When you reach your 30s, you’ve likely been working for a while and are now earning a decent annual salary. The 30s is also a decade that witnesses several major life events like marriage, having kids, and buying a first home. You may have already experienced them or may be preparing for them. Your 30s are also the ideal time to start thinking about retirement planning earnestly.

With the different responsibilities you have to manage, saving and investing in your 30s can seem like a daunting task. However, with a well-planned structure, active investing, and diversified strategy, you can simplify investing in your 30s.

Remember, it's never too late to start investing. If you’re investing in your 30s, try implementing the following tips:

Draft a solid financial plan

By the time you turn 30, you should have a solid financial plan in place. Although unforeseen events can take you by surprise, ensure that you have clear short and long-term goals and plans for accomplishing them. For instance, buying a home is a short-term goal, while planning for retirement is a long-term one. A solid financial plan also takes cognisance of sudden emergencies like job loss or sudden home repairs. Make sure you have an emergency fund set up with ample funds to cover at least 6 months of expenses. If you are looking for a safe investment option, you can consider fixed deposit. They offer guaranteed returns and a fixed interest rate throughout your investment tenure.

Building a strong and lasting portfolio

When you’re investing in your 30s, you can afford to take on more risks. Since you have a longer investing horizon, you can worry less about short-term volatility and focus on generating better long-term returns. Generally, investments like stocks and equity mutual funds have a higher risk quotient and return potential. Since you have decades before retirement, you can afford to dedicate 70%-80% of your investment portfolio to high-return-generating investments. That said, you should also diversify your investments across asset classes and sectors to build a strong portfolio.

Maintain strict financial discipline

Financial discipline is the bedrock of a well-rounded investment strategy. Setting aside a fixed sum of money every month for your savings schemes and investments can be challenging at first, but once you develop a saving habit, the process becomes smoother. Instead of manually transferring your contributions to various investment instruments, try automating savings. Set auto-deduct mandates to ensure a fixed sum gets invested into the investment avenues of your choosing every month.

Use schemes based on the power of compounding

Select the investment products that offer compounding benefits to maximise your returns. Investments like mutual funds growth plans compound your earnings. Under the power of compounding, your returns on the investment are reinvested to yield further earnings. Without the power of compounding, your returns may lose their value over time due to inflationary pressures.

Even in an emergency, don't touch your retirement funds

As mentioned earlier, you should already have an emergency fund invested in an FD or liquid mutual fund to cover emergency expenses. In the absence of an emergency fund, you may be tempted to use your retirement funds to meet unexpected expenses. At first, this may seem like a prudent choice since your retirement is still a couple of decades away. However, withdrawing from retirement assets like PPF can compromise the compounding power of these funds.

You can consider investing Bajaj Finance Fixed Deposit. With a top-tier AAA rating from financial agencies like CRISIL and ICRA, they offer one of the highest returns, up to 8.60% p.a.

Whenever you can, increase your savings rate

In the beginning, you can start with a small amount. However, your contribution does not have to remain the same throughout your investment journey. In fact, you should always strive to increase your savings rate and contributions over time. Each time you receive a salary hike, bonus, promotion, or any other form of additional income, you can invest the same to boost your portfolio. Even a 10%-15% increase in your contributions annually can make a significant difference to your overall corpus.

When considering investments in your 30s, the goal is to earn inflation-beating returns. Therefore, as an investor, you would want to park your funds in instruments that offer compounding benefits and returns higher than the inflation rate. Here are a few investment instruments you can consider when investing in your 30’s:

Equities

If you have enough market expertise to pick individual stocks, you can invest in company stocks. If you’re looking for a more diversified approach and expert management, you can invest via equity mutual funds through SIPs or lump-sum contributions. While equity investments have a greater return potential, they also carry a higher risk exposure when compared to traditional instruments like FDs.

PPF

PPF or Public Provident Fund is a government-backed retirement planning scheme with a 15-year lock-in window. You can make regular contributions to your PPF account to build a sizable retirement corpus over time. PPF interest rates are announced by the government and revised every quarter. Additionally, PPF enjoys EEE status, meaning your contribution (up to Rs. 1.5 lakhs annually), interest, and maturity sum are all tax-free.

Fixed-income securities

If you’re looking to diversify your investments with fixed-income securities that offer capital protection, tax benefits, and stable returns, you can opt for 5-year FDs, debt funds, and small saving schemes.

Insurance

Apart from investing in your future, you also need to secure your present. If your company does not offer health insurance, invest in one immediately to avoid dipping into your investments to cover sudden medical bills. Starting early will ensure low premiums. Consider buying a life insurance policy with comprehensive and adequate life coverage to keep your dependents financially secure in your absence. In fact, with the variety of insurance policies available today, you can even opt for an insurance-cum-investment scheme like ULIPs or endowment policies to enjoy both a life cover plus market-linked investment returns.

You can streamline investing in your 30s by maintaining a solid financial plan, fostering a disciplined savings approach, and building an emergency fund. By prioritising investments that offer compounding returns like equities, you can build a sizable retirement corpus over time. Additionally, you can take advantage of time and invest in instruments that are susceptible to volatility but also offer high return potentials like stocks. Remember, when it comes to investing, there’s no better time than the present.