How to Invest for the First Time in Your 30s

A lot of people struggle to save and invest money in their 20s, and for good reason. When you're fairly new to the workforce, you may not be in a position to command such a high salary. And the majority of your income may be needed to cover things like your car payments and rent.

By the time your 30s roll around, you'll hopefully be in a strong position to start investing your money. By then, you may be earning more, and you may have a better handle on your finances overall.

If you start investing in your 30s, you'll give yourself ample opportunity to grow wealth in time for retirement. But it's important to adopt the right strategy so your efforts pay off.

Go heavy on stocks

There's risk involved in owning stocks. The market can be fairly volatile, and you could see the value of your portfolio swing wildly from one week to the next.

That's not such a big problem when you're investing over a few decades, though. So if you're in your 30s, you're probably able to take on the risk of investing in stocks because you may not be touching that money for three decades, or until whenever it is you retire.

In fact, over the past 50 years, the stock market's average annual return has been 10%, as measured by the performance of the S&P 500. But that average return accounts for years of strong returns and years of negative returns.

If you start investing $250 a month in a stock-heavy portfolio at age 32, and you do so through age 67, you stand to retire with about $813,000, assuming that 10% average annual return. Make it $350 a month, and you'll have well over $1 million.

Make sure to maintain a diversified portfolio

Being in your 30s means you're able to take some risk in your portfolio, and that's a good thing, since it could lead to stronger returns. But it's also important to maintain a diverse investment mix at all times.

A good way to start is to invest in an S&P 500 ETF. This will effectively allow you to invest in the 500 largest publicly traded companies in the stock market without having to buy shares of each one individually.

Once you're able to learn more about choosing stocks, you can move on to buying shares of individual companies if you'd like. But when you do that, keep that diversification principle in mind.

You don't, for example, want to make it your mission to buy a new tech stock every month. Rather, if you're buying shares of a tech stock one January, that February, aim to invest in a different industry, like retail or banks.

Also, know that you don't necessarily need to hold hundreds of different stocks in your portfolio. Doing so, in fact, is not so advisable, because it's hard to keep track of 224 companies. If you hold some S&P 500 ETFs along with 30 to 40 stocks or so, you should be well-diversified -- as long as those stocks represent different corners of the market.

Some people don't begin to invest until well after their 30s. But if you're able to get started at that time, you may find that you're able to amass quite a lot of wealth in time for retirement.