Even A Small Side Hustle Can Help You Retire Early
Have you started investing late? Do you think you won’t be able to build a corpus of 25 times your expenses? If you answered “yes” to any of these questions, then read on. This post will help you.
How Can A Side Hustle Help You?
Having a side hustle makes it a lot easier during your retirement. You may have a lower corpus with you and the reasons might be that you might not have started early, not invested enough, or wouldn’t have controlled your emotions. For all these situations, a side hustle will have you during your retirement.
Let’s say you are someone who is 40 years old and hasn’t saved a single rupee for your retirement. You current expenses are ₹50,000 per month, which will be almost ₹2 lakh by the time you are 60 considering 7% inflation. With your annual expenses at ₹24 lakh, your retirement corpus should be ₹6 crore (25 x ₹24 lakh).
Just imagine if you earn ₹1 lakh from a side hustle at the time of retirement, 50% of your expenses are covered. The corpus which you now need would be cut in half to ₹3 crore, which is realistic if you start an SIP of ₹15,000 per month, increase the SIP amount every year by 10%, and your investment grows at 12%.
Now the question is whether ₹1 lakh income from a side hustle is realistic within two decades? If you are consistent and show up daily, it is almost inevitable that you will reach this number, and even cross it comfortably. Now, you don’t want this to be active income as tendency to work decreases after the age of 60. You would want to be selling some product for which you don’t have to deliver after the sale, life an e-book.
First, let us understand what exactly does passive income mean. Please remove the misconception that passive income is totally passive. Purely passive income does not exist. You have to put up a huge amount of effort expecting nothing in return initially. Even after that, you still have to put some effort (not that much) to keep your side hustle running.
Still, having some side income helps and once you’ve setup, you hardly need to put in any efforts. Yes, it might not be fully passive, but you can consider this as semi-passive income.
Why Most People Fail?
Now that you are convinced that a side hustle might help you retire earlier, let look at some reasons why people fail while building passive income.
Thinking Passive Income Is Truely Passive
As I said earlier, there is no such thing as purely passive income (except dividend investing). For everything else, you need to put in the efforts. And even after you have set it up, you still need to put some effort. Let’s say you launch a product, you will have high sales during the launch. Later on, you’ll need to put some effort to get sales.
Thinking Short Term
Most people want instant results. When they see that they are not growing, they quit within a month. Passive income takes years to set up, but once you’ve set it up, it is a smooth sailing after that. You just need to stay consistent and patient. Yes, it might seem like you might not get any results, but keep expectations low early on.
Selling Too Early
People start selling too early to get instant results. They also sell scammy products which aren’t even worth other people’s time, and then they ask why aren’t they growing. Initially, provide lots of value for free, understand what your audience might need and then you can start selling.
How To Get Started?
Start small. Don’t expect any money for the first couple of years. Put all the effort you can expecting nothing in return during this time. Aim to reach a position where you are able to solve other people’s problems. For that, you need to look at a problem which people are facing, and you could be able help with. This can be anything from helping people lose weight quickly to planning other people’s finances.
Once you’ve identified the problem and your core competency, you want to dive deep into that topic. Now, you want people to be aware of that you help them solve their problem. What better than social media to start sharing whatever you’ve learnt along with your experiences. You want to post consistently on social media. At times, it might get frustrating, but stick to it, because social media websites value consistency. You can start tweeting, posting in Facebook groups, sub-reddits, creating videos on YouTube, writing a blog — the opportunities are endless. In the end, what matters is how much value you are providing.
To do all this, you might need to put in some extra efforts initially. Just take out a couple of hours on a daily basis on working days, and some extra hours on the weekend. Yes, you need to sacrifice initially, but it is truly worth the effort you put in.
A side hustle should be a part of your retirement plan which could make up for starting investing late, and also help you retiring earlier. Yes, it might be a grind for the first couple of years, but in that process, it’ll set you up with an income stream that might last a lifetime. And I hope this post gets you started in your journey to building a side hustle.
Till next time.