How a 30-year-old should invest? All you need to know

The 30s are very crucial for you as an investor. In this article, we will try to understand the best way to start investing in the 30s.  

Steps to take before investing  

Create an emergency fund

The first and foremost thing you need to do is create an emergency fund that will assist you in times of urgent need. Ideally, the emergency fund should be equivalent to 6- 8 times your monthly expenses.   

Become debt-free

Tension-free and full-fledged investments are possible when you are not reeling under your loans. In the case of personal loans like credit card bills, try to clear them off on or before the due dates. 

What should be your investment strategy?  

Align investments with life goals

The 30s is that juncture of life where you have a lot to do ahead –in terms of responsibility and achievement. For this reason, you need a detailed time log of what you intend to do in the upcoming decades before you define your investment strategy.

In general, some big-ticket expenses are your marriage, your kids’ future studies (maybe 15 years later) and planning your retirement. At this age, your portfolio should have a subtle combination of equity and debt to suit your long-term goals.  

Beating inflation

In your 30s, you still have time to get rich and enjoy the luxuries of life. So, you should put the investible money into assets that will beat inflation.

Inflation is your enemy so treat it like one, and thus, do not invest your money (for growth purposes) into assets that do not even match inflation such as FDs and savings bank accounts.

You should aim at investing in stocks and mutual funds or even real estate (if you have the proper knowledge and guidance).  

Do not fear risk

At this time of life, the risk is synonymous with living in terms of a career or investments. Risks depend on your appetite; if you wish to obtain asymmetric returns, you have to take asymmetric risks. However, you must have the potential to manage the risk (an emergency fund).

Managing risk implies diversifying your investment portfolio by placing your money into various asset classes and reviewing your portfolio to check for the risks.  

Do not disregard liquidity

Liquidity is a vital factor to consider. While investing, you must ensure that your investments are not tied entirely to illiquid assets, which might create problems in times of distress.  

Invest continuously

Continuity and patience will reap the highest benefits in your investments. The longer you remain invested, the more you can benefit from the power of compounding and through the systematic accumulation of stocks/mutual fund units over a long period. 

Consult an expert advisor to get the right plan for you