How to invest in your 30s
During your 30s, it can be difficult to plan ahead and start your investment journey when you have other priorities, but it can pay dividends in the future.
Your 30s are a great time to start progressing towards your big financial goals, such as buying a house, getting married or starting a family.
While this can be daunting, you still have lots of time to build a financial plan, including the best way to start investing if you want to.
1. Establish your priorities and identify any limits
It's not a good idea to start act without thinking about what you’d like your financial future to look like.
For example, are you:
- Struggling with debt?
- Confident that you’re investing enough for the future?
- Setting your children up for big financial milestones, like their first home?
Understanding your key goals will help you make a plan that aligns with your priorities.
2. Clear your debt
Before you start investing, it’s sensible to pay off any debt first.
If you’ve built up a few debts, don’t panic. Now is the time to focus on getting rid of any short-term debts that are limiting how much you can save and invest.
If you’re only paying off the minimum amount on any debt, it means it will take longer to clear it and you’ll pay more in interest.
There are many options to help you clear debt, from the snowball method to a debt management plan.
You can also talk to Citizens Advice about how to best deal with your debt.
3. Build (or start) your pension pot
It's likely you’ve got a few years of pension contributions under your belt by now.
However, 37% of people in their 30s haven’t started paying into a pension, meaning they will have to rely on the state pension once they retire.
You can use our pension calculator to work out how much you’ll need to contribute to secure your desired retirement income.
The earlier you start, the less you pay in each month.
If you have already established a solid pension pot and you have more disposable income, it’s a great time to review your contributions.
Talk to your employer about increasing your monthly pension contributions, as you can do so tax-free up to the annual limit of £60,000 (or up to 100% of your earnings).
4. Buy your own home
With the average first-time buyer in the UK aged around 34, it’s clear that this is a popular time for young people to move onto the property ladder.
Buying your first home while you’re young is a savvy decision, as you may be able to pay off your mortgage before you retire and fully own your home.
If you’ve already purchased a home and are managing to put aside some money for investments already, you could overpay on your mortgage.
Generally, you can overpay up to 10 percent of what you owe annually on a mortgage before you pay a penalty but check with your lender first.
5. Be realistic about how much you can invest
With other priorities like saving for the future and paying down debts, you may be unable to invest as aggressively as you’d like in your 30s.
But even if you can only invest £50 per month, starting this in your 30s gives your investment a chance to grow over time.
6. Invest with a long-term view
Although no investment is ever risk-free, long-term investments help to mitigate many key worries investors have.
Leaving your investments for five, 10 or even 20 years gives them time to overcome any market shocks and, in most cases, grow slowly and steadily over time.
There are options for every kind of investor. Some platforms let you invest with a small amount and have no ongoing fees.
Other investment platforms may ask for a reasonably large deposit and charge ongoing fees but offer a wider range of services, such as actively managed funds.
7. Passive vs active investing
Once you’ve made a financial plan and set aside your investment budget, it’s time to consider how involved you’d like to be in your investments:
- Do you want to set aside money and forget about it, accepting any potential losses in return for lower or no fees?
- Would you prefer an active fund, where an experienced investment manager makes decisions to mitigate losses?
There are pros and cons to both active and passive investments.
Even the most experienced fund manager can’t predict every market dip, but they can make decisions that maximise the value of your investments.
If you’re investing a small amount, the cost of fees and ongoing payments will likely outweigh the value of an active fund, making passive funds a more cost-effective option.
Get expert financial advice
Investing in your 30s can set the stage for a secure financial future, even amidst the demands of buying a home, managing debt, and planning for family milestones.
By clearing debt first, building or boosting your pension, and starting to invest, even with modest amounts, you lay a solid foundation for growth.
Remember to keep a long-term perspective and choose between passive and active investment strategies based on your goals and preferences.
Every step you take now, no matter how small, can lead to significant benefits. Embrace these years as an opportunity to set yourself up for long-term financial success.
Let Unbiased match you with a financial adviser for expert financial advice on planning your investments, managing debt, and optimising your pension contributions.
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