Investment strategies for 30-year-old investors look a little different than they did in your 20s, but there’s no time like the present to grow your portfolio. Here’s what every 30-year-old needs to know about investing.

Are you a late bloomer to investing?

Don’t worry, you’re not alone—28% of Americans (one in four people) don’t start investing until they’re in their 30s. That presents a few unique challenges, and you’ll have more ground to make up compared to someone who started in their 20s. However, there’s no reason why you can’t meet your financial goals.

Plus, your life starts to change pretty dramatically in your 30s. Now is the time to take a hard look at your finances. Here’s what you need to know about investing in your 30s—and the best investment strategies for a 30-year-old.

Understand Your Goals (and Be Honest with Yourself)

First, you need to take a hard look at your investing goals. That will require being brutally honest with yourself.

For example, are you primarily saving for retirement? Starting a college fund for your kids? Canceling out debt? Each of these goals has a different timeline and a different investment plan.

Also, keep in mind that your investing goals as a 30-year-old look different than they would in your 20s. You have less time than you did in your 20s. The good news is that your income is probably higher and more stable than it was in your 20s, which makes it easier to stick to a plan.

Above all, be honest with yourself. Brutally honest. For most people, your baseline goals look like this:

• Cover your immediate needs
• Take care of your family
• Save for the future
• Save for big events

As a starting point, this means you should have six months in savings as an emergency fund. If you don’t have that money yet, that’s your primary goal.

Get Your Head of the Sand with Retirement and Get Your 401(k) Going

Your brutal honesty policy extends to your retirement—including how much you actually need to retire.

Your total retirement goal should be based on:

• How much you spend
• How much you’ll earn on savings
• How much you can withdraw from savings every year
• How long you’ll live

Most people cut themselves slack and round down. You need to round up. Unless you’re already in frail health, you should budget to live at least 25 years in retirement—if you retire at 65, that would carry you until you’re 90.

That’s probably going to be a scary number. Here’s the good news: now you know what the number is and you can adjust your spending accordingly.

Once you’ve done the scary calculations, it’s time to get aggressive with your retirement account. For most people, the simplest route is an employer-sponsored 401(k). You should contribute as much as you can afford. You can set this up to come out of your paycheck before it hits your bank account, so there’s no thinking required.

If you don’t have an employer-sponsored 401(k) plan, your best bet is an individual retirement account (IRA). There are seven types of IRA, so do your homework on the one that works for you. Even if you have a 401(k), it’s a good idea to supplement with an IRA—it’s perfectly legal to own both, and it allows you to make the most of your retirement savings. Just keep in mind that an IRA doesn’t automatically invest—it just holds investment vehicles for you, so you have to work those investment vehicles within the IRA to see its advantages.

Be as Risky as You Can Stomach

The reason why you’re told to invest as young as possible is because you have more time to take risks and recover potential losses. You’re not as young as a 20-something, but at 30, you’re still young.

Which means you need to take advantage of risk and reward—as much as you can stomach.

To be clear, risk does not guarantee higher returns, but you won’t see those higher returns without some degree of risk, and you’re more likely to see higher returns over the lifetime of the investment. Remember, that money adds up over time, and you’re in it for the long game. The difference between 4% and 6% annual return on $6,000 per year in your 401(k) sounds small now, but if you start at age 30 and retire at 67, that’s 37 years of returns and savings.

Diversify Inexpensively

Remember the saying, “Don’t put all your eggs in one basket?” Look at stock market performance in 2020, think about what would have happened if all you had was in stocks, and you’ll understand why.

There are three key tricks to diversifying without breaking the bank:

1. Have enough money to spread
2. Use exchange-traded funds and index funds
3. Throw in alternative investments

An exchange-traded fund is a basket of securities that can be traded on the market like any average stock, but unlike a stock, it tracks the performance of an index, commodity, sector, or asset. A well-known example is the SPDR S&P 500 ETF, based on the S&P 500.

Like an exchange-traded fund, an index fund tracks the performance of a market benchmark (an index) as closely as possible. When you buy into one, you buy stock in every company that’s part of the index.

Alternative investments are anything that isn’t a stock, bond, or cash, which could mean almost anything from fine art to derivatives to private equity to real estate. The benefit of alternative investments is that they have low correlation to the stock market, which means they work well as a hedge against market volatility. And because these assets don’t derive value from the market (and may even hold value regardless of market performance), they also work well as a hedge against inflation.

Ready to Invest for Your Financial Future?

It’s never too late to start investing, and it’s never to late to learn how to invest smartly. Investment strategies for 30-year-old investors are mostly the art of figuring out where you are and figuring out how to make it work.

At Masterworks, we believe that blue-chip art investing should be for everyone, whether you’re a veteran investor or new to the game, young or old, average or wealthy. That’s why on our platform, you can buy shares in multi-million-dollar art and take advantage of an asset class that outperformed the S&P 500 index by 180% from 2000 to 2018. It’s passion investing made accessible—and successful—for everyone. Ready to get started? Then let’s strengthen your portfolio. Fill out your membership application today to learn more.