Your thirties may just be the best decade of your life. Baby boomers and those who live past 100 alike are most nostalgic for these years.
It’s easy to see why. This is typically the decade when people become more financially secure and their career sacrifices begin to pay off.
And while people in their thirties may take on new obligations like mortgages and childcare costs, they also may have started to accumulate some wealth with their best earning years still ahead.
With retirement still decades out, people in their thirties are in a good position to take smart investment risks with the promise of greater long-term returns.
Remember that not all risks are created equal. I certainly don’t suggest gambling all your savings on the latest investment fad, but here are some risks worth taking in your thirties:
1. Invest in change
Every so often, you’ll get the opportunity to invest in an industry in transition – one that could reshape elements of the economy or impact our society.
Blockchain, cleantech, and cannabis are recent examples that straddle both of these lines.
While still early in its early years, blockchain is already being used for meaningful applications like keeping citizen data safe in Estonia and helping Somalian refugees access to digital identification. Cleantech is helping countries around the world transition away from fossil fuels, and cannabis can offer relief for those suffering with PTSD or chronic pain.
But transitioning industries like these can also be prone to show-stopping fluctuations. In 2017, the top five cannabis stocks saw a 400% growth in market cap in less than a year, but that same year the price of Bitcoin, a cryptocurrency that’s built on blockchain, peaked and subsequently burst, causing the price of each coin to plummet by 82% within a year.
Investing in change can be a meaningful way to support causes that you believe in, but just because something captures your heart, doesn’t mean it’s the best thing for your wallet.
Consider how much you’d be willing to lose and invest only that portion of your portfolio accordingly. To minimize risk, make sure that the bulk of your portfolio is diversified across other industries.
2. Invest in your career growth
There’s never been a better time to upgrade your education. As our lifespans increase, we can expect to have longer careers. At the same time, artificial intelligence and automation could force a major economic transition over the next two decades with many roles disappearing.
Pursuing additional training can be a great way to accelerate and future-proof your career, but it can come at a cost. You’ll need to pay tuition and may lose part or all of your income while you study.
Still, people with higher levels of education tend to earn more money, making this a smart investment in the long run.
If going back to school wasn’t in your original plans, you may be wondering where the money will come from. The good news is, you have options. Start by looking at grants and scholarships, which many students tend to overlook. If you don’t want to rely on student debt, it’s also possible to borrow from your RRSP to cover the cost of education, but you’ll need to repay that amount to your account within ten years.
3. Invest in volatility
If you don’t expect to withdraw from an investment account (such as an RRSP) in the next ten years and you’re comfortable weathering the storm should the stock market dip, then your thirties are an ideal time to choose a growth-oriented or even an aggressive investing portfolio.
These are portfolios with a higher composition of volatile assets such as equity. While they’re more susceptible to market swings, these higher risk portfolios also tend to see higher returns over time.
4. Invest in living with less
Growing your money isn’t just about earning more: it’s about spending less. Take a lesson from the FIRE (Financial Independence, Retire Early) movement – stash away money today so that later in life you have the power to decide how you spend your time.
This may mean sticking with the cheap and cheerful apartment rather than the luxury condo, buying vintage instead of new, and skipping the $25 spin classes.
The risk is that making these lifestyle sacrifices now may leave you feeling like you’re missing out. The reward? Every dollar invested today can grow into a bigger payout down the road. That’s why it’s worthwhile.
At the end of the day, your thirties can be a decade marked by personal growth and change. Why not use these happy golden days to take some calculated financial risks that could put you ahead for life?
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