Investing in your 30s

Sam Slator 22/06/2023 in Global, Asia/Emerging Markets, Investment Trusts

For many people, their 30s can be a challenging time with contrasting commitments and numerous demands on their financial resources. Life often becomes more ‘grown-up’ in this period. The comparatively carefree 20s have often given way to a more serious outlook.

It’s also the decade in which couples tend to settle down and start a family, with the average age at first marriage now 31 years, according to data from the UK Parliament*.

Buying a house and having a baby are quickfire ways to drain the bank account – so how can you afford to live, while simultaneously saving for the future?

Your situation

Of course, not everyone is preparing to welcome the pitter patter of tiny feet into their lives. Plenty will still be travelling, enjoying life as free spirits, or focusing on their careers.

Many will have spent the best part of a decade climbing the corporate ladder and are now reaping the benefits with a decent salary to fund their lives. If you are lucky enough to be in this situation, make the most of it! We’re not saying you need to save every penny, but having one eye on the future makes sense.

First considerations

As always, your first priority should be clearing outstanding debts. The interest rates you’re likely to be paying will almost always outweigh what you’re earning on investments.

Similarly, ensure you have some money in an easy access account – either a traditional bank savings account or cash individual savings account – in case of emergency.

It’s also a good idea to budget carefully so you know exactly how much money you have coming in each month and where it’s being spent. That’s just sensible financial housekeeping.

Pension plans

It’s a good idea to think about consolidating any workplace pensions if you’ve changed jobs since you started your working life.

As you still have decades to invest – meaning your portfolio can cope with stock market fluctuations – you can afford to take more risk and remain 100% in equities.

If you have near-term financial commitments, such as saving for a house, you can opt for an individual savings account (ISA) as this can be accessed earlier than a pension.

Investment suggestions

By this point in your investing life, the hope is you already have core holdings in place. This could be in global equity funds that give you diversified exposure to international companies.

Being in your 30s means you’re still incredibly young – regardless of how you may feel – and the long investment horizon ahead will enable you to cope with stock market volatility.

Investing in funds buying into smaller businesses can also be a lucrative move as these firms have less analysts following them. This means they have a better chance of surprising on the upside.

One example is abrdn Global Smaller Companies. Its manager, Kirsty Desson, considers such stocks from around the world, including emerging market areas. We believe this is a very good contender for long-term exposure to an exciting asset class and consider Kirsty a safe pair of hands.

Exciting additions

Once you have core holdings in place, you could allocate some of your money to higher risk equities like biotech or emerging markets. Although these areas are more volatile, they generally do well over the longer-term and are worth considering if you have many decades before retirement.

Here we highlight three such funds, each with a slightly different focus, that might be worth a look for those in their 30s.

AXA Framlington Biotech

No-one can deny that healthcare is an attractive investment sector due to technological advances and the fact people are living longer. Biotechnology is an important subsector of this space and one of the fastest growing – and AXA Framlington Biotech aims to take advantage of the opportunities. You only need to consider how important this area proved to be in the global fight against the Covid-19 pandemic in recent years.

This fund invests in shares of listed companies, mainly in the biotechnology, genomic and medical research industry. Firms of all sizes will be considered. While its manager, Linden Thomson, can invest anywhere in the world, the fund tends to have a bias towards the United States as this is where most biotech companies are based. The 10 largest companies, which together account for a combined 43.62% of assets under management, include Regeneron Pharmaceuticals, Biogen, and Gilead Sciences**.

Sanlam Global Artificial Intelligence

Artificial intelligence is hotly tipped as a long-term investment theme – and this fund invests in businesses that are involved in this growing area. This includes those working in areas such as research and development, the provision of AI, and the transformational adoption of such services.

Sanlam, a boutique investment manager, believes AI is driving change across the global economy and remains confident of its long-term prospects. “The influence of AI is set to permeate every sector worldwide as its reach continues to accelerate and broaden, creating compelling investment opportunities,” it has stated. The 10 largest stock positions include Alphabet, the parent company of search engine Google, which accounts for 6.3% of assets under management, followed by Nvidia Corp at 5.8%**.

JPMorgan Emerging Markets Trust

Emerging markets remains popular with longer-term investors that recognise the potential benefit of putting their money into fast-growing areas. The JPMorgan Emerging Markets Trust, which has a track record dating back more than three decades, focuses exclusively on companies.

Austin Forey, its experienced manager, has been at the helm of this fund since the mid-1990s. His longer-term focus is illustrated by the fact he’s held some positions for more than 20 years. Taiwan Semiconductor has the largest single stock position of 9.4% currently, followed by HDFC with 6.4% and Tencent on 5.3*. By virtue of its stock holdings, the fund is geographically diversified with exposure to China, India, Taiwan, Hong Kong, Korea, Indonesia, and other countries**.

*Source: UK Parliament, All you need is love (and a marriage certificate)

*Source: fund factsheet, 31 May 2023


Photo by Tony Luginsland on Unsplash

This article is provided for information only. The views of the author and any people quoted are their own and do not constitute financial advice. The content is not intended to be a personal recommendation to buy or sell any fund or trust, or to adopt a particular investment strategy. However, the knowledge that professional analysts have analysed a fund or trust in depth before assigning them a rating can be a valuable additional filter for anyone looking to make their own decisions.Past performance is not a reliable guide to future returns. Market and exchange-rate movements may cause the value of investments to go down as well as up. Yields will fluctuate and so income from investments is variable and not guaranteed. You may not get back the amount originally invested. Tax treatment depends of your individual circumstances and may be subject to change in the future. If you are unsure about the suitability of any investment you should seek professional advice.Whilst FundCalibre provides product information, guidance and fund research we cannot know which of these products or funds, if any, are suitable for your particular circumstances and must leave that judgement to you. Before you make any investment decision, make sure you’re comfortable and fully understand the risks. Further information can be found on Elite Rated funds by simply clicking on the name highlighted in the article.