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How to Invest Money in Your 30s – 5 Financial Priorities for Building Wealth


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If your 20s see you vacillating between elation and insecurity, fun and the constant effort to prove your success, then your 30s tend to bring more stability, confidence, and direction. And the more money you save and invest, the faster you’ll achieve those results.

Fortunately, you don’t need to be a math whiz or personal finance nerd to get your investments right. Follow a few simple rules, prioritize building long-term wealth over keeping up with the Joneses, and you’ll find that you can’t help but succeed.


How to Invest in Your 30s

Managing your money in your 30s comes down to prioritization. You have plenty of financial goals but only so much savings each month, so you need to put them in a pecking order. 

1. Ditch Unsecured Debts First

If you have high-interest unsecured debts, prioritize paying them off over everything else.  


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After all, it makes no sense to invest money in stocks at a historical return of 10% if you’re paying 24% interest on a credit card balance. 

The same goes for personal loans, high-interest student loans, and any other debts with an interest rate over 8% or so. Remember, you earn a guaranteed annual return equal to your interest rate by paying off your debt early. 

Try the debt snowball method to knock out your unsecured debts in quick succession. As an added bonus, your credit score will rise as you pay down your balances.

2. Maximize Your Retirement Savings

We all have one long-term financial goal in common: retiring one day. 

Not everyone wants to buy a house, get married, or help their kids with college tuition. But everyone needs to reach financial independence at some point, because you can’t work forever. 

For that matter, you may not want to work very long at all. Some people aim to retire in just five or 10 years!

But saving for retirement offers a slew of options, so how do you form a plan?

Start with Employer Matching Contributions

If your employer offers matching contributions to a work retirement plan, take them up on it. It’s effectively free money. 

In fact, you should prioritize these investments even over paying off high-interest debt. You earn an instant 100% return on every dollar you invest that your employer matches. 

If you have a Roth option for your employer-sponsored retirement plan, such as a Roth 401(k), opt for that over the traditional version offering the immediate tax deduction. 

As a 30-something, you probably earn less now than you will later on, and your investments have decades to compound. With 40 years to compound, your investments could be worth 40 times your initial contribution — or more. Pay taxes on the contribution now, so you can enjoy tax-free compounding and withdrawals in retirement. 

Contribute to a Roth IRA

The same logic applies to Roth IRAs. Rather than investing in a traditional IRA, put your money in a Roth IRA.  

And the Roth option doesn’t depend on your employer-sponsored retirement account options, either. Anyone with adjusted gross incomes under the limit can invest in a Roth IRA. 

If your income exceeds the limit, consider investing in a traditional IRA instead. You won’t get the tax deduction, but you can roll over your balance to a Roth IRA in a maneuver called a backdoor Roth contribution. Speak with an accountant before trying this at home though. 

Consider an HSA as Another Retirement Account

Health savings accounts (HSAs) offer the best tax advantages of any tax-sheltered account.

You pay no taxes on contributions. Invested money compounds tax-free, and you pay no taxes on withdrawals either — if they’re used for qualified medical expenses. 

Which you’ll have plenty of in retirement. 

As a 30-something, you and your family probably enjoy good health and low health care costs. Consider setting up an HSA and using it as a secondary retirement account to invest even more money tax-free. Try these best-in-class HSA providers if you don’t have one in mind. 

3. Save for Long-Term Goals

Everyone has their own unique long-term financial goals, in addition to reaching financial independence and retiring one day. 

But how do you prioritize these other goals?

Start with an Emergency Fund

Most Americans are one car breakdown away from catastrophe. 

Make sure you have a bare minimum of one month’s living expenses held in reserve as an emergency fund. Depending on how stable your income and expenses are, you may need as much as 12 months’ living expenses set aside. 

If you don’t have at least one month’s living expenses in your emergency fund, prioritize padding it.

Prioritize Your Life Goals 

Want to get married? Have kids? Buy a house? Start a business? Save for your kids’ college education?

You can, of course, split your savings to go toward multiple goals. Set a timeline for each goal, and invest accordingly. That may mean putting money in lower-risk, lower-return short-term investments for goals you want to achieve within the next year, and longer-term investments to fund longer-term goals. 

As a psychological trick, try naming your various savings accounts or investment accounts after each earmarked goal. That makes your goal more tangible, and can help motivate you to save more money toward it.

4. Invest More in Stocks

As a young person, you don’t need to worry about volatility in your investment portfolio. You don’t need to withdraw money from your retirement nest egg for decades to come. 

That means you don’t need to invest in low-return, low-volatility investments like bonds — at least not among your long-term investments. 

You can invest heavily in equities because stock market corrections are all upside for you. When the market crashes, you don’t have to freak out that your net worth has dropped. Instead, get excited that you get to buy stocks at fire-sale prices.

So don’t stress over the daily gyrations in the stock market. Keep it simple by investing in passive funds such as index funds. In fact, you can automate your index fund investing through a robo-advisor, many of which are free. They not only manage your investments for you, but they also let you set up automated recurring transfers to put both your savings and investments on autopilot. 

5. Diversify Your Portfolio

Remember what your grandma always told you about not putting all your eggs in one basket? 

As anyone who invested in Enron will tell you, you don’t want all your money tied up in a single investment. Or sector, or market cap, or even asset class. 

Plan your asset allocation with the following in mind.

Diversifying Your Stock Holdings

Start simple by diversifying your stock investments. Invest in both U.S. stocks and international stocks, including developed regions (such as Europe) and emerging markets (such as Asia and South America). 

Beyond geographic diversity, also invest across small-, mid-, and large-cap companies. For example, if you invest in an index fund mirroring the S&P 500, that exposes you to large-cap U.S. stocks. Investing in an ETF or mutual fund mirroring the Russell 2000 exposes you to small-cap U.S. stocks, and so forth.

These funds also expose you to companies across many economic sectors, from technology to consumer staples to financial services. 

But don’t stop with stocks. 

Including Real Estate

Sure, owning your own home gives you some narrow exposure to real estate markets. But just as taking stock options in your employer’s company isn’t all the stock market exposure you need, consider diversifying into other real estate investments. 

Besides, you didn’t choose your home for its investment returns — you chose it because it fit your needs.  

Start by exploring real estate crowdfunding platforms. They’re completely passive and offer great diversification potential. I personally like Fundrise, Groundfloor, Streitwise, and Concreit as relatively safe and easy starting places. 

I also invest in real estate directly, but it’s not for everyone. Only consider buying rental properties or flipping houses if you want to approach real estate investing as a side business, because it takes an enormous amount of time and knowledge. 


Investing in Your 30s FAQs

Given the stakes — your entire financial future — new investors often hesitate to start investing or to diversify with new investments. And they always have questions. 

Here are a few of the more common questions that investors in their 30s have about their personal finances and portfolios.

How Much Money Should I Invest in My 30s?

At a bare minimum, invest 10% of every single paycheck. 

That’s a great habit to help you build wealth in the long term, but it won’t get you anywhere fast. Start with this breakdown of how much you should save for retirement, depending on how quickly you want to reach financial independence. 

The greater your financial goals, the more you should save and invest. If you want a lavish wedding, you need to save a higher percentage of your income to afford it, compared to a more modest one. Want to buy an up-market house? A flashy car? The same answer applies: you need to save more money. 

The irony of wealth is that the more you show it off, the less of it you actually build. Real wealth exists in your brokerage account balance, in your retirement accounts, in the equity in your investment properties. It doesn’t exist in a huge house or high-horsepower car. To build real wealth, start spending less and saving and investing more.

What Investment Strategy Is Best for 30-Somethings?

Start with a simple, passive strategy of investing in index funds. Consider setting up an account with a robo-advisor to automate it, or hiring an investment advisor if you don’t mind paying more. Or you could get started by just buying shares of the Vanguard Total Stock Market Index Fund (VTSAX), which gives you exposure to stocks across all market caps and sectors.

Follow the order of operations outlined above, from taking advantage of matching contributions to paying down high-interest debts to building an emergency fund and investing in a Roth IRA. 

When you’re ready for the next step, add real estate into the mix. 

Don’t overcomplicate it. 

Do I Need a Financial Advisor?

No, you don’t. But some people sleep better at night with a professional managing their investments.

I personally use Charles Schwab’s free robo-advisor. The only major drawback is that it requires a $5,000 minimum investment. 

Should I Invest or Pay Down Debt in My 30s?

It depends on the interest rate. 

Definitely prioritize paying down debts with interest rates in the double digits. As you get down to debts costing around 8%, start thinking about splitting your savings between investments and paying down debts early.  

Leave your home mortgage and car loan in place, unless the latter comes with a high interest rate.

Should I Prioritize Buying a Home in My 30s?

Again, it depends.

First, it depends on how long you plan to live in your next home. If you plan to stay put for at least five years, consider buying a home. But if you might move within the next few years, you should probably continue renting. 

Also, how disciplined are you with budgeting money? Homeowners need a deeper emergency fund than renters because they get hit with “surprise” repair bills all the time. If your furnace kicks the bucket in February, you better be ready to write a $5,000 check on the spot. 

To make buying a home a no-brainer though, find a way to house hack. Once you stop paying for housing, you’ll wonder how the rest of the world does it. 

Do I Need Life Insurance in My 30s?

Some people do, for their family’s financial security. Life insurance makes the most sense for traditional households with one breadwinner, where the family would face a financial emergency if that breadwinner died. 

For a case in favor of it, read these reasons to buy life insurance. As an alternative model, read up on how my family avoids the need for life insurance with our high savings rate and early retirement age target as a hidden benefit of the FIRE lifestyle


Final Word

Your investment strategy in your 30s depends on your financial goals. And those shift over time as well — you might not give a second thought to saving for college tuition until you have a child, for example. Revisit your financial goals at least once per year to make sure they haven’t moved while you weren’t looking, and to make sure your current savings plan reflects them. 

Keep your investments simple and boring. You don’t need to pick stocks, time the market, or day trade. In fact, those are usually terrible strategies. 

Focus instead of saving more and spending less. It’s not sexy, but it’s how you can consistently build wealth in the years to come. Consider freezing your living expenses at their current level, regardless of how your income increases in the future. That helps you avoid lifestyle inflation and lift your savings rate over time. 

G. Brian Davis is a real estate investor, personal finance writer, and travel addict mildly obsessed with FIRE. He spends nine months of the year in Abu Dhabi, and splits the rest of the year between his hometown of Baltimore and traveling the world.

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