Best investments

Financial moves to make in your 30s

Are you in your 30s? If so, it’s a great time to start thinking about building wealth and taking steps to make your retirement accounts stronger. You are more established in your career and making a salary that should give you extra cash to invest, but you also are young enough to reap the benefits of compound interest.

So what types of investments should you be making?

Let’s start with a high-level vision of a successful investment plan for the average 30-something. Though each person has his or her own goals, if you’re following a general path, you should be planning for a long-time horizon — 30 years or so — and optimizing your investments to pay off over that time horizon.

Trying to get rich by timing the market or focusing on short-term investments isn’t going to pay off. You also need to consider investments accessible to the average professional; most people cannot afford an apartment complex or be able to invest in promising startups.

Here are a few ideas for investments that make sense for a lot of people in their 30s. Keep in mind that it’s smart to do your homework and invest an amount that you can handle.

1. Pay off high-interest debt

While not an investment in the conventional sense, you should have a plan to pay off all your debts in your 30s. 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 doesn't 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.

2. Buy 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 neighborhood with high growth potential to maximize the appreciation value of your home, and make sure to get a fixedrate mortgage with a substantial down payment (so you can avoid paying PMI).

3. Utilize tax-advantaged accounts

Take advantage of tax-advantaged accounts as early as possible. These accounts are designed to help you invest for retirement by making your contributions or earnings exempt from taxes.

If your company offers a 401(k) with a company match, your first priority should be maxing out that match; it’s free money, and your contributions will come out of your gross pay (rather than your net pay). Then, turn your attention to a Roth IRA, which will shield you from paying taxes when you cash in the earnings

on your account.

4. Stocks and index funds

Within those tax-advantaged accounts, make sure you’re investing in stocks, including stock-based index funds. Stocks may seem like they’re inherently risky, but don’t let yourself be intimidated.

As long as you’re diversifying your portfolio with companies of different sizes and from different industries, or are investing in index funds that contain dozens of stocks, your growth rate will average out to be positive over the course of many years.

5. Cryptocurrencies

Yes, cryptocurrencies are volatile. In late 2017, the price of one Bitcoin soared to nearly $20,000; the current price is about $7,000. If you are able and willing to go on a wild ride, there’s something to be said for diversifying your portfolio with high-risk, highreward assets when you’re young.

If the uncertainty of traditional cryptocurrency is too much for you, consider new developments like TrustToken’s stablecoins, which are backed with fiat currency.

Cryptocurrencies are not the right investment for every investor, but they can be a valuable addition to a balanced portfolio.

6. Bonds

You should also make sure to have some bonds in your portfolio.

Unlike stocks, bonds aren’t often susceptible to price fluctuations with good or bad news. Instead, they function like loans to the government or individual companies, and are associated with a fixed interest rate.

They aren’t guaranteed investments, and their rate of return is lower than other investments, but they’re much safer than stocks, so they deserve a place in your portfolio.

7. Other diverse investments

You should also consider making other investments to diversify your portfolio. For example, you might purchase a rental property where you can earn a monthly profit in exchange for being a landlord, or you could purchase real assets like precious metals.

A portfolio with most, if not all, of these investments can help you make the most of your 30s, even if you don’t have a lot of money to invest. Stay consistent with whatever plan you adopt and, eventually, you'll see the fruits of your labor.

Larry Alton is an independent business consultant.

ZINKEVYCH/DREAMSTIME