If you’re an early or mid-career professional under 40, now is the time to begin or solidify your investment planning based on your short- and long-term goals. With time on your side, consistent, long-term action can be powerful in helping you support a growing family, purchase a new home, and retire on your terms. The power of compound returns, which are reinvested over decades, is a primary benefit of investing early and staying in the market long term, even with small contributions.
San Diego offers a unique blend of high-paying careers in technology, engineering, biotech, healthcare, and other industries. There is significant income potential from employees at RTX and Dexcom to lucrative startups. We often work with young professionals accumulating and managing new wealth as they progress in their careers, earn higher incomes, and receive more complex compensation benefits. Let’s explore a few practical and actionable ways to boost your investment strategy.
Maximize Your Retirement Account Contributions
401(k) Contributions
If you have stable or excess income, take advantage of opportunities throughout your prime earning years, such as contributing to an employer-sponsored 401(k) program, especially if your employer offers a match. Early contributions give your investments more time to grow, increasing the benefits of compound interest. Roth 401(k) contributions can provide additional benefits.
Roth IRA Contributions
You can also take advantage of tax-free growth with after-tax contributions to a Roth IRA, an account ideal for millennials with longer timelines for retirement. As a young professional, you may not have yet reached the income thresholds for contributions of $165,000 for singles or $246,000 for married, joint filers (as of 2025). Therefore, maxing out your Roth IRA contributions can be valuable to your investment and retirement strategy. If you exceed the income thresholds as you advance in your career, strategies such as a mega backdoor Roth may help you continue to benefit from tax-free growth.
Leverage Dollar-Cost Averaging
If you want to continue saving beyond the 401(k) limits, you may consider a taxable account, non-deductible IRA or Health Savings Account (HSA), while leveraging dollar-cost averaging. Dollar-cost averaging includes making consistent contributions regardless of market price to level out the average price you pay over time, as the market goes up and down.
Dollar-cost averaging within non-deductible IRAs and HSA accounts provides various tax benefits to enhance your overall savings, such as reducing taxable income (HSAs) or tax-deferred growth (both IRAs and HSAs). Note that each type of account has distinct tax and withdrawal implications. For example, unused HSA funds will continue to grow tax-free year after year if you don’t use them to reimburse qualified expenses now or in retirement. After age 65, you can use the funds for anything but you may lose out on some of the tax savings HSAs provide if they are not used for qualified medical expenses.
Adjust Your Risk
Your life stage, income and cash needs will influence your investment risk preferences. For example, as a young professional, you have more time to manage higher risk than someone approaching retirement.
Long Time Horizon
We often guide millennials with a long runway toward a globally diversified, majority stock portfolio. While the market can be volatile, stocks have built-in inflation protection and have historically produced higher returns than cash or bonds over time. Young investors who don’t need access to retirement funds right away have more time to ride out market fluctuations and corrections while benefiting from compound growth and potentially higher returns with a more aggressive approach. As you progress in your career, you can review your risk tolerance and adjust to a more conservative approach to better protect your funds before retirement.
Short Time Horizon
When saving for short-term goals like buying a new house or starting a business, liquidity matters. Savings in an after-tax account, like a high-yield savings account, can help you access funds when needed and avoid early withdrawal penalties without derailing your retirement savings.
Global Diversification
For short- and long-term investing, diversification, which is how you spread your investments within asset classes by geography or industry, is essential to offset poor-performing assets. Further, investing in global assets may offer more attractive opportunities and buffer against risks, such as an overconcentration in U.S. stock, currency changes or political impacts. Overconcentration in any one asset class could significantly impact your savings if a company crumbles or there is market volatility.
CCMI Provides Investment Guidance for Young Professionals
When you start to invest with purpose, there are many options and strategies to consider. We seek to be our clients’ lifelong trusted partners, so we enjoy working with young professionals and helping them align steady income growth and career advancement with their current and future goals. We’re also familiar with many local companies, giving us insights into their retirement plans, benefits, and intricacies.
Investing strategically for the first time can also spur other feelings, such as risk aversion, anxiety about market uncertainty, and fear-based actions when portfolios go up and down. While it’s natural to want to avoid the negative feelings of market swings, we still believe the best approach is to stick to a disciplined, globally diversified, long-term strategy — the only method that continues to work over time. Here are other ways we can help provide peace of mind:
- Asset Allocation: We can help guide you through your options based on your preferences, values, income, and retirement timeline to help you manage risk, create a diversified mix of assets tailored to you, and rebalance periodically to ensure you stay on target.
- Reach Your Goals: We will work together to prioritize your assets to buy your first home, invest for the future, save for your children’s education, or navigate an emergency.
- Executive Compensation: We can help you manage your stock options and other corporate benefits as your income grows and when you leave a company.
- Tax Planning: We can walk you through tax-efficient strategies and tactics to increase and optimize your savings.
- Risk Management: In addition to implementing strategies to help offset risks like an extended retirement, rising cost of living, tax liability, and overconcentration, we can be a trusted resource to address your concerns and avoid emotional reactions that could hinder your plan.
We’re here to answer your questions and guide your strategy through every professional and personal milestone. Contact us to learn more about how we help.
CCMI provides personalized fee-only financial planning and investment management services to business owners, professionals, individuals and families in San Diego and throughout the country. CCMI has a team of CERTIFIED FINANCIAL PLANNERTM professionals who act as fiduciaries, which means our clients’ interests always come first.
How can we help you?
CCMI provides personalized fee-only financial planning and investment management services to business owners, professionals, individuals and families in San Diego and throughout the country. CCMI has a team of CERTIFIED FINANCIAL PLANNERTM professionals who act as fiduciaries, which means our clients’ interests always come first.
How can we help you?
