Investing in Your 30s: Do’s and Don’ts

Ruby Layram 5th Sep 2024 No Comments

Reading Time: 6 minutes

Your 30’s is an excellent time to dip your toes into the stock market. But, did you know that there are certain investments that you might want to consider over others?

The ‘best’ investing strategy looks different for each generation and understanding how to effectively invest in your 30’s could help you to maximize your returns in the long run.

In this guide, we will explore how to invest in your 30’s including the best investments to make for long-term growth.

• What Are the Best Investments to Make in Your 30s?
• Why Is Your 30s the Best Time to Invest in High Growth Potential Investments?
• The Do’s and Don’ts of Investing in Your 30s

What Are the Best Investments to Make in Your 30s?

Let’s jump right in and take a look at the best investments to make in your 30s.

Your 30s are a great time to invest—you’re likely earning more than you did in your 20s, but you might also have more responsibilities, such as a mortgage, children, or even supporting aging parents.

With all these factors in play, it’s crucial to choose investments that balance growth potential with financial security.

Here are some investment options to consider.

1. Emergency funds

Before you start investing, it’s important to have a bit of a financial buffer in place.

This means building an emergency fund—enough money to cover three to six months’ worth of expenses.

This fund is your safety net for unexpected expenses like car repairs, last-minute hen-dos, or even job loss. Having this cushion means you won’t have to dip into your investments if life throws you a curveball.

We recommend keeping your emergency fund in a high-yield savings account that you can access at any time. For example, Trading 212 offers a cash ISA that pays 5.2% AER and can withdrawn daily.

2. Growth stocks

Growth stocks are shares in companies that are expected to grow at an above-average rate compared to other firms.

These are companies that might not pay a dividend but reinvest their earnings into expanding their business.

In your 30s, you still have time on your side to ride out the ups and downs of the stock market, making growth stocks a great option. Just remember, while the potential for higher returns is there, so is the risk—so don’t put all your eggs in one basket.

3. Property

Property is often seen as one of the most solid investments you can make.

If you haven’t already, your 30s might be the time to think about buying your first home or even investing in a rental property.

Not only does real estate typically appreciate over time, but it also provides the potential for rental income.

That said, property can be a significant financial commitment, so it’s crucial to ensure you’re ready for the ongoing costs and responsibilities that come with it.

4. Lifetime ISA

The Lifetime ISA is a great tool for anyone in the UK looking to save for big life events like your home or retirement.

These accounts offer tax-free capital gains as well as a 25% government bonus. Each year, you can put up to £4000 in a LISA. If you manage to save the full amount, the government will throw in an extra £1000!

It’s like free money, which is always a good thing, especially when you’re planning for the future.

Plus, the funds in a Lifetime ISA can be invested in stocks and shares, offering the potential for growth over time.

5. Education and training

Investing in yourself might not seem like a traditional investment, but it’s one of the most valuable. Your 30s are an excellent time to upskill, take courses, or even go back to school.

The better your skills, the higher your earning potential, which in turn can give you more money to invest.

Whether it’s a professional qualification, a new language, or even learning about investments themselves, education can pay dividends for years to come.

6. Tax-friendly investments

Take advantage of tax-friendly investment options like ISAs and pensions. With ISAs, you can invest up to £20,000 a year without paying any tax on the interest, dividends, or capital gains.

Pensions offer tax relief on contributions, which is essentially free money from the government to help you save for retirement.

The earlier you start, the more you benefit from compound interest, making these a smart choice in your 30s.

7. Small business and startups

Investing in a small business or a startup can be incredibly rewarding, both personally and financially.

This doesn’t necessarily mean starting your own business (although your 30s is definitely the best time to do this!), but you can also invest in other people’s ventures.

Platforms like Seedrs or Crowdcube allow you to invest in startups and potentially see significant returns if the business succeeds.

Just keep in mind that this is a high-risk investment, so it should only make up a small portion of your portfolio.

Why Is Your 30s the Best Time to Invest in High Growth Potential Investments?

Your 30s are often described as the ‘sweet spot’ for investing.

You’re still relatively young, which means you have time on your side to let your investments grow, and time to recover from any potential losses.

But unlike your 20s, you also have more financial stability, which allows you to take advantage of higher-risk, higher-reward opportunities.

Investing in high-growth potential assets like stocks, property, or even your own education means you’re setting yourself up for significant financial gains later in life.

Plus, compound interest works best over long periods, so the sooner you start, the better.

By the time you reach your 40s and 50s, the investments that you make in your 30s could provide you with stability and more freedom. This could look like retiring early, living more comfortably or even doing that long trip you’ve always dreamed of!

The Do’s and Don’ts of Investing in Your 30s

When it comes to investing in your 30s, there are certain strategies that can help you maximize your returns while minimizing risk. Here’s a quick overview of some do’s and dont’s.

Important note: The information below is based on our own opinion and shouldn’t be taken as financial advice. 

Do’s

First, let’s look at some best practices for investing while you’re 30.

Diversify your portfolio

Diversification is one of the best ways to reduce risk. By spreading your investments across different assets, you’re not relying on a single investment to succeed.

This means if one investment underperforms, the others can help balance out your portfolio.

One of the easiest ways to diversify is to invest in an ETF. These are baskets of assets that are picked out for you.

Understand the importance of investing in yourself

As mentioned earlier, investing in your education and skills is crucial in your 30s. The better equipped you are to earn a higher income, the more you’ll have to invest.

This could be as simple as taking a short course in financial management or as big as getting an advanced degree.

Invest in long-term assets

Your 30s are the perfect time to focus on long-term investments. Stocks, property, and even some bonds are great options for this.

The key here is to think long-term and not to get caught up in short-term market fluctuations. Remember, the goal is to let your investments grow over time, so patience is essential.

Don’ts

So, what should you try to avoid when building your portfolio in your 30s?

Keeping all your cash in a savings account

While it’s important to have an emergency fund, keeping all your money in a savings account isn’t the best strategy.

Savings accounts typically offer low interest rates that don’t keep up with inflation, meaning your money loses value over time.

Instead, consider investing in assets that have the potential to grow or assets that hedge inflation.

Be afraid to take a bit of a risk

In your 30s, you have time on your side, which means you can afford to take a bit more risk with your investments.

This doesn’t mean being reckless! But don’t shy away from higher-risk, higher-reward investments like stocks or startups. Just make sure these investments are part of a diversified portfolio.

Rush into property investing before you’re ready

When you hit the magic 3 0, the pressure to buy a house seems to really heat up! However, you shouldn’t rush into buying a home or an investment property just because you feel like you should.

Make sure you’re financially ready for the ongoing costs of property ownership, such as maintenance, insurance, and property taxes. If you’re not quite there yet, it might be better to wait or look into other investment options.

Check out 5 investments that might be better than property.

Investing in your 30s is all about balance and long-term growth. By diversifying your investments, continuing to invest in yourself, and taking a bit of risk, you can set yourself up for long-term financial stability.

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Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence. When investing your capital is at risk.