Key points
- When you’re in your 30s, paying off high-interest debt is one of the best ways to invest your money.
- You could significantly raise your income during this decade, so be open to investing in career development opportunities.
- Use at least 10% of your income to build a retirement fund, and make sure you have all the insurance you need.
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Your 30s are an exciting and pivotal decade. You’ve had some time to establish yourself as an adult and start building your career. In an ideal world, you’ll also be saving and investing money regularly. But if you haven’t done that yet, it’s still early enough that you can get on track without too much trouble.
Where you put your money right now is crucial, because this can either set you up for success or make life more difficult as you get older. To help with that, you’ll find the best investments for people in their 30s below.
Note that this will be a broad look in a way to make the most of your money. It won’t cover specific companies or assets to buy, but rather how you can use your money in a way that improves your finances and your life as a whole.
1. Paying off high-interest debt
Even if that’s not the first thing that comes to mind when you think of investing, paying off costly debt is one of the best investments you can make. There’s no textbook definition of high-interest debt, but anything with an annual interest rate of 10% or higher fits the bill.
For many, the main culprit here is credit card debt. Americans as a whole have nearly $1 trillion in credit card balances, and the average interest rate is above 20% per year.
Look at it like this — if you get rid of credit card debt with a 20% interest rate, that’s like getting a 20% return on your money. You’re not going to find any other investment that can reliably get you those kinds of returns.
2. Career development
Your income is one of the most important factors in your financial success. The more money you earn, the easier it is to afford your bills and have funds left over to put toward your goals.
The average income goes up until middle age, and it increases quite a bit for Americans while they’re in their 30s. With the right decisions, you can significantly increase your income during this decade of your life. To give yourself the best chance, it’s worth looking for ways to invest in your career. Here are a few options:
- Further your education through a degree or certificate program. Adults with higher levels of education earn more on average.
- Take a course related to your career or learn skills that could benefit you professionally. For example, if being bilingual would help, invest in tools to help you learn another language.
- Work with a coach or career counselor. You could also spend time with mentors to learn from them.
3. A retirement fund
Waiting to save for retirement is an all-too-common money mistake. To show just how costly waiting can be, let’s say that two people save $1,000 per month toward retirement. They get an 8% annual return, as they invest in stocks and that’s in line with the stock market average. The only difference is that one starts investing at 35 and the other starts investing at 50.
By 65, the investors who started at 35 will have $1,490,359. The investors who started at 50 will have $346,038. Those 15 years cost over $1.1 million.
You’re still young, so take advantage by investing at least 10% of your income toward retirement. Here are the most popular types of tax-advantaged retirement accounts that help you save on taxes while building your nest egg:
4. Insurance
It’s important to have insurance to protect you from major expenses. There are many types of insurance, and at a minimum, every adult should have:
- Health insurance
- Homeowners or renters insurance
- Auto insurance (if you drive)
Depending on your situation, there may be other types that you need, as well. For example, if you have a pet, then pet insurance is good to have. If there’s anyone relying on your income, such as children or a spouse, then life insurance is a must.
On the subject of life insurance, it’s worth mentioning that insurance salespeople often market whole life policies as an investment. For most people, whole life insurance isn’t worth it. Term life, which lasts for a set time period, is a better fit because premiums are much cheaper.
As you get older, it becomes even more important to use your money wisely. Now that you’re in your 30s, make it a point to aggressively pay off high-interest debt. Don’t be afraid to spend your money on things that will benefit your career, and also make sure to save for retirement every month. Last but not least, consider what insurance coverages you need so that you’re protected if any sort of disaster strikes.
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