Your 30s and 40s are likely to be the decades when you hit major life milestones. From buying your first home, getting married and having children to hitting your stride in your career, there are many events that could have a huge impact on your finances.
That’s why it’s important to stay on top of your investments, adjust your goals if necessary and make plans for the future.
Here are six things to consider when investing in your 30s and 40s.
Create a solid budget
If you have several years’ worth of employment under your belt, you may have seen your monthly take-home pay increase since you first entered the world of work.
However, you might also be facing bigger financial commitments, such as a mortgage and childcare costs. It’s important to know how much money you have coming in and what your regular outgoings are so you can manage your finances effectively. Creating a budget will help you understand whether you need to control your spending, or whether you have the capacity to put more money towards your future.
Read more about creating a budget and some of the other steps to take before you invest.
Make the most of your ISA
If you have money left over each month and you haven’t already started investing, sooner is usually better than later. And if you are already investing, consider topping up your individual savings account (ISA) if you haven’t yet reached your annual allowance1.
When you invest through an ISA your investments grow tax-free. That means you won’t pay income tax on the dividends2 or interest you receive, and you won’t pay capital gains tax (CGT) on any profits you make when selling investments.
If you don’t have a lump sum to invest, you could consider setting up a regular investment – or increasing your monthly payments if you already have this in place. As you start to earn more money, increasing your monthly contribution can help you achieve your goals faster by taking advantage of the power of compounding. This is when you earn returns on the money you invest as well as on the returns themselves, which helps your money grow progressively faster over time.
Regularly review your investments
Your financial situation and goals will change over time, so it's important to review your investments regularly. If you have investments earmarked for specific goals, such as buying a home, you might want to reduce investment risk as you approach that goal, by investing more of your money in bonds3 and less in shares. Bonds typically offer lower but more stable returns than shares, which can help protect your savings when you need them soon.
On the other hand, if your goal is saving for retirement several decades from now, investing more in shares gives your money more opportunity to grow. Although shares can experience bigger price swings than bonds, and you may get back less than you invest, history shows that they tend to outperform bonds over long periods.
Keep on top of your pension(s)
According to the Office for National Statistics (ONS), the average 35- to 44-year-old has £39,000 in their pension pot4. This figure will vary depending on your salary, how much you’ve contributed and even your gender (read more on the gender pensions gap) but if you’ve been enrolled in a pension since entering full-time employment, it’s probably somewhere in the tens of thousands by now.
But there’s probably still a long way to go to save for retirement, especially if you want to enjoy a similar lifestyle to one you currently have. Fortunately, there are steps you can take now to save for the retirement you want.
For example, paying more money into your pension could make a big difference to the size of your pot at retirement, not least because of the tax relief you get on personal pension contributions. For every £80 you contribute to your pension, you’ll get a top-up of £20. If you’re a higher-rate or additional-rate taxpayer, you can claim back an additional £20 or £25, respectively, via your self-assessment tax return. Tax relief can really help to supercharge your long-term savings.
If you’re employed and saving into your employer’s workplace pension, your employer may offer to match any additional contributions you make. This is essentially free money and it can go a long way towards boosting your retirement pot.
Another thing to consider is consolidating your pensions. If you’ve worked for lots of different employers, you’ve probably accumulated several pension pots along the way. Combining your pension pots can cut down on admin and may even help you save on costs.
If you’re having trouble tracking down your pensions, you can use the government’s free pension tracing service. This can help you find the contact details for workplace and personal pensions.
Plan your finances as a couple
If you have a partner, it usually makes sense to plan your finances together. You’ll likely share some common financial goals, so it’s a good idea to talk about how to realise those goals together.
What’s more, planning your finances as a couple tends to be more tax efficient than going it alone. That’s because you can effectively double up on your allowances, including the £20,000 ISA allowance and the £60,000 pension annual allowance5.
Spouses and civil partners who have savings and investments outside an ISA or pension can transfer those assets from one partner to the other without paying tax. This might come in handy if one partner is a higher-rate taxpayer and the other is a basic-rate taxpayer. By transferring certain assets into the basic-rate taxpayer’s name, you could benefit from a lower rate of tax – or even no tax at all – on income and capital gains.
Additionally, the marriage allowance currently lets some married couples and civil partners reduce their tax bill by transferring some of their personal allowance to their partner. To qualify, the lower earner must have an income below £12,570 and their partner must pay income tax at the basic rate6. If you qualify, the lower earner can transfer £1,260 of their personal allowance, which reduces their partner’s tax bill by up to £252 (tax year 2025-26). You can backdate your claim for up to four years7.
If you’re unsure about your options, consider speaking to a tax adviser.
A Junior ISA can help towards your child’s future
If you are able to put money towards your children’s futures, it could be well worth doing. Investing relatively small amounts of money on a regular basis could grow into a sizeable sum over time, perhaps enabling your child to graduate debt-free or put down a deposit on their first home.
One way to invest for your child is through a Junior ISA. This provides the same benefits as adult ISAs, in that there is no tax on income or profits. The money is locked away until the child reaches 18, at which point they can withdraw the money or leave it invested. Only a parent or legal guardian can open and manage a Junior ISA8, but anyone can pay into it (up to the annual allowance of £9,000 per child per year9).
A Junior ISA is also a good way to introduce children to the concept of investing and the power of compounding. You can help better prepare your children for some of the financial responsibilities of adulthood by discussing the importance of starting early, saving regularly and investing for the long-term to achieve their financial goals.
Life is full of twists and turns, some planned and other unexpected. But these steps can help guide you through those events and help you progress towards your financial goals. Whether you're saving for retirement, your children's education or other important milestones, the steps you take in your 30s and 40s can have a significant impact on your financial wellbeing.
1 The annual ISA allowance is £20,000 for the 2025-26 tax year. This limit covers all your ISAs, including cash ISAs and stocks and shares ISAs.
2 Dividends are the payments some companies make to their shareholders out of their profits.
3 Bonds are a type of loan issued by governments or companies, which typically pay a fixed amount of interest and return the capital at the end of the term.
4 Pension wealth: wealth in Great Britain, 2020-2022, ONS, January 2025. Only includes people with pension wealth, those that have zero pension savings are excluded in the figures.
5 The pension annual allowance is the maximum amount you can save into pensions each year without paying a tax charge. It is currently £60,000, but your annual allowance might be lower if you have a high income or you’ve already flexibly accessed your pension pot. To work out if you have a reduced (tapered) annual allowance, see HMRC’s website.
6 The basic rate usually means income between £12,571 and £50,270 (or between £12,571 and £43,662 in Scotland). This applies to the tax year 2025-26.
7 For more information on the marriage allowance see HMRC website.
8 Only one ‘registered contact’ can provide instructions to a JISA manager, including setting up direct debits for regular payments. For an account holder aged under 18, this means a person with parental responsibility for a child.
9 In the 2025-26 tax year.
Investment risk information
The value of investments, and the income from them, may fall or rise and investors may get back less than they invested.
The eligibility to invest in either ISA or Junior ISA depends on individual circumstances and all tax rules may change in future.
Eligibility to invest in a Vanguard Personal Pension depends on your individual circumstances. Please be aware that pension and tax rules may change in the future and the value of investments can go down as well as up, so you might get back less than you invested. You cannot usually access your pension savings or make any withdrawals until the age of 55, rising to the age of 57 in 2028.
If you are not sure of the suitability or appropriateness of any investment, product or service you should consult an authorised financial adviser. Please note this may incur a charge.
Any tax reliefs referred to are those available under current legislation, which may change, and their availability and value will depend on your individual circumstances. If you have questions relating to your specific tax situation, please contact your tax adviser.
Important information
Vanguard only gives information on products and services and does not give investment advice based on individual circumstances. If you have any questions related to your investment decision or the suitability or appropriateness for you of the product[s] described, please contact your financial adviser.
This is designed for use by, and is directed only at persons resident in the UK.
The information contained herein is not to be regarded as an offer to buy or sell or the solicitation of any offer to buy or sell securities in any jurisdiction where such an offer or solicitation is against the law, or to anyone to whom it is unlawful to make such an offer or solicitation, or if the person making the offer or solicitation is not qualified to do so. The information does not constitute legal, tax, or investment advice. You must not, therefore, rely on it when making any investment decisions.
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