Best ETFs for Side Hustlers
In today’s fast-paced world, side hustles are becoming increasingly common. They offer financial freedom, the opportunity to pursue passions, and a way to supplement income. But once these extra dollars start rolling in, what do you do with them? For many, leveraging investments is the answer. Enter Exchange-Traded Funds (ETFs)— an investment vehicle that is efficient, diversified, and accessible for both novice and seasoned investors alike.
What are ETFs?
Exchange-Traded Funds are investment funds that hold a basket of assets, such as stocks, bonds, or other securities, and trade on stock exchanges like stocks. They provide investors with exposure to a diversified portfolio without requiring the need to buy individual securities. With their unique structure, ETFs offer a lower expense ratio compared to mutual funds and share characteristics of both mutual funds and stocks.
Why Side Hustlers Should Consider ETFs
Affordability
: Many brokers allow you to start investing with low minimums. You can buy a single share or, in some cases, even fractional shares in an ETF.
Diversification
: A single ETF can provide instant diversification, reducing the risk associated with investing in single stocks.
Liquidity
: ETFs can be bought and sold during market hours, making them more liquid than many mutual funds that trade only once a day.
Transparency
: Most ETFs disclose their holdings daily, allowing investors to see exactly what they are invested in at any moment.
Tax Efficiency
: ETFs are structured in a way that minimizes capital gains taxes compared to traditional mutual funds.
Given these advantages, it’s no wonder that those pursuing side hustles are looking to ETFs to grow their income. However, with thousands of ETFs available, it can be challenging to determine which ones are best suited for side hustlers. Below, we explore a selection of top ETFs that align with various investment strategies, risk tolerances, and long-term financial goals.
Best ETFs for Side Hustlers
For those looking to gain broad exposure to the U.S. stock market, the Vanguard Total Stock Market ETF (VTI) is a reliable option. This ETF covers virtually the entire U.S. equity market, including small-, mid-, and large-cap growth and value stocks.
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Expense Ratio
: 0.03% -
Inception Year
: 2001 -
Why It’s Great for Side Hustlers
: With its low expense ratio and comprehensive market exposure, VTI is an excellent choice for side hustlers looking for long-term growth without the burden of high fees.
If you believe in the sustained growth of large-cap U.S. companies, then the iShares Core S&P 500 ETF (IVV) might be your pick. It aims to track the performance of the S&P 500 index, representing the largest and most established firms in the U.S.
-
Expense Ratio
: 0.03% -
Inception Year
: 2000 -
Why It’s Great for Side Hustlers
: The S&P 500 has historically provided strong returns, making IVV a solid choice for those focusing on wealth building through established companies.
For side hustlers with a taste for technology and growth stocks, Invesco QQQ Trust (QQQ) offers exposure to the 100 largest non-financial companies on the Nasdaq Stock Market, including tech giants like Apple, Amazon, and Microsoft.
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Expense Ratio
: 0.20% -
Inception Year
: 1999 -
Why It’s Great for Side Hustlers
: If you’re looking to capitalize on tech-driven growth, QQQ is your ticket. While it can be volatile, the returns over the long term have been significant.
This ETF holds over 2,500 stocks, making it one of the most comprehensive funds available. Schwab U.S. Broad Market ETF (SCHB) offers exposure to the entire U.S. stock market.
-
Expense Ratio
: 0.03% -
Inception Year
: 2009 -
Why It’s Great for Side Hustlers
: With SCHB, you can diversify across the U.S. market at an incredibly low cost, which is appealing for individuals looking to invest modest amounts from their side income.
To branch out internationally, the Vanguard FTSE Developed Markets ETF (VEA) offers exposure to stocks in developed markets outside the U.S. and Canada, including Europe and Asia.
-
Expense Ratio
: 0.05% -
Inception Year
: 2010 -
Why It’s Great for Side Hustlers
: This ETF allows investors to take a step towards global diversification, which can provide a hedge against domestic market volatility.
For those who want to invest in small-cap stocks, the iShares Russell 2000 ETF (IWM) provides exposure to 2,000 of the smallest U.S. companies.
-
Expense Ratio
: 0.19% -
Inception Year
: 2000 -
Why It’s Great for Side Hustlers
: Small-cap stocks often have higher growth potential, and investing in IWM could yield substantial gains later on, making it an appealing option for risk-tolerant investors.
Income-seeking side hustlers might consider the SPDR S&P Dividend ETF (SDY). This fund holds companies that have consistently increased their dividends for at least 20 consecutive years.
-
Expense Ratio
: 0.35% -
Inception Year
: 2005 -
Why It’s Great for Side Hustlers
: If you’re looking to generate passive income from your investments, SDY offers a stable source of dividends alongside potential capital appreciation.
With rising awareness of climate issues, the iShares Global Clean Energy ETF (ICLN) invests in companies that produce energy from renewable sources.
-
Expense Ratio
: 0.46% -
Inception Year
: 2008 -
Why It’s Great for Side Hustlers
: For those who want to align their investments with their values, ICLN provides exposure to the growing trend of clean energy, potentially leading to significant long-term gains.
Key Considerations When Choosing ETFs
Investing in ETFs is not without its intricacies, and side hustlers should keep several factors in mind.
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Investment Goals
: Reflect on what you want to achieve with your investment. Is it short-term gains, long-term growth, income generation, or a combination of these? -
Risk Tolerance
: Consider your willingness to accept fluctuations in value. For instance, technology ETFs can be more volatile than those that track the broader market. -
Cost
: Always take note of the expense ratios. Lower costs can significantly affect your returns over time. -
Diversification
: Ensure that the ETFs you choose complement each other, offering a diversified investment strategy without heavy overlap. -
Performance and History
: While past performance is not a guarantee of future results, examining an ETF’s historical returns and volatility can provide insight into how it might perform in the future.
Investment Goals
: Reflect on what you want to achieve with your investment. Is it short-term gains, long-term growth, income generation, or a combination of these?
Risk Tolerance
: Consider your willingness to accept fluctuations in value. For instance, technology ETFs can be more volatile than those that track the broader market.
Cost
: Always take note of the expense ratios. Lower costs can significantly affect your returns over time.
Diversification
: Ensure that the ETFs you choose complement each other, offering a diversified investment strategy without heavy overlap.
Performance and History
: While past performance is not a guarantee of future results, examining an ETF’s historical returns and volatility can provide insight into how it might perform in the future.
How to Get Started with ETFs as a Side Hustler
Choose a Brokerage
: Select a brokerage platform that allows access to the ETFs you’re interested in. Look for features such as low commissions, user-friendly interfaces, and educational resources.
Set an Asset Allocation Strategy
: Based on your investment goals and risk tolerance, decide how much of your side hustle income you are willing to invest and the percentage allocated to different ETFs.
Automate Your Investments
: Consider setting up automatic contributions from your side hustle earnings to your investment account, allowing you to develop a habit of investing consistently.
Monitor Your Investments
: Regularly review your portfolio to ensure that it aligns with your investment goals. Be prepared to adjust as necessary.
Stay Informed
: Keep updated on market trends and economic indicators that could affect your investments. Knowledge is power when it comes to investing.
Conclusion
In an era where side hustles are on the rise, ETFs emerge as an excellent investment vehicle for those looking to make their supplemental income work for them. Whether you’re focused on long-term growth, seeking income through dividends, or venturing into international markets, there’s an ETF that aligns with your investment strategy.
Arming yourself with the right knowledge and resources can transform your financial circumstances, and taking the plunge into the world of ETFs can serve as an effective path toward achieving your financial ambitions. Remember, it’s not just about the hustle; it’s about making your hustle work for you in the long run. Happy investing!