#6 - Finance Fridays - 4 Investing Strategies, TaskRabbit Side Hustle and Spotting Growing Markets in 2024

Contents:

• 💹Investing - The Four Investing Styles

• 🥗Side Hustle of the Week - TaskRabbit

• 🧐 Question of the Week - How to spot a growing market

• 🎒Useful Resource - AI Side Hustles

💹The Four Investing Styles

Inspired by Redditor (ReaperCraft07)’s comment, I decided to look into the spectrum of investing styles from Conservative to Aggressive.

According to Acorn, this would be how you would typically split up your investment portfolio in line with each style/strategy.

1. Conservative

2. Moderately conservative

3. Moderately aggressive

4. Aggressive

Out of all the factors to consider, I personally think - time horizon is the most important. For the uninitiated, a “time horizon” is when you need to cash out. The more time until you need the money, the MORE aggressively you need to invest (the article said less, typo maybe? lol). If you need the money in less than 5-10 years, don’t be aggressive because the market might be going through a low period when you need the money the most.

That’s the conventional wisdom but I disagree with the logic within the article that “if you need a lot of money for retirement or want to live an opulent lifestyle, you should invest more aggressively.”

Your Pensions Should Never Be Too Aggressive

Your retirement funds (401K in the US, Pension in the UK) is your ultimate failsafe when you reach retirement. Which is probably why pension pots are typically conservative. So conservative that the UK Government feels it appropriate to add more risk by allocating 5% of pension fund assets to unlisted equities by 2030.

Failing at entrepreneurship is a smarter risk than failing at retirement investing

If you need a lot of money in the future, focus on the short term risk/reward opportunities instead of gambling with your retirement savings. In a 20 year period you can start and fail multiple times in multiple career paths and businesses and still have your pension pot waiting for you. 

On the flip side, you can make your pension pot high risk, for it to ultimately fail and by the time you have access to it, you’re already too old and frail to make it back.

So when should you be aggressive?

Highly aggressive investing looks like picking lots of high risk companies hoping a small % pays off. Given that 90% of startups fail, that’s a lot of individual picks needed to spread out your total risk. Even 26% of Fortune 100 companies on it in 1980 were still there in 2001. Business investing even over a long time is inherently risky, hence why it is encouraged to leave it to the experts who fail anyways. For example, 89% of fund managers fail to beat the market.

Look at these stocks below:

If you invested in McDonalds 20 years ago, you’re looking good. But if you invested in BT which was classed as a safe, long term bet, then you’re not so lucky. But if you invested in both, your portfolio would’ve balanced itself out. 

Right now Tesla looks good but what will it look like in 10 or 20 years time? Risking my pension on business investing feels like a bad strategy, but failing at a side hustle feels like short term pain that I can bounce back from.

🥗Side Hustle of the Week

1. Hours per week ⭐️ - To make it worth it, you’ll have to work a lot of hours at a fixed rate

2. Skill required ⭐️⭐️⭐️ - The type of work on offer are typically low skilled

3. Upfront cost ⭐️ - None besides the 15% service fee

4. Market saturation ⭐️ - High which means you’ll need to undercut competition

5. Timeline to reach success ⭐️⭐️ - Dependant on niche chosen and how quickly you can get first few jobs

6. Income potential ⭐️ - Hard ceiling due to competition and nature of jobs available

This is a good platform to get started on generating additional streams of income. It's filled with niches that require a low barrier to entry but you will need to build your profile so you’re trusted by potential customers. 

You will probably need to commit 10 hours+ a week (to earn £1200 per month approx.) to be worth your time and effort. This means evenings and some of your weekend. Would you consider that life changing? There’s a hard ceiling on potential earnings but there’s good short term potential if you’re willing to start by undercutting competition. The competition is based on your local area which could work in your favour or even against you.

✍🏿Quote of the Week 

“Set up a business in a growing market because a rising tide lifts all boats”

― Jeremy Hunt

🤔 How do you spot a growing market?

Put aside your political allegiance and appreciate the wisdom within the above quote from Jeremy Hunt on entrepreneurship. 

These are 4 ways to spot a growing market for your next business idea.

1. News headlines

Investors do this thing where they try to anticipate the second or third order effect of current events. This is essential for spotting investment opportunities before stock values skyrocket.

For example, if the price of pork goes down then Greggs might have a higher profit margin from selling sausage rolls at a cheaper cost. On the other hand if the British population culturally shifts towards eating less pork than Greggs stock value may decrease due to less demand. 

Obviously this is oversimplified because Steak Pies are the real reason we love Greggs right?

2. Government policies

Governments have this habit of impacting the economy when they least expect it. When they are decreasing interest rates, it is because the economy forced them to. When inflation goes down, it's due to them increasing interest rates. Funny how that works?

The point is to anticipate the economic consequences of upcoming government legislation. For example, while we were fighting over pasta and toilet rolls in lockdown. Others were selling masks, home gym equipment, vitamin D and remote only software applications.

3. Subreddits

Subreddits are filled with deeply passionate fans who are the early adopters before products, services or content reaches the mainstream market. If you scroll long enough you will encounter deep nuggets of wisdom (and a lot of noise).

An example is reading about a new video game due to come out. If it's being beta tested you can see what people are saying before it’s widely available. Knowing this, you may want to make an astute investment decision.

4. Everyday conversations and Cultural shifts

You can spot cultural shifts in society from talking to people everyday and identifying anecdotal patterns. For example, my friend's brother paid £20,000+ to save his dog from cancer. This is more common than you think. Combine that with the fact more couples are raising pets over children, you can say pet health is a growing market. 

Another example is I've heard from 2 people my age range (millennials) are investing into DIY house building as the housing crisis gets worse. Based on this, you can anticipate a growing market for alternative housing solutions.

One anecdotal piece of evidence should be taken with a pinch of salt but multiple pieces of information both in the micro and macro environment, put together, paints a bigger picture that can be turned into a business opportunity.

🎒Useful Resource

There are a lot of AI tools on the market but CapCut’s AI features are some of the best. These are some of the great use cases where you can start a side hustle utilising AI at minimal to no cost.

Best AI Side Hustles You Can Start With $0 In 2024