns as time progresses.

With this in mind, the sooner you get started, the more money you will have when you reach retirement age. Because time is on your side, you should focus on long-term investing rather than short-term speculation. This approach not only allows you to benefit from compounding returns, but you can also ride out market fluctuations.

Starting in your 30s can also help manage risk. During this stage, you have the capacity to assess and effectively manage risks carefully. Always avoid putting all your eggs in one basket.

This is an opportune time to establish well-defined financial goals encompassing the short, medium and long term. Your desired lifestyle, both presently and in the future, will serve as the ultimate destination, while your risk tolerance will play a role in charting the path towards achieving those goals.

Embrace budgeting if you haven’t already. Thoughtfully assess your expenses versus income and give priority to necessities, savings and the things that are important to you. Ensure your budget is realistic, to avoid feeling disheartened by consistent overspending.

During this stage of life, amidst various family and personal commitments, it is advisable to build an emergency fund. Significant expenses can arise unexpectedly, particularly when raising children. Additionally, having a financial safety net is imperative to mitigate the impact of potential job loss, severe injury or unexpected family emergencies. We recommend setting aside the equivalent of three to six months’ worth of living expenses.

While you still have plenty of time left before retirement, if you’re in a position to bolster your superannuation now with extra contributions, take action. Superannuation is a security deposit into your future.

There are numerous tax-effective and smart strategies that incentivise making additional contributions to your superannuation, all resulting in more money when you retire. For instance, superannuation benefits from a maximum tax rate of 15%, which is significantly lower than individual tax rates (which can reach up to 49%). This means you retain a greater portion of your investment returns from superannuation as opposed to other investment options.

Diversification is also an important consideration. Spread your investments across different asset classes to reduce the risk and increase potential returns over time. For help in devising a successful investment strategy, it’s best to consult your financial advisor.

One of the best investments you’ll make is in yourself. Invest in education and invest in solid financial advice.

At First Financial, we provide professional advice tailored to your goals, lifestyle, financial situation and family circumstances. We believe wealth is more than money. It is the freedom to live however you choose. And your 30s are a great time to start on the pathway to wealth to ensure you can live the way you choose for the rest of your life.

Wealth accumulation is attainable for everyone through a systematic and structured approach. The key is to take the first step and get started.

At First Financial, we offer comprehensive assistance in various areas, including debt reduction, superannuation acceleration, potential suitability of an SMSF, diversified investment portfolio growth, smart cash flow management, tax-effective strategies and ensuring adequate insurance coverage to safeguard your assets.

If you are ready to get started creating an investment strategy that is perfect for you, no matter what decade you’re in, talk to a member of our expert team today.

In your 40s? See our top tips for investing in your 40s.

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