While we have more than three decades to go before the average retirement age of 65, the decade of our 30s offers important opportunities for life-changing smart money moves. Hopefully we have left behind some bad habits from our 20s – like overspending, splurging on extravagant indulgences and credit card debt. Now, many of us recognize the need to have more control over our financial lives and the importance of establishing a solid financial foundation.

With that goal in mind, here are five smart money moves for the 30-something:

Don’t Rely Solely on a Robo-advisor

Robo advisors are all the rage these days, especially among the technologically adept. The term refers to automated computer algorithms or software that allocate, deploy and rebalance investments based on an investor’s current age, expected retirement age and appetite for risk. “This service may not be beneficial for someone younger,” cautions Adam B. Scott, co-founder of Argyle Capital Partners, a Registered Investment Advisor in Los Angeles. “Starting with a Robo-advisor is going to limit the amount of learning for a young investor,” he said. Another reason: an individual retail investor can still get scared during times of extreme volatility and give in to the urge to tinker with their allocation or withdraw funds, thus defeating the entire purpose of using a Robo-advisor. “This is a major drawback,” said Scott. However there is a place for Robo-advisors when coupled with a knowledgeable (and trusted) human advisor, said Scott. Indeed, the debate on whether or not to use or rely on a Robo-advisor has been widely debated in leading media outlets including The Wall Street Journal and The New York Times. Many advisors point out that the marriage of a traditional financial advisor with the lower-cost, methodology and accessibility offered by Robo-advisors can be a powerful combination for some investors.

Don’t be too conservative

This is not to suggest you become a day-trader, but you can afford to be overweight in equities at this age, said Scott. “A common mistake I see with someone in their 30s is that they are are overly conservative,” said Scott. “It may be the result of having their portfolio hurt by the 2008/2009 downturn, or they might be influenced by their parent or grandparent. But being overly conservative in our 30s can limit our ability to create wealth.” One major benefit of our 30s is that we have decades for our money to grow before we need to withdraw it. Our asset allocation should not look like that of someone who is 60 years old. We have to take into account our feelings for risk, but we have to invest in a way that suits our timeline especially if want to build a nest egg.  The American Association of Individual Investors, an independent, non-profit corporation created to offer unbiased investment education, has made available tools and articles to help investors with asset allocation and portfolio building. They can be assessed via its Asset Allocation section.

Read & Learn

It is also very  important is to proactively increase our knowledge of investments and retirement during our 30s. That way we can take better control of our financial lives, according to Scott. Becoming an educated investor takes years. Fortunately, there are many resources available from those offering basic information (e.g. Investopedia), to tutorials (e.g. Morningstar.com’s Investing Classroom) to in-depth training (e.g. Morningstar’s annual Investment Conference or Barron’s Art of Successful Investing). The goal is to boost our knowledge so that investing is not a  great mystery, and we have the ability to become an active participant in our investments and not just a passenger along for the ride. The more we know the better. Scott also suggests becoming regular consumers of Barron’s, Bloomberg and The Wall Street Journal. Another important habit he advocates is reading articles, books, posts and shareholder letters written by well-regarded investors Warren Buffett, CEO of Berkshire Hathaway; Ray Dalio, the founder of Bridgewater Associates; Howard Marks, the Co-Founder of Oaktree Capital Management or Larry Fink, the CEO of BlackRock.

Don’t be Afraid of Good Debt.

We are conditioned to think of debt as a four-letter word, observes Scott. “But there is such a thing as good debt,” he said. Smart debt is borrowing money to generate higher returns. Smart debt is borrowing to start, or grow, a business. Smart debt is buying a home at a low interest rate instead of renting. “If you can lock in a low rate at 4% or less to buy a home, you can say that is smart debt,” said Scott, “You will also have some tax benefits on the interest payments.” What is not ‘smart debt’? Credit card debt, said Scott.

Max out your 401(K)

The earlier we invest, the more we invest, the better our retirement security. Max out your 401(k), Roth IRA or Roth 401(k) contributions, advises Scott. “If you work for a company that offers a Roth 401(k) you are in luck,” said Scott. It is the best of the traditional 401(k) and the Roth IRA, said Scott. Just like with the Roth IRA, the Roth 401(k) lets an employee contribute funds post-tax, and upon retirement withdraw the funds tax-free. The Roth 401(k) also permits employers to make matching contributions similar to the traditional 401(k), although employer contributions cannot receive the Roth tax treatment.

Our 30s is the defining decade to get more serious with our financial lives. By using this important time to empower ourselves with the right skills and knowledge, we can make smarter choices in how we manage and invest our money. Remember, retirement is a reality, no matter how far away it might seem, and it is up to us to prepare and plan for it.

Josie Lee

Josie Lee

Josie Lee is a freelance writer based in New York city. She is a former Forbes reporter and have worked with leading fintech, financial services and technology companies on their marketing and communications programs.