04 Oct Investing in Your 30s and 40s: 5 Steps to Investment Success

Through your 30s and 40s, life can really start to get complicated. “Adulting” can be difficult and making the right choices with your money is even harder. 

As you hit your 30s and 40s, you begin to see a more straightforward path for you, your family, and your financial responsibilities. 

Whether you’re searching for your dream home, starting a family, or even looking to get a headstart on your retirement planning – there’s a lot of financial decisions to make which is where an investment plan can come in as a life-saver. 

Step #1: Lay the Groundwork 

It’s all about laying the groundwork for long-term wealth and passive income. 

Investing should always be a long-term strategy. 

While it may be nice to gain some quick wins, a successful investment strategy should strategically balance risk and return to ensure you are getting the best outcomes. 

Investing in growth assets, like stocks and real estate, can generate a passive income stream while accumulating wealth over time. For example, you may invest in dividend-paying stocks, which may provide you with a chunk of the company’s profits (generally once or twice a year).

Another approach to generating passive income is to invest in an investment property. Long-term rental returns on residential property in Australia can be a great way to grow your savings. 

When it comes to investing, be sure to diversify to protect your money and your financial future. 

According to moneysmart.gov.au, incorporating a diversification strategy within your investment plan can lower your portfolio’s risk as different asset classes – such as shares, property, bonds and private equity – perform well at different times.

Step #2: Prioritise and Proactively Manage Your Debts

It’s no secret that debts can be a massive burden in our lives and may even affect a person’s ability to secure their future. Fortunately, there are reasonable debt management strategies that can help you secure financial freedom. 

Before investing, you should review your debts and decide on the right strategy for you. 

Should you pay off your debts first or start investing?

There’s no right or wrong answer. It all comes down to what is going to better your finances and your life. 

Most people in their 30s or 40s have a mortgage to pay off. Don’t let paying off your mortgage stop you from making other investments. You can do both at the same time and this may be the best thing for your savings. 

Step #3: Build a Retirement Fund

Your 30s and 40s is the perfect time to start retirement planning. You may think you are far too young and years off retirement but the earlier you start, the more chance your nest egg has to grow!

It might be worthwhile to monitor your superannuation and regularly reassess your investment strategy when it comes to retirement planning. If you need to make financial changes to enhance your retirement savings, one option is to raise your regular contributions to superannuation, which can have very rewarding tax benefits. 

Certain ways of contributing to super, for example, may deduct a portion of your post-tax income or savings. This reduces your taxable income for the year, perhaps resulting in a lower tax bill while also increasing your superannuation balance. 

Step #4: Get a Financial Advisor

If in doubt, seek expert advice. When it comes to your money, you want to be smart, strategic, and well-informed. 

At the end of the day, you shouldn’t dismiss professional tips on money management. If you have a never-ending to-do list and are continuously strapped for time to manage your funds, a financial advisor may be able to help.

A financial advisor can help you with more than just money. Their mission is to help you achieve your life goals by supporting you with budgeting, property, savings and personal insurances. More importantly, they can help you pay off your mortgage faster and lower your personal debts.

Are you looking for a wealth planner on the Central Coast? Leo Wealth is a financial planning practice on the Central Coast helping individuals, couples and families to secure financial freedom. 

Ready to invest for success? Set your appointment with us today!