Stock Market Investing Tips To Help You Retire In Your 30s

Millennials have the opportunity of a lifetime in front of them - to do what Amon and I did, and retire before they turn 40! And the stock market has a lot to do with that. This generation may have the highest amount of student loan debt, but they also have the best access to stock market investing, and plenty of time to grow their money, portfolios, and compound interest.

Starting on the road to financial independence, and using the stock market to help you along, is a big move to make. So today I’m going to share some of our top tips on how to use stock market investing to achieve financial independence and retire early (FIRE).

Get Into The YOLO Mindset

This might sound a bit weird, but I’m not talking about YOLO in the traditional sense. A lot of people think that because ‘you only live once,’ that means you should spend your money on whatever you want - life is short, why not enjoy it while you have it?

But I like to turn this idea on its head. People have a long life expectancy, and if you burn through everything now, what will be left when you’re older? Instead, I use YOLO as a long-term life strategy. You only live once - so you should try to secure a happy and secure future for yourself in the years to come.

Amon and I used this mindset while we aggressively pursued financial independence, and that’s part of what allowed us to retire before 40! By flipping YOLO on its head, we are actually able to live more freely for a longer time, because we don’t have to worry so much about money as we get older.

Start Investing Whatever You Can ASAP

Even if it’s only a dollar, invest it. The sooner you start investing, the closer you get to financial independence. Even the smallest amount can make a difference, especially when you’re young! Take a 20-year-old for example. If that 20-year-old invests one dollar a day until they are 60 years old, they could end up with more than $200,000 in their investing accounts!

Begin with a small amount, and as you make more money you can add a little more to the pot over time. It will make a huge difference to your investment goals, trust me.

Budgeting and Saving

There’s a budgeting rule called the 50/20/30 rule. The idea is that 50% of your budget goes toward your needs, 30% to your wants, and 20% to your savings.

But I think you can do better, and you should do better. The big problem with this budgeting rule is that it keeps your spending relative, so the more you make the more you spend, even if you don’t need to. With this rule, it’s easy to start thinking “maybe I need a bigger house” or “maybe I need a better car” even if both are unnecessary. Telling yourself that you should spend 70% of your income means you’ll go out of your way to find reasons to spend as you earn more.

If you’re seeking FIRE, this budgeting rule is not a good one to follow, because most people cannot retire as early as they might like when they only save 20% of their income. When we were pursuing financial independence, Amon and I were saving as much as 70% of our income.

The rule of thumb should always be to save more, not spend more. And the more you save, the more you can invest, the quicker you reach early retirement.

Maximize Your Tax-Advantaged Accounts

Any account that gives you tax benefits (think 401k and Roth IRA), are ones you should be focused on maxing out. And once you’ve done that, then you can move onto a traditional brokerage account. If you’re in a position like this, you are already well on your way to financial independence.

Maxing out your tax-advantaged accounts is essential because it protects your money from being eaten up by taxes over time. You’re going to save a ton of cash by doing this, just make sure to put money into a brokerage account once you’re done!

Keep Learning

To this day, even after achieving FIRE, Amon and I are still working to improve our financial literacy. There is always room to learn more about saving and investing, and there is no shortage of great resources that will increase your knowledge.

Don’t Invest Like Warren Buffett (Or Anyone Else)

Your situation is not the same as Warren Buffets or anyone else for that matter, so it’s important to tailor your investing style to your own needs. What is your risk aversion? What are your goals? How do you feel about investing? The answers to questions like this should dictate how you invest. You are unique, and you probably aren’t a billionaire, so make sure you’re investing strategies realistically reflect your situation.

Assess Your Risk Level

The rule of thumb for millennial investors is that the younger you are, the higher risk tolerance you have since you’ve got more time to recover your losses. However, this can vary from person to person. You should do an honest self-assessment of your situation, to ensure that you don’t build a portfolio that is too aggressive, and end up in a sticky situation if the stock market drops.

Automate Your Investments

Whenever money comes in, a certain amount should go straight into your investment accounts without you having to think about it. Automated payments mean you won’t be distracted from your investments and put money into the wrong things. It also helps to distance your emotions from the process, since you won’t be spending as much time looking into your accounts and potentially making hasty adjustments.

Think Twice About Individual Stocks

Today you can buy individual stocks on so many different platforms, and they don’t even charge you a commission. It’s so easy to do, so I’m not surprised if you’re rearing to go out and invest in individual stocks. But I suggest you think carefully about doing this since it is very easy to invest recklessly.

If you do choose to invest in this way, you should be doing your research thoroughly, regularly checking up on the annual reports, and following any news related to that stock. It takes a lot of work to get it right, especially if you’re new to stock market investing.

Millennials are facing more than their fair share of challenges. But they also have a lot of opportunities that previous generations didn’t, including far better access to stock market investing. I hope these tips have encouraged you to up your investing tactics and strategies because doing so could pay dividends for the rest of your life!