Have you ever heard anyone talk about the “terrible twos” as they raise their children? It’s a time when kids often don’t sleep, can walk and talk, and get into all kinds of mischief.
My wife went through this phase twice with our two kids—with me out on assignment most of the time. It’s a challenging period for most couples, but you will be much stronger if you manage.
Your 30s are similar to the terrible twos. This decade is the crunch time of your life. You spent your 20s learning the ropes; your 30s are the championship game. But there is no prize for second place; we must bring our “A” game.
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Welcome back to the Stock & Bond Investing at Any Age series (20s), where we create passive income across our entire life.
Welcome to your 30s. I like to focus on married couples in their 30s. However, this can apply to anyone going through this patch. Here are some of my other articles on your 30s.
- Retirement Planning in Your 30s (Amazon)
- Real Estate Investing in Your 30s (pdf)
- Staying Debt-Free in Your 30s (pdf)
- Dividend Investing in Your 30s (Amazon)
- Bond Investing in Your 30s (pdf)
The first thing you should do in your 30s is to read the book “Smart Couples Finish Rich.” I wish I had read this going into this phase of life.
The problem with your 30s is that you must be laser-focused—on everything. You want your marriage to survive and thrive, as well as your kids. You must also build your career and learn how to save and invest.
Don’t get overwhelmed; the best advice I can give is that everyone is struggling. The addition of social media adds the high school element to your 30s. It seems everyone is out on vacation while you are grinding at home and work.
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First things first. This article is about investing, so let’s focus on that. Let’s start with an easy question, how much passive income do you earn?
If the answer is zero, we will start working on this immediately. I typically like to start with an income-investing portfolio, but let’s start with bonds today.
Money is tight in your 30s—very tight. So we want to accomplish three things: 1) preserve capital, 2)grow our wealth, and 3) ensure a safety net.
The best way to achieve all three goals at once is by buying Series “I” Bonds. They do not give us income but provide us with peace of mind.
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I’m 42, and my wife is 39; we married at ages 25 and 22, respectively. I can tell you that peace of mind, safety, and security are top of mind in your 30s.
Ideally, you would enter your 30s with a saving and investing plan, but that’s not usually the case. We may even start our 30s with debt and poor credit.
Why Series “I” Bonds? Series “I” Bonds protect us from inflation, grow tax-free, and don’t punish us too much for withdrawing early.
We can invest $10,000 per year per person in Series “I’ Bonds. Yes, we can start a TreasuryDirect account for our kids.
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You can add Series “EE” bonds if you want more savings bonds. However, they don’t offer as much short-term flexibility as “I” Bonds.
401K versus Dividends. Now that we have savings bonds, we need income. I need you to listen closely to this statement: do not overcommit to your 401K.
Yes, your 401K is vital to your long-term retirement plan. Yes, your employer may match you 5% inside your 401K portfolio.
The problem is people contribute 5-10% of their income to their 401K and have nothing inside a taxable brokerage account.
Why use a taxable brokerage account? In one word: dividends. Dividends are the lifeblood of your household income plan.
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The magic of dividends. Even having $300 per month in dividends can change your life. If you have enough dividends, your spouse could potentially stay home with the kids.
At one point, I had $30,000 in my 401K. I borrowed against it to purchase our first house, then again to buy a second house. Then, one more time, to help us in a pinch.
I am retiring from the military with $10,000 in my 401K and $250,000 in my brokerage accounts. Why such a discrepancy?
Dividends provide me with a sweet income I can use daily. I have to wait another 18 years to leverage my 401K.
Remember that my military pension will start immediately when I retire this year. Your situation probably differs from mine; however, dividends can help now and later.
Your dividend goals. Since you are in survival mode in your 30s, it is essential to set realistic goals. A good plan would be to create $300 per month in dividend income.
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It may sound easy, but at a 4% yield, your account will require $90,000. What can you do with your $300 per month?
You can do anything you want. You could use it as your family’s fun budget for the month. Or you can use it as date night money for you and your spouse.
The automatic investor. The best way to create this income stream is by automatic investing. This is like how your 401K works but originates from your brokerage account’s website.
For example, I invest $700 monthly into my M1 Finance account. I have M1 Finance (affiliate) take money from my Wells Fargo checking account on the 1st of the month.
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However, I can also set up a direct deposit from my work to M1 Finance. Either way, I get the money into my account before it touches hands—we call this “paying yourself first.”
You need a plan. Sadly, you will have a terrible time in your 30s without a plan. You need a lighthouse to navigate through the toughest times.
Focusing all your time on your kids’ activities will only pay off in the short run. You must dedicate at least an hour daily to following the stock market and reading financial mindset, business, and real estate books.
Conclusion. Why such a hot take on kids’ sports? Because if we don’t get “the information,” we cannot pass it down to our kids.
This ensures that our kids will have challenging 30s like us. Imagine if your parents gifted you a $1,000 monthly income stream in your 20s or 30s. Would that help?
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As tough as our 30s are, we can triumph over them through learning. I started my journey to financial independence at age 38, after 20 years in the military.
By learning this information and using it, I can fully retire at age 42. I can dedicate the rest of my life to my wife, kids, and grandkids. All it took was the proper knowledge and massive action.
There is no easy way through your 30s, so keep it simple. Use your 401K, but do not overdo it. Build a portfolio of Series “I” bonds, and create a $300/month dividend portfolio.
These are three ways to set the stage for a great decade in your 40s. Good Luck!
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Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. All Right Reserved Military Family Investing
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