30 Somethings

It’s time to get serious!

While your 20s may have been spent getting to know your worth out on the job market, making some spending mistakes and possibly not putting saving for retirement on top of your priority list, your 30s are the time to be completely and absolutely serious about your financial future.

More likely than not, you’ll have to consider the financial needs of your spouse and/or children, which means your financial responsibilities and expenses are likely to increase as well. You need to focus on putting an investment portfolio in place which is focused on long term growth. Stay on course towards your personal goals and remember that a disciplined long-term investment approach is always the best way to go.

Debt Management

Are you in the right debt products? Are you maximising your surplus cashflow and focusing it on eliminating your non-deductible debt as soon as you can?


Have you established a portfolio of quality assets which are actively managed and focussed on long term wealth creation.


Many of our clients in this lifestage are managing debts and dependents. Quality insurance policies and the right amount of cover are key focus areas.
Some key strategies we use with our "30 Something" clients
Still have credit card debt? No emergency fund? Then you absolutely have to start these things in your 30s. And for those 30-year-olds that did get these tasks completed, it’s time to build upon a strong foundation.

Thirty-somethings are progressing in their careers and making more money. You may buy a home in this decade of life, start a family or do both. But, the one thing that has to stop in your 30s is unbridled spending.

Active Investing

Active investing is an investment strategy that aims to outperform the returns of a specific index or
benchmark. The level of return that exceeds index is referred to as alpha.

This approach differs to passive investing where the objective is to match the performance of an
index or benchmark.

Benefits of this approach

  • Active investing may appeal to investors that seek a return that exceeds the performance of the broader market.
  • May be suitable for investors that seek exposure to a niche strategy or segment of the market.
  • Active investing may appeal to investors wanting an investment outcome with a superior risk and return payoff to passive investing.
  • The strategy allows for the deliberate introduction of tilts into a portfolio such as an underweight or overweight allocation to specific sectors or investment styles.
  • Active investing can be combined with passive investing to target less efficient segments of the market where fund manager skill is more likely to generate alpha.
  • Active investing can align closely to a specific investing objective and tolerance to risk.
  • It is a suitable strategy for investors that are willing to be more engaged in the investment process. This reflects that investment outcomes are now a function of two factors: market movement and manager skill.
Active investing can provide specific exposure and be managed in a benchmark unaware manner. This flexibility can avoid sectors that are expected to underperform the broader market – for example, sectors that are facing structural decline or where valuations are exorbitantly high. Active investing also enables investors to target specific characteristics, such as a greater focus on income and full franked dividends. This flexibility typically cannot be implemented via passive investing.

Active investing may be suitable for investors seeking higher risk adjusted returns than the broader market. We achieve this by rotating the portfolio in response to the business cycle and to relative valuations amongst sectors. For example, an active strategy may switch between defensives and cyclicals or large and small caps. This flexibility can provide a cushion in down markets while increasing risk when the outlook is more favourable.

It is important to know that active investing requires a level of engagement above what is required when passive investing and costs can be higher due to the higher number of transactions involved. And, of course, like all investing, superior returns are not guaranteed.

Repaying debt is considered a low risk strategy because the savings are achieved through a lower interest cost. Once non-deductible debts are repaid, the repayment amount can be directed towards savings to help increase wealth.

Benefits of this strategy
  • Potential to increase wealth as surplus cashflow can be put towards savings instead of repaying non-deductible debt.
  • Taxable income may be reduced if non-deductible debt is converted to deductible debt.
How this strategy works

Borrowing can create opportunities to buy assets that a person couldn’t otherwise afford, but it also
requires discipline as loan repayments must be met as they fall due.
Implementing strategies to manage debt can relieve cashflow and reduce the cost of a borrowing
(the cost of a borrowing is primarily the interest paid, but may also include loan fees). Strategies to
manage debt include:

  • making additional repayments
  • debt consolidation
  • repaying high interest rate debt first
  • repaying non-deductible debt first.
Making additional repayments

A simple strategy to reduce debt is to make additional repayments with extra cashflow or savings.
Not only does this strategy reduce the time taken to fully repay the debt, it also achieves a saving
by reducing the total interest paid.

This low risk strategy can provide significant cost savings, however it is important to first check the
loan contract to see if there are any restrictions on additional repayments. For example, some fixed term loans may not allow additional repayments or may charge a penalty.

Repaying high interest rate debt first

A person may hold a number of different types of loans, such as a home mortgage, a personal loan and a credit card. The interest rate applying to loan will usually be different, with some rates being considerably higher than others. Repaying the loans with the higher rate first will create savings compared with repaying all the loans at the same time.

For example, a credit card will usually charge the highest rate of interest, so by directing extra savings to repay this debt instead of the home mortgage (which usually has a lower rate of interest) can create interest savings over the long term. However, it is important to remember to continue making the required repayments on other loans at the same time.

Repay non-deductible debt first

The interest cost and other related expenses of a borrowing may be tax deductible if a borrowing is taken out to buy an income-producing investment (such as a rental property or managed funds).

This type of debt is called ‘deductible debt’. The tax deduction effectively reduces the cost of borrowing, with the value of the deduction being dependant on a person’s marginal tax rate. The higher the marginal tax rate, the higher the value of the deduction.

‘Non-deductible debt’ is where a loan is taken out to buy personal assets (such as a home or holiday). The interest cost of these borrowings is not deductible and there is no tax benefit to reduce the cost of the loan. These borrowings should be repaid as quickly as possible.

Some options to accelerate the repayment of non-deductible loans:

  • Make additional repayments regardless of how small (after first checking that the loan arrangement allows additional repayments with no extra fee).
  • Consolidate non-deductible loans into one loan to reduce overall interest cost.
  • If repayments are calculated monthly, halve this amount and make fortnightly repayments. As there are 26 fortnights in a year compared to 12 months this will create additional repayments which will reduce the total interest cost and the loan term.
Other things you should know
  • All lending requires discipline. It is important not to over-commit as this will increase the likelihood that ongoing interest and loan repayments can be met.
  • When borrowing, a person should have adequate life insurance (eg life, total and permanent disability and income protection) to help meet loan repayments in the event that income ceases because of death or illness.
  • It is important to confirm with the lender what fees and charges may apply if a loan is restructured or additional repayments made.
  • Tax advice should be sought prior to making any changes to investment related borrowings.
The common belief that “it won’t happen to me” results in many people having a sound plan for wealth creation but not for protecting the very thing that generates wealth, themselves. In your 30s you will typically hold alot of debts and maybe starting your family - insurance can be critical.

Life insurance

Life insurance pays a lump sum to the deceased’s beneficiaries or estate upon death. Beneficiaries can use the lump sum to repay debt, pay for children’s education or long term care, or any other purpose.

Life insurance policies which are owned directly generally have the following features:

  • Premiums are usually not tax-deductible.
  • In the event of death, the lump sum is generally paid tax-free to the nominated beneficiary.
  • There are generally no restrictions on who can be nominated as beneficiary.
  • If a beneficiary is nominated, proceeds are paid direct to that person and bypass the estate.
Total and permanent disability (TPD) insurance

TPD insurance pays a lump sum if the person suffers an illness or injury which totally and permanently prevents them from working again. TPD insurance can provide cover based on the person’s own occupation or any occupation. A
person working in a specialist occupation may gain greater protection by choosing own occupation cover.

Premiums on TPD policies which are owned directly are generally not tax-deductible. In the event of a claim, the proceeds will be paid direct to the insured person or their nominated beneficiary. The proceeds are generally only taxable if paid direct to someone other than the insured person or their near relative.

Income protection

Income protection, or salary continuance, provides a regular income if a person is unable to work due to sickness or injury. This type of insurance can be particularly important for a person who has loans or geared investments where the loan repayments are reliant on the person’s income.

Income protection provides a regular income during the period the person can’t work. A waiting period will usually apply before payments commence. A person can generally choose a waiting period between 14 days and two years. A longer waiting period will usually result in a lower premium.

A policy will usually pay up to 75% of income. If the policy covers an ‘agreed value’, the monthly payment is stated in the policy and this is the amount that will be paid if a claim is approved. ‘Indemnity value’ means the amount of the monthly payment will be determined at the time of making a claim, based on 75% of the income earned in the 12 months prior to the claim.

The cost of income protection premiums are generally tax deductible, which helps to reduce the effective cost of the insurance. In the event of a claim, the monthly payments are taxable income.

Trauma insurance

Trauma (or critical illness) insurance provides a lump sum upon diagnosis of a specified illness or injury.
Trauma insurance is designed to provide money to help the insured person recover financially after a trauma or crisis, such as a heart attack, stroke, cancer or other life threatening illness.

The payment is made regardless of whether the person is able to return to work and is designed to relieve financial pressure at a time of great stress. Premiums for trauma insurance cover are generally not tax deductible. In the event of a claim, the proceeds are generally paid tax-free.

Amount of cover

In determining the amount of insurance a person needs, consideration needs to be given to the potential loss that could result from various risks. Decisions need to be made as to what risks can be retained, what risks can be avoided and what risks must be transferred. The amount and types of cover that a person needs will depend on their circumstances and objectives. It might include factors such as marital status, whether the person has children, their budget, how much they want to provide for dependents and their level of assets and debt.

Need Advice?

Contact us

Paladin Wealth Advisers Pty Ltd
Phone:(02) 9216 9030 Fax: (02) 9775 2121
Address: Level 29, Chifley Square, Sydney NSW 2000.
Email: Greg@PaladinWealthAdvisers.com.au

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