Investing Your Side-Gig Profits: Here’s How Much You’ll Make in 10 Years

04/05/2024

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From pet sitting to rideshare driving, there are hundreds of ways to earn some extra money in addition to your full-time job. According to recent data reported by Bloomberg, nearly 10% of American workers do some type of side gig for additional cash. While side hustle earnings can bolster your monthly income and make paying for basic living expenses easier, another option is investing that hard-earned cash.

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How Much the Average Part-Time Side Hustler Earns Each Month

According to a GOBankingRates survey, the average side hustler earns about $400 monthly — sometimes less. While earning more is possible, about 67% of side hustlers fall into the $400 or under category. That may not sound like a financial windfall, but it can make a big difference over the long term.

Investing Your Side-Hustle Earnings: What Can Happen

What would happen if you invested all your side hustle earnings rather than spending it? Answering that question requires looking at a few scenarios, assuming a return of 10.48%, the average 10-year return of the S&P 500. The 10-year S&P 500 return has remained fairly consistent since the early 1990s.

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1 Year of Investing

Assume you invest the same $400 earnings from your side hustle each month. With an annual return of 10.48%, you’d have:

Investment balance at the end of the year: $5,026.41
Total contributions: $4,800
Total gains: $226.41

Not bad! By investing your money, you earned a bonus equal to two weeks’ worth of side hustle work.

2 Years of Investing

Now take it a step further. You love your side gig and decide to stick with it for a bit longer. You continue to invest the same $400 each month, with an expected market return of 10.48%. Here’s what you’d have at the end of the two years:

Investment balance after two years: $10,579.59
Total contributions: $9,600
Total gains: $979.59

The benefits of investing are looking clearer now. Your gains are comparable to 10 weeks of side hustling — much more than you would have had if you cashed out after the first year.

5 Years of Investing

Now, say you stick with your side hustle even longer — five years. It continues to provide a steady source of income, and you don’t mind the few hours you spend working on it each week. All your side-hustle money goes directly to your investments, which provide a return comparable to the S&P 500. Here’s how much you have after five years:

Investment balance after five years: $30,981.33
Total contributions: $24,000
Total gains: $6,981.33

Pretty impressive! Your gains nearly equal a year and a half of side-hustle work. And you’ve saved every cent you earned from your gig. If you withdraw your earnings now, you could buy a new car or pay off debts.

10 Years of Investing

Assume your side hustle becomes another part of your weekly routine. You no longer see it as a short-term option to earn extra cash. Instead, you stick with it and keep socking away all of your earnings. Here’s how much you’d have after 10 years of investing your side gig income:

Investment balance after 10 years: $81,975.24
Total contributions: $48,000
Total gains: $33,975.24

Your investment balance keeps looking better and better. You’ve earned the equivalent of seven years of side hustling through investment gains. The money you have in your investment account can help support you in retirement or go toward a major purchase — like your child’s college tuition.

20 Years of Investing

Twenty years of side hustling may seem a little far-fetched. After all, a lot can change in 20 years — you might start a family, get a promotion or retire. Those changes might impact your ability to keep working a side gig. But assume you stick with it. Here’s what your investment balance would look like if you continued to invest $400 monthly at the same 10.48% annual rate of return:

Investment balance after 20 years: $304,060.29
Total contributions: $96,000
Total gains: $208,060.29

Notice something interesting: Your investment gains exceed your contributions. In fact, your gains are more than triple your contributions after 20 years. With the money you’ve earned, there are all kinds of things you could do — supplement your retirement, start a new business or pay off your mortgage.

Final Take

Does it pay to invest your side-hustle earnings? It certainly can. While there are no guarantees that you can earn the same return on your investments each year as the 10-year average for the S&P 500, the analysis above shows you what’s possible. Now it’s up to you to decide how to use your side-gig income — spend, save or invest.