5 Tips for Investing the Money from Your Side Hustle

Whether it be for financial gain or personal development, more and more millennials are maintaining a side hustle (a job outside of their fulltime job). According to a survey by Simple, on average millenials earn 1,000-10,000 dollars per year from their side hustles.This extra money can be used in many ways, depending on your financial situation. A great way to approach this secondary stream of income is to start using it to make small investments in order to further increase your earnings (if it is not necessary for you to spend it right away). Even if you’re new to investing, there are a number of ways to make small investments in order to increase your secondary income.

Why should you invest? 

By investing your side hustle money, you won’t get the instant gratification of spending your money right away. But, you will have an living emergency fund that will grow if you invest. This fund can be used for unforeseeable situations like emergency travel or a medical issue. Having money put aside for investing can also increase the amount of funds you have to pay off consumer or student loan debt.

Things to consider before investing 

1. Get rid of most or all of your consumer debt.
2. Try to invest a lot of places and don’t put all of your eggs into one basket.
3. Create a savings account.

Use beginner investing apps

There are a lot of different apps out there that can make investing small sums of money easier than ever before. Some are better than others, and it’s best for you to find the app that best fits your lifestyle, but here are some of my favorites. 

Acorns 

Acorns is a great app to start with for almost any experience level. Even if you don’t have thousands (or even one thousand) dollars to start with, Acorns will allow you to start investing with literal pennies. When you make any kind of purchase it will round up the spare change and invest the rest.

For example, if you were to buy a sandwich from a deli on your lunch break and it cost $5.57, Acorns would round up the cost to $6.00 and invest the difference. This adds up super quickly and causes minimal headaches. Acorns does the heavy lifting for you, and only costs $1/month if you have under $5,000.

Stash Invest

Stash Invest is an investment app that requires minimal capital to start (the minimum is $5). Unlike many other robo advisors, Stash teaches users how to manage their investments rather than automatically doing it for them. This is a very valuable skill that you can apply to larger investments as you grow your portfolio.

Stash allows you to pick from 40-plus investment themes and creates a portfolio of ETFs (Exchange-traded fund) or single stocks. Stash costs $1.00 per month if you have less than $5,000.

Robinhood 

While it doesn’t actually take from the rich to give to the poor, as the name suggests, Robinhood’s goal is to bring stock investing to more people. It is a smartphone-based brokerage. If you are looking for a mobile-only stock investing program, Robinhood is a good choice. It has no minimum investment amount, so you can start off with any amount of money.

How does Robinhood work? It has a stock trading interface where you can buy and trade the shares you’re interested in right on your phone. It’s simple interface supports market orders, limit orders, stop-limit orders and stop orders. It also allows you to trade crytopcurrency. It is overall a great way to start investing with no extra fees.

Buy U.S. Treasury Securities

If you want to try an alternate route to using micro-investing apps, maybe try out Treasury Direct. This form of investing is traditionally less exciting, however, you can start investing in a variety of U.S. government securities with just $100. You can invest using Treasury bills, notes, bonds, Inflation-Protected Securities, Floating Rate Notes, I Savings Bonds or EE and E Savings Bonds.

Invest in a Brokerage Account

A brockerage account is an arrangement between you and a brokerage firm that will allow you to make investment orders through them. Many brokers provide extensive investment advice. With under $1000 your options are somewhat limited, but you can still open a taxable account.

A good way to get started with this process is with Ally Invest. Ally Invest will help you through your first trade, and offer a great one stop banking and investing package. Keep in mind that stock trades are also $4.95 per trade, and can add up if you trade too frequently.

Diversify as much as you can

Like I mentioned in the intro, make sure you don’t put all of your eggs into one basket. Invest in many areas from the stock market to small businesses. Get creative! Five great alternatives to the stock market are:

• Bonds, used like a savings account that earns interest
• Annuities, with the right one you can see a small amount of growth and recieve your money when you need it.
• Peer to Peer Lending, a method of financing that allows people to borrow and lend without the use of a financial institution.
• Real Estate, buying property and holding onto it and selling it for more money when the market changes.

Don’t be afraid!

In order to combat your fear of investing money (what if you don’t come out ahead!) be sure to learn as much as you possibly can about markets before you start. The more you know, the less fear you will have for the outcome and you’ll feel more in control. Keep refining your strategy based on your losses and gains, and you will continue to improve over time.

Finally, don’t sweat it if you lose out! As long as you aren’t sacrificing money that you need to survive, and are saving for long-term goals, treat small failures as a learning experience.

In conclusion, if your side hustle brings in enough extra cash that you think starting to invest it is right for you, there are many ways to get started. There are even more apps, strategies and ways to invest small amounts of money than outlined in this post, so start researching and don’t be afraid to turn your small sums into large ones.

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