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martin-dm / Getty Images November 10, 2022 Bankrate reporter Brian Baker covers investing and retirement. He has previous experience as an industry analyst at an investment firm. Baker is passionate about helping people make sense of complicated financial topics so that they can plan for their financial futures. Matthew Goldberg is a consumer banking reporter at Bankrate. Matthew has been in financial services for more than a decade, in banking and insurance. Brian Beers is the managing editor for the Wealth team at Bankrate. He oversees editorial coverage of banking, investing, the economy and all things money. Bankrate logo The Bankrate promise
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Your 30s are a good time to make sure you’ve got a solid financial plan. There are always unexpected things that come up, but you should know your short- and long-term goals and have a plan to get there. Short-term goals might be planning for kids or , while long-term goals typically focus on retirement. If you don’t have one already, make sure you have an saved for any major unexpected costs that may arise. This includes hospitalization, loss of a job, unexpected home repairs, sudden automobile expenses and any other unplanned expense. Experts suggest having at least three to six months worth of expenses saved. 2 Get rid of debt
If you don’t have debt, that’s great. But if you do, paying this off should be a priority. Odds are, debt is going to be at a high annual percentage rate (APR). Even if it’s a “low” APR, paying interest should be avoided because it’s money that could go toward savings down the road. People often want to know which investments will lead them to financial freedom, but paying off is a more certain path than hoping investments turn out exceptionally well. 3 Get your employer s retirement plan match
At a minimum, you’ll want to be contributing enough to any offered by your employer to receive a matching contribution, if available. For example, you might need to contribute 5 percent of your pay to receive the maximum matching contribution from your employer, which might consist of a 100 percent match on your first 3 percent and a 50 percent match on the next 2 percent, for a total contribution of 9 percent. The amount of the match varies by employer, but you’ll want to make sure you’re receiving the full amount because experts think of this as “free money.” Many employers require you to work for a certain number of years before their contributions are vested. If you leave your job before then, you could lose what they’ve contributed to your retirement plan. Some employers take a gradual approach to vesting, where you’re 20 percent vested after one year of employment, with that increasing steadily until you’re 100 percent vested after five years. 4 Contribute to an IRA
If you don’t have an , consider opening one to diversify your investment portfolio and take advantage of its perks, which can include reducing your taxable income. You could also contribute to a , which doesn’t come with an immediate tax benefit, but your withdrawals during retirement will be tax-free. You can also withdraw your contributions at any time without penalty. You’ll also likely get more investment options in an IRA account than you would from an employer-sponsored plan such as a 401(k). You’ll probably have a handful of funds to choose from in a 401(k), but you can invest in ETFs, mutual funds and even individual stocks in an IRA account. If you have an old 401(k) from a previous employer, you may want to into an IRA. If you’re going to open up an investment account for a 401(k) rollover, you may be able to earn a bonus for opening that account. 5 Maximize your retirement savings
In the 2022 tax year, the maximum contributions for a 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan In 2023, the limit jumps to $22,500. Your 30s are a good time to max out your contributions so that your money can compound for a few decades leading up to retirement. “A good rule of thumb is saving 10 to 15 percent of your income in either your 401(k) at work or if you have IRAs, Roth IRAs, that sort of thing,” says Crystal Rau, certified financial planner at Beyond Balanced Financial Planning LLC. “And then if you aren’t hitting that gauge, then you need to focus on maybe cutting back on the spending, and if you’re having trouble with that.” 6 Stick with stocks for long-term goals
In your 30s, you still have time on your side to make up for market losses. Over the long run, have returned about 9-10 percent annually on average for investors, but that return doesn’t come in a straight line. Volatility is part of investing in stocks and you’ll want to be sure you have the risk tolerance for it. But a big benefit of investing in your 30s is the amount of time you still have for money to compound before you reach retirement age. Use this long time horizon to your advantage and consider investing in stocks through ETFs and mutual funds. “If you can do it, if you can stomach it – be as aggressive as you can because your timeline is literally 30-40 years,” Kenney says. 7 Potentially build wealth by purchasing a home
If you rent instead of owning a home, you’re not building equity. For most people, a home is the largest asset that they own. So purchasing a home may be able to help you earn equity, and save for the future by having an asset. Keep in mind that home ownership is not for everyone. Make sure you’re ready to embrace the good and the bad that comes with owning a home and are ready to tackle maintenance issues that you may be used to having a landlord take care of. You’ll also want to account for the total cost of home ownership and include things like property taxes and maintenance costs in your monthly payment calculation. How much should you be investing in your 30s
The exact amount will depend on your individual situation, but saving and investing 10-15 percent of your income is generally a safe bet. Remember that money you invest during your 30s should be worth more than the money you save in your 40s and 50s because it will compound for longer. If you’re able to keep a during your 30s, you will likely reap the rewards in later decades and during retirement. Learn about investing How to get started
It can be intimidating to dive into the investing world. Here are a few investment options if you’re just getting started. ETFs. are a great way to own a basket of stocks at a low cost, even if you don’t have a lot of money to invest. The funds trade similarly to stocks and you can invest in a broadly diversified portfolio of companies or a narrow sector of the economy. Mutual funds. Like ETFs, give investors access to a basket of securities. are a popular way to own a group of stocks that track an index, such as the , for almost no cost. These funds have tended to outperform other funds that attempt to identify superior investments and charge high fees. Robo-advisors. are a relatively new offering, but can make sense for many people who want a simple approach to their investments. After answering a few questions about your goals and , an algorithm will identify a portfolio of investments and manage the account for you. You’ll pay an annual fee, but it’s usually less than that of traditional financial advisors. Stocks. For most people focused on long-term goals, should be a good place to invest. You can get exposure to a basket of stocks through ETFs and mutual funds, or you can choose individual companies for your portfolio. Make sure to any company before investing and understand that concentrating your holdings in just a few stocks will likely be more volatile than having a diversified portfolio. Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation. SHARE: Bankrate reporter Brian Baker covers investing and retirement. He has previous experience as an industry analyst at an investment firm. Baker is passionate about helping people make sense of complicated financial topics so that they can plan for their financial futures. Matthew Goldberg is a consumer banking reporter at Bankrate. Matthew has been in financial services for more than a decade, in banking and insurance. Brian Beers is the managing editor for the Wealth team at Bankrate. He oversees editorial coverage of banking, investing, the economy and all things money. Related Articles