“ The best time to plant a tree is 20 years ago. The second- best time is now.”
Chinese Proverb
In our early thirties, the typical life cycle shows that you have gathered some years of experience, and you are wiser in your decision-making. You probably have more responsibilities at work or if you are in business you are starting to expand, and this is taking up more of your time. You have also probably started your own family and your extended family is also looking up to you to shoulder some responsibilities.
It may seem daunting but take it all in in stride. A good plan will see that you become financially stable. In this phase of life your income it is expected that your income will have increased and therefore you can do a bit more than your 20-year-old self. So what should you be doing in your 30s for investments
- Grow Your Emergency Fund
If you started an emergency fund, in your 20s it is time to grow it. The recommended fund amount is 6 months’ worth of your living expenses. I recommend that you up it to at least 9 months. Also, build it in by saving it in a money market fund so that the doesn’t get wiped out by inflation.
- Retirement Fund
If you don’t have a retirement fund, join a scheme as soon as possible, because here in this community we start preparing for retirement as soon as we start earning. Also, because hope is not a strategy we employ, that our children will take care of us… but most importantly it’s because of the magic of compound interest. So, if you started investing in your retirement account in your twenties you are starting to see some good amounts in your statements. Top up as much as you can to grow your golden pot.
- Get into a Chama
- Get into a Chama
The benefits of being a member of a progressive chama cannot be overemphasized. Alone you can only do so much but in a group the possibilities are endless. A chama whose members are laser-focused on their financial growth can push their members to financial freedom much faster than the members doing it alone. What is important is to ensure that the members have clarity of the goals they want to achieve and that everyone is working towards this.
- Stocks
Start and grow your stock portfolio, if you are only invested in one country think about diversifying further your portfolio to different countries and markets. Stocks have the potential to grow your wealth portfolio, through capital gains, when the prices appreciate, as well as through dividend payments which you can re-invest, you can adopt one or both investment strategies. To trade in stocks, at least at the Nairobi Securities exchange, you need to have opened a Central Depository System account (CDS) with your preferred broker.
If investing directly in the stock market is not your cup of tea, you should consider investment vehicles such as Unit trusts which are offered in a range that includes, Balanced funds and Equity funds.
- SACCO
Consider joining a SACCO if you are not in one yet. SACCOs offer a disciplined approach to saving but also allow the savers to access credit when they need it. The upside is that members are then compensated annually with Dividend and Interest payments for their Shares and Deposits at the SACCO. This investment avenue is a must-have in your investment portfolio.
6. Treasury Bills and Bonds
Investing in Treasury Bills and Bonds is not as complex as it sounds, you need to just have opened a CDS account with the Central Bank of Kenya, (this CDS is not to be confused with the one for trading in Stocks).
For investing in Treasury bills the minimum amount is currently KShs. 100,000 while for the Treasury Bonds, it is Kshs.50,000.
This investment is important to have because it gives predictable income and the interest paid. If you don’t want to be bogged down by investing as an individual, you can invest through the unit trusts that offer Money Market funds and Fixed-income funds.
7. Save up and acquire real estate
I don’t know if this is an African problem generally but Kenyans we are obsessed with Land! Never mind if you are literally acquiring land that is in the middle of nowhere, provided you can tell your friend you own land, it is enough for you. Except it cannot be enough, especially if you cannot do anything with it.
And please don’t buy into the narrative that the land will appreciate in value, because it does not help to have land appreciate in value and you cannot sell it to unlock that value. I am using a lot of words to say, be very intentional in the property you acquire and the land you purchase.
Let the property add value to you, in that it is in a good location so that you have a good occupancy rate. Purchase land in a good location where you can envision yourself developing the land or even easily selling it off.
8. Research and Read on Personal Finance
Most of us will go wrong when we completely delegate our financial health to other people. So we get caught up investing where our friends are investing never mind they may be chasing the flavor of the month, shiny investment. Information on where to invest is not hard to come by, it is one of those areas everyone has an opinion, but you have to be intentional in mapping out your journey to financial wellness, especially during this season, so that you avoid costly mistakes that can haunt you for the rest of your life.
Fun fact that may not be so much fun…
Some personal finance experts advise you to save up at least 3X of your annual income by the time you get to 40 years. Again, this is a good number to aspire to, but don’t overwork yourself to get there.
I firmly believe that investing is simple, and it should be like watching paint dry, once you have a solid plan, but investing is not easy. Especially if you are fidgety about moving your money around all the time, then you don’t benefit from compound interest. So, the key lies in making solid investment decisions. It also does not mean that you shouldn’t adjust to circumstances.
It’s never too late to start on the right path, so start today.
Rooting for your success!