The right investment strategy to reach your goals shifts as you age. Once you reach your 30s, the looming worries of graduating, starting a career and climbing out of the student loan debt hole probably have been replaced by more domestic concerns.
According to the U.S. Census Bureau, the median age for marriage for men and women is 29 and 28, respectively. Additionally, the National Association of Realtors reports that the median age for first-time homebuyers is 33. And if you’ve gotten married and/or bought a home—or have at least thought about it—you also may be having kids soon (if you haven’t become a parent already). That’s a lot of new responsibilities and costs to think about when planning for the future.
Your 30s are the time to begin building lasting wealth to meet life’s growing demands. Here are six ways to focus your investing strategy as you navigate your 30s:
Consolidate Your Investments
If you started investing in multiple accounts in your 20s, your portfolio may be in disarray now. You might have 401(k) accounts with a few employers, a Roth IRA that you started right out of college and some online investments you built up over time.
Now is the time to consolidate those investments. Pooling them in one place—with the help of a single advisor—makes it easier to see the role each investment plays in achieving your financial goals. It also will help you avoid redundancies and manage your overall risk.
Get Strategic With Your Debt
If you have debt, the strategies you put in place in your 30s can shape how quickly you can pay it off. There’s no precise formula for getting out of debt quickly, and your financial situation will dictate your exact priorities. In general, I recommend tackling your debt in this order:
- High-interest debt that isn’t tax-deductible (e.g., credit cards).
- Debt with private mortgage insurance attached.
- High-interest, tax-deductible debt (e.g., some student or business loans).
- Reasonable and low-interest-rate debt—4% or less—that’s tax-deductible (e.g., many student loans and mortgages).
It’s critical to get as much of this debt behind you as possible at this stage in life, but don’t neglect to invest while paying down debt. The rewards of investing are enormous when you start now.
Maximize Your Retirement Accounts
There are so many options for retirement investing and choosing the right ones can feel daunting. In general, you should prioritize accounts with employer benefits and tax advantages before investing in others.
Maximize your retirement investments in this order:
- Invest the amount to get a full match on your company retirement plan.
- Contribute to a Roth IRA or deductible traditional IRA, if you’re eligible, which grow tax-free.
- Invest the maximum limit on your company 401(k) (do this before investing in the previous accounts if it’s a high-performing fund with low fees).
- Contribute to a traditional nondeductible IRA, which offers tax-deferred compound growth.
If you’ve accomplished the above and still have more available to invest, don’t forget about your Health Savings Account (HSA). This account offers a triple tax benefit: a tax deduction on the contribution, tax-free investment growth and tax-free withdrawals when used to pay for medical expenses.
Make The Most Of Your Cash
Investing while covering expenses can be a delicate dance, especially at a stage in life where financial responsibilities seem to multiply. The trick is figuring out how much you can put away while still having enough liquid cash on hand to meet immediate needs.
Most people find that a cushion of between 25% and 50% of a month’s expenses is enough to cover fluctuations, but you may need more if you have an irregular income. Most financial planners also recommend an emergency savings account of three to six months of expenses. It’s best to keep an emergency fund in an online savings account separate from your primary checking so that you earn a higher rate of interest and make it slightly harder to tap the funds for non-emergency purposes.
Holding too much of your assets in cash, however, makes it difficult to stay ahead of inflation and generate sufficient returns to meet your retirement and other long-term goals. Build cash reserves and make sure they’re earning what they can for you, but funnel as much as possible into retirement.
Plan For The Unexpected
Over the course of your life, you and your family are bound to face some unplanned—even unpleasant—moments. Some of these can be financially crippling if you’re unprepared.
It starts with proper insurance coverage. Nearly everyone with a spouse, partner or child needs life insurance, and you are better off choosing term life insurance rather than a permanent life insurance policy. You also need some form of disability insurance to protect you from an accident or illness that takes away your ability to work. Social Security Administration reports young workers have a 26.8% chance of being disabled for 12 months or longer before reaching retirement age.
The final step in preparing for the unexpected is developing an estate plan to protect you, your family, and your stuff. If you have minor children, an estate plan is important beyond monetary reasons because it allows you to name the kids’ guardian in the event of your death—otherwise the decision is up to the state.
Many financial advisors have tools and processes to help improve your investment and financial planning outcomes. Research from Vanguard estimates that financial advisors can add roughly 3% in relative return for an individual investor.
Choosing an advisor that provides comprehensive financial planning —not just investment advice—can get your entire financial house in order and keep it that way forever. These financial professionals can proactively assist in estate planning, tax projections, insurance analysis, entitlement strategies, and more.
Perhaps most important of all, hiring a professional frees you up to do the things you love most in life and alleviates the stress that can come from managing your financial matters.
The financial decisions you make in your 30s will impact you for the rest of your life. With these strategies, you can plan for a successful retirement long before you near the end of your career.
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This post first appeared on Forbes.com.