Experts: 6 Safest Places To Put Your Side Gig Income

 Experts: 6 Safest Places To Put Your Side Gig Income

If you earn money from a side hustle, whether it’s via cash or online payments, you might not be sure about the best place — or places — to store it. After all, there are many options to choose from, and not all of them are as accessible or as secure as you need them to be. Some options also offer a higher return on investment than others, something that’s particularly beneficial if you’re trying to secure a financially stable future.

Considering these factors, experts shared the best and safest ways to store or save extra money fromPerhaps the simplest way to store your side gig income is in a bank account that’s separate from your main income. This can make it easier to keep track of your income for tax purposes.

“Put it in a separate account to help track your earnings,” saida nationally-recognized consumer finance and budgeting expert. “Remember, you have to report any income you earn over $400 in a calendar year to the IRS, and you will owe taxes on it. Although you should get a 1099 if you earn over $600, some companies fail to send these out, so you will want to keep track closely to avoid any hiccups and potential penalties on your taxes.”

A high-yield savings account, or HYSA, is another secure option that tends to have a higher yield than traditional savings accounts.“I think diversification is key, even with smaller amounts of money,” said Lieberman. “So, start by putting the money for your side gig into a high-yield savings account — and enjoy those higher-than-average interest rates we’re seeing today. But once you have $500 or so, try putting your next few hundred dollars into bonds, and the next few hundred after that into an index fund. From there, you can divide further earnings between these different accounts and investments.”

He added, “Not only does this strategy balance risk and reward, but it also helps you develop sound wealth-building habits. Remember, it’s not just the mega-rich who should have ‘diversified portfolios.’ You should have one, too!”

Professionally Managed Investment Portfolio

A professionally managed investment portfolio helps you diversify your investments, grow your money, and manage risk. “For hands-off development, a robo-advisor like Betterment or Wealthfront provides affordable access to professionally managed investment portfolios.”

Individual Retirement Account

“For more active investing, a self-directed IRA through a brokerage firm gives you more flexibility but requires more research,” said Paragi. An IRA, or individual retirement account, is a tax-advantaged investment account. It’s also a popular way to build a retirement savings fund and invest in a secure financial future.

There are many secured payment services available online, such as PayPal and Venmo. Many people with a side hustle use these types of services not only to get paid, but also to keep some of their money and pay for certain expenses.

“For getting paid, I’m a big fan of digital payment platforms like PayPal, Venmo, or Square Cash,” said Paragi. “They allow fast and secure money transfers, provide records of payments, and avoid the risks of handling cash. PayPal in particular makes it easy to create invoices and receive payments seamlessly.”

You may not want to keep your money in an online payment service for long, though, especially if you want it to grow upon itself. But this can be a good option if you intend to spend some of your side income on specific purchases in the near future.

Other Investment Accounts

There are several other secure options in which you can keep the extra money you earn from side gigs, including: Money market accounts: These accounts work similarly to traditional savings accounts, but they typically offer a higher yield. They’re also accessible and secure.

Certificates of Deposit (CDs): CDs are generally considered a secure place to store and grow your extra side income. You’ll need to keep your money in the CD until it matures, or else risk facing an early withdrawal penalty, so keep that in mind.

Short-term bonds: If you want to invest some of your cash for around 5 years or so, consider getting a short-term bond. Like other investment vehicles, these come with some level of risk. They can, however, see a higher return than a typical savings account. Index funds: For a long-term investment solution, consider putting your cash in an index fund. “Index funds are a great way to grow your money long-term without picking individual stocks,” said Paragi.

In today's dynamic economic environment, side gigs have become a popular way to supplement income and achieve financial goals. As you accumulate additional funds from your side hustle, the question becomes: where should you place your side gig income to ensure its safety and potential growth? We consulted industry experts to give you insight into the six safest places to invest your hard-earned side gig income.

High Yield Savings Accounts

When considering a safe place for your side gig income, experts often recommend high-yield savings accounts. These accounts offer higher interest rates compared to traditional savings accounts, meaning your money grows faster without the risk of investing in more volatile assets. Keywords: high yield savings, interest rates, safe investment.

Certificates of deposit are another safe option for parking income from side gigs. CDs offer a fixed interest rate and a set maturity period, making them a low-risk investment choice. By diversifying the maturity dates, you can have a predictable income stream from the proceeds of multiple CDs. Keywords: Certificates of deposit, low-risk investment, fixed interest rates.

Government bonds, such as US Treasuries, are known for their stability and safety. These bonds are backed by the government, making them a highly safe investment. They are available in a variety of terms, allowing you to choose the one that best suits your financial goals. Keywords: government bonds, US government bonds, safe investments.

For those looking to explore investment opportunities beyond traditional savings options, experts often recommend index funds. These funds track the performance of a specific market index and spread the risk across multiple assets. Index funds offer a balanced approach to investing, making them suitable for individuals looking for moderate growth. Keywords: index funds, diversified investing, balanced approach.

Crowdfunding in real estate

Real estate crowdfunding platforms provide an opportunity to invest in real estate projects with a relatively low entry barrier. Experts suggest this may be a safer way to enter the property market without the burden of full property ownership. Careful research and due diligence is essential when choosing platforms and projects. real estate crowdfunding, low entry barrier, due diligence.

Although not a traditional investment, experts unanimously emphasize the importance of building and maintaining an emergency fund. Life is unpredictable and having a fund set aside for unexpected expenses provides financial security. This will ensure that you don't have to resort to riskier investments when unexpected events occur. Keywords: emergency fund, financial security, unexpected expenses.

Prioritizing security and stability is essential on your journey to making the most of your side gig income. By considering options such as high-yield savings accounts, CDs, government bonds, index funds, real estate crowdfunding and emergency funds, you can protect your funds while allowing them to grow. Remember that each individual's financial situation is unique, so consult with a financial advisor to tailor these suggestions to your specific needs. Secure your financial future by making informed decisions about where to invest your side gig income. Keywords: secure financial future, side income from concerts, investment options, professional advice.