Are you in your 30’s and clueless about how you should invest?
This read is for you.
What Should Be a 30 Year Old’s Investment Strategy?
1. Identify Your Future Expenses
We understand your expenses are slowly increasing now.
And you always tend to spend whatever you earn in your 30’s.
This approach has to be altered and you should inculcate the habit of saving for yourself and your family.
Ideally, an individual should plan based on his/her future expenses. While it is true that the future is dynamic and predicting all future expenses is difficult, you can come close to predicting them.
2. Inflation Is Unavoidable; Beat it, if You Can’t Tolerate It
We believe the only aim of a 30-year-old should be to get rich over long-term, so that he/she can enjoy the luxuries of life. It is seen that people lock savings in the following three:
- Savings account
- Fixed deposits
- Piggy bank
These investments are great when it comes to liquidity but when it comes to returns, they barely generate anything.
Sometimes the returns are lower than inflation!
Which technically means an investor is losing money’s value. So, for a 30-year old – the objective should be to identify expenses and treat inflation as an enemy.
Remember, inflation is unavoidable and one cannot eliminate it completely.
Thus, it is better to learn how to beat it!
Well, you’re in your 30’s, your mantra of wealth creation should be investing in assets that would beat inflation and multiply rapidly with time.
Thus, selecting products like stocks, equity mutual funds), or real estate should enable an you to beat inflation.
Take informed decisions and ensure you take expert help if required.
3. Take Risk! (But manage them well)
If you want to be a successful investor, you need to take risks. Period.
Taking risk is not a big thing.
Every day we risk our lives while going to work, but we make it a point to beat traffic and reach safe and sound.
Similarly, investing is not rocket science, but ensure the risk you take while investing is well thought of and well managed.
For example, for a 30-year-old who is looking to create wealth, investment in small and mid-cap space is ideal, given the time is on his/her side.
Remember to not invest your entire portfolio in this space, or do not take a loan to invest either.
Check out some of the best mid-cap and small-cap funds to invest in.
Also, keep reviewing your portfolio at every interval. This enables you to ensure that risk is within your tolerable limit.
4. Don’t Run After Returns; Chase Value
Generating 15% consistent returns is better than generating 50% returns in the first year followed by a loss of 5% in the second year.
Choose funds that invest in fundamentally strong companies and whose returns are consistent and not very volatile.
5. Take Care of Liquidity
Liquidity forms a very important factor in deciding your investment option.
Ensure the instruments you sell are liquid enough.
Liquid, here indicates that the instrument can be bought and sold in the market easily.
Before we end the discussion about best investment strategies for a 30-years-old, let us quickly capture the general investment strategy that should be adopted by any individual for attaining financial freedom.
General Investment Strategies
1. Invest Continuously
You must invest every month.
Yes, you must.
Or at least at every interval in instruments that provide compounding benefit.
For example, mutual funds. The fundamental idea is of mutual funds is to systematically accumulate units and/or stocks which will provide returns in the future
2. Become Debt Free ASAP!
Okay, before you start investing, you need to clear off that education/car loan.
Remember, full-fledged investment comes once you have repaid your debts. Thus, if you are carrying costlier loans like a personal loan or holding a credit card, try repaying them first within the due date.
3. An Emergency Fund Is Necessary
It is advisable to maintain a corpus that can take care of your family expenses for a minimum of three months. This should be parked in liquid instruments that are highly safe.
We believe you will surely enjoy your investing journey.
Disclaimer: The views expressed in this post are that of the author and not those of Groww