How To Start Investing In Your 30s

Hello my fellow 30s investor! If you are like me, you are starting to invest later in life. Normally, the best time to invest is 16 going forward but investing in your 30s is ok too. As I like to say, it is never too late to start. I began my journey in investing back in high school but I did not fully understand it so I gave up. Fast forward to age 29-30 and I bought first dividend stock. I am now 33, about to be 34 with a portfolio of over $1k in stocks. Not where I want to be but Covid was a problem for me. Going forward, my goal is to have $20k-$40k in dividend stocks by age 40.

You are in your 30s and things have changed since you were younger. You probably have a house, a wife, maybe some kids. Money wise you might be looking to your retirement and wondering how you can prepare for it. Investing now can help you later. I put money away into my 401(k) account and I dividend invest with a Roth IRA account. My hope is both of these accounts will allow me to live comfortably when it is time to retire.

Disclaimer – I am not a financial advisor nor a licenses tax/lawyer or broker. Please consult a professional and do your own research. I am simply a person who loves to invest.

Balancing Investing With Life Events in Your 30s

You have made it to your 30s but that means you have 30s problems. As I mentioned above, you probably have a house, kids, a wife, cars, college loans, etc. Navigating these expenses to find a way to invest is the goal. Covid did a number on me financially so finding a way to dig myself out of a hole while investing was a huge thing for me. However, if I can do it so can you.

So, how do we deal with these major life challenges? We do what is called financial balancing. I would suggest you do the following before investing so you can see what areas you need to work on.

• Create an income and expense sheet per month. This will help you calculate what your average savings are per month. In addition, this will help you see where your money is going and how you can eliminate it or limit its effect on your monthly budget.

• Create a goal for yourself and your family. Having a financial goal of where you and your family wants to be is crucial. My wife I have planned our goals and we are doing our best to hit them. Right now, my main goal is saving up for a house so everything I am doing now is towards that.

• Create a savings plan. You should have a plan to save money. You should save money for the following reasons. I would suggest contributing to these funds at the same time to help build them up.

• Emergency fund. You should set an amount you want incase for emergencies. I think $10,000 is a good emergency fund, as it should buy you 3-4 months. However, you can increase this if you want.
  • Home Repair Fund. If you own your own home, you should have a fund in case any major issues arise. For this one I would suggest $3,000.  If something major happens beyond this number then the emergency fund would come into play. Just remember to refill that fund as well as this one if they are used.
  • Vacation Fund. You and your family need to relax one in a while. For this fund, a modest $2k-$3k is all that is needed.

• Execute. Execute the plan you put in place. If your goal is to eliminate $200 from your expenses so you can invest $200 each month, do it! Do not sit around and contemplate it, do it. Procrastination is the number one killer of dreams. Even while saving up you can still invest. Find an expense that is not needed or can be toned down and use the extra money to invest.

• Insurance. If you have a family it is important to get insurance that will cover a disability, injury or god-forbid, death. You need to make sure you and your family is taken care of.

• Lastly, create a will for yourself. There is no point in doing all this if a large portion of your investments and savings will go to lawyers. I wrote an article on this already, check it out HERE.

I am not saying this will be easy but it is something you should really try your hardest. Creating a budget and sticking to it will help your family out tremendously and allow you to invest for your future. Your teens and 20s, you could stash all the money you wanted away but now you need to balance your finances.

What Accounts Should You Be Investing In?

I would suggest using a Roth IRA for your investing as it uses after-tax dollars. Another benefit to this account is that you do not pay taxes on anything you earn in the account and if you need to withdraw from the account there is no penalty as long as the withdrawal matches what you put in that year. For example, if you put in $3,000 that year ($6,500 max), you can withdraw $3,000 penalty free.

In addition to a Roth IRA account, I suggest adding to your company 401(k) plan and always max out the covered percentage. What I mean is, if your company matches you 4% on every 8% you put in, put the 8%. If you can afford more, do it. Right now for me, I am contributing 15% and my goal is to reach 18% next year.

How Much Should You Invest?

Since we started a bit, you will need to invest quite a bit to catch up. However, you can still get away with a little bit if an investment account is simply a bonus for you in retirement. For myself, I am trying to put as much as I can, as my goal is to have a combined monthly income of $7k-$8k from my 401(k) and dividend stocks. From here, I wait patiently for social security to kick in and add an additional $2k-$3k to my monthly income.

$1 million seems to be the preferred amount needed to retirement comfortably, especially with today’s inflation and taxes. Let me assume you are 30 and you get an average 8% return on your investments. To reach $1 million dollars by age 62 you will need to invest the following:

Age	Amount To Invest Per Year To Reach $1 Million
30	$6,900
31	$7,600
32	$8,200
33	$9,000
34	$9,800
35	$10,700
36	$11,600
37	$12,700
38	$13,900
39	$15,300

I know this may seem impossible but it is doable if you manage your household budget properly. In addition, if your spouse works too this is extremely doable. My wife plans to start working soon, so her income coupled with mine means I can put away a lot more into our investment accounts and reach our retirement goal even quicker.

Be diligent in your saving. Save until hurts you, your mother, dad, the neighbor, everyone!  Kidding, but you get the point.

Investment Allocations in Your 30s

Now, let us dive into the investing part. You will need to understand your risk tolerance and what an acceptable loss is for you. The market will fluctuate and your money and will be growing and declining constantly. Now, the goal is to find stocks that grow more than decline but if I knew the secret to that, I would be rich. This is where research comes into play. I can give you suggestions but please do your own research.

For myself, I am ok with losing a bit of money because I know eventually earn it back with the share price going back up or my dividends that I earn off that stock. I am in it for the long run and I have been investing for a while so I do not panic easily. You need to have tough skin and a strong conviction to invest.

While investing, you will need to have a diversified portfolio. This will help minimize the risk to you and your portfolio. If one stock takes a hit, it will not hurt you.  I suggest dividend investing alongside the other investment options you choose. That is my preferred method to invest.

ETFS to Consider

ETF’s are a great way to get into investing. They are also a great option to diversify your portfolio.  If you want to own a bunch of stocks but cannot afford to do so, an ETF is perfect for you. ETF’s combine many different companies under one umbrella and some even pay you to hold them. This is great for dividend investing. I have also written an article on ETFs, to save time check it out HERE.

Conservative ETFS

Less fluctuations and easier to manage risk wise.

% Allocation	Fund	ETF
40%	Vanguard Total Bond Market Fund	BND
60%	Vanguard Total Stock Market Fund	VT

If you are ok with more ups and down and can handle it, check out these below.

% Allocation	Fund	ETF
40%	Vanguard Total Bond Market Fund	BND
30%	Vanguard Total Stock Market Fund	VTI
24%	Vanguard International Stock Index Fund	VXUS
6%	Vanguard REIT Index Fund	VNQ

If you are ok with risk and want to maximize your earning potential, check out these.

% Allocation	Fund	ETF
30%	Vanguard Total Stock Market Fund	VTI
10%	Vanguard Emerging Markets Fund	VWO
15%	Vanguard International Stock Index Fund	VXUS
15%	Vanguard REIT Index Fund	VNQ
15%	Vanguard Total Bond Market Fund	BND
15%	Vanguard TIPS	VTIP

Dividend Stocks

If you want to add some dividend stocks to your portfolio, I would suggest these but do your research before buying. Make sure the stock aligns with your risk tolerance and goals.

Dividend Yield	Company	Tick
2.81%	PepsiCo Inc	PEP
3.04%	Coca-Cola Co	KO
5.43%	Realty Income Group	O
5.76%	3M Co	MMM
8.92%	Altria Group Inc	MO
11.48%	JPMorgan Nasdaq NASDAQ Equity…	JEPQ

Adjusting Your Portfolio

It is important to look at your investments at least once a month and do a hard analysis once a year. You need to make sure your stocks are still working for you, as they should. Sometimes a stock will stop its dividend payouts and if that happens I suggest selling that stock and using it to buy other stocks that pay dividends. If you stick to dividend kings or dividend aristocrats then you will not have this issue but the dividend yields are lower. I stick to higher yields but I am ok with the risk that comes with it.