Saving and Investing in Your 30s and 40s

By Guest Author Michael Vincent

If you spent your 20s having fun and not taking your finances seriously, you should start being more proactive in managing your finances in your 30s or even 40s. This is because you’re at that point in your life that you should start planning for your retirement.

Being in your 30s means having more responsibility. Many in their 30s are taking care of young families and are responsible for paying the monthly bills and loans. With all these expenses—like paying for your family’s daily food or making sure that the lights are kept on and that the water from the tap is still flowing by paying the bills—it may be hard to think about savings or investments that you could tap into in your twilight years. But saving and investing as early as you can will help you maximize your retirement income.

Start Saving in Your 30s or 40s

If your employer is offering a retirement plan, you should enrol in one and make the maximum contributions. Your employer might also offer the option of redirecting a portion of your salary into a savings account. By enrolling in a program like that, you’re less likely to miss that money if it never passed through your hands in the first place.

There’s a rule of thumb that says you should contribute at least 10% of your income into your retirement fund so you might want to use that figure when determining how much to put into your employer’s retirement savings program. You could also go online and look for retirement calculators to help you determine how much you need to be saving right now. Those calculators will take into account your financial goals when you retire like how much income you need to have based on the lifestyle that you plan to keep after retirement.

If your employer doesn’t have a retirement savings program or if you’re self-employed, you could also consider opening a personal time deposit account as your retirement savings account. Time deposit accounts earn more than your typical savings account but the difference with a regular savings account is that you can’t withdraw your money as easily because your money is locked in for a specific period.

Saving your money in a bank or a fund is not the only way you could save. You could also start cutting back on expenses and saving money by going to comparison sites to look for better deals for services that charge regular fees. You could use these comparison sites to look for credit cards with better interest rates or for mobile and broadband plans that give more value for money.

Start Investing in Your 30s or 40s

With at least 35 years left before retirement, there’s still time to build a portfolio of investments. You should talk to an investment adviser to help you decide how much you allocate for different types of investments based on your tolerance for risks. Stocks may be riskier than bonds but these have a greater potential for gains. If you’re in your early 30s, you should be able to recover from any short-term losses from your stock investments. You could also look into mutual funds and exchange traded funds and how their risk profiles and potential gains compare with your financial goals.

Taking seminars and attending classes can also be considered an investment. You’re allocating resources (funds and your time) and investing in your career. Use your newly learned skill to ask for a raise or to look for a better-paying job.

Taking steps to manage your finances better is important in any age. Managing your finances by saving and making prudent investment decisions just becomes more important in your 30s and 40s because you need to have funds when you retire.

Saving as early as you can will let you earn more through the power of compounding interest. You could especially feel the positive impact of compounding interest if you open a time deposit account. Investing early in stocks should also help you recover from any short-term losses as you still have a lot of time to realize returns from your stock investments. There’s still some years left before retirement, so start saving and investing now!

About The Author:

This article is prepared by Compare Hero for Late Bloomer Wealth. Compare Hero’s platform allows you to compare a broad range of financial products side by side, helping you make intelligent financial decisions.