5 Side Hustles That Don’t Actually Pay You
Everyone likes to earn some income on the side.
This was particularly prevalent during the first wave of lockdowns, as people cooped up at home with only an internet connection for company and facing uncertain employment prospects looked online for ways to supplement their income.
It is also relatively easy to come up with a listicle of the “top five” ideas, by writing a short paragraph of how easy it is to ‘earn’ money from the hustle, usually in an ideal scenario.
What such articles do not give you is a holistic view of the REAL work that is needed behind some of these ideas. Many of the side hustle ideas look good on paper, but when you actually start implementing them, you will soon realise that it is not as easy / risk free as it looks to earn money, and many times, you may not even get paid.
Let me unpack a few side hustle ideas and show you the key roadblocks that stand between you and actually getting paid.
1. Anything to do with investing
This is particularly prevalent in the “passive income” listicles, with the first item usually mentioning dividend stocks (i.e., put your money to work by buying high dividend yielding stocks). Not wrong, but there is more to stock selection (and even investing) than the short one or two paragraphs about some high dividend yielding stock and what percentage yield you will get.
Let’s first be clear — stock picking is hard.
If stock picking was so easy, then everyone would not need any investment advisors.
I shall pre-empt the question about “active” and “passive” management here. People seem to forget that “passive” management, such as buying an ETF that tracks an index, is still technically a stock picking exercise because there are actual humans that decide the rules for what stocks go into the indices. For example, the S&P 500 is a market-weighted index whereas the Dow Jones Industrial Average is a price-weighted index. There are still people who “actively” determine the rules of whether a stock should or should not be included in these indices. It is not “passive” in the sense that you are buying a slice of every single stock in every single market — you must still understand that if you pick the S&P 500, for instance, you are actually buying into the narrative that the top 500 companies listed in the USA by market capitalisation (and whatever other funny rules S&P has) will outperform other sectors, for e.g., small cap stocks listed in Europe.
So, it is not so much “active” vs. “passive” investing, it is more of what type of rules (and fees) you want to choose for your investment portfolio, and whether you think an investment manager with discretion will be able to outperform a simple rule-based algorithm that buys the top 500 stocks by market capitalisation.
Anyway, there are 2 big areas which are the actual hustle behind this idea: capital and time. Let’s talk about capital first.
Capital (i.e. the money you are putting in)
In general, investing is risky. There is a risk you could lose some of the principal you put in, particularly so when you are buying common shares.
You have to accept this risk if you are looking to make money ‘work’ for you.
There are also several big elephants in the room when people start to talk about compound interest and dividend yields. Since we are now clear that there is a risk you could lose money, let’s also peel back another layer and tackle the “compound interest” portion.
The key thing to remember is:
Compound interest is great, but the general stock market doesn’t give you compound interest.
People seem to confuse the term when they see articles like “the S&P 500 generated a return of 8% to 10% compounded over the past 10 years”. This statement is loaded with assumptions and sometimes, people will follow up by exposing on a quote by Warren Buffet about how compound interest is the 8th wonder of the world, then start extrapolating a $1,000 investment at 8% return, and compound that over 30 years.
Sorry, but the stock market doesn’t work like that.
When people say that the S&P 500 generated an 8% compounded return, they are taking it as a “compound interest equivalent”, not actually compounded interest. To illustrate, let’s take a graph of the S&P 500 from 2010 to 2020:
So how do people take the “compound interest” equivalent returns? They just take the ending price in 2020 and do funky math with the beginning price in 2010, and that will spit out approximately 8% to 10% per year. However, an actual compound interest chart would look something like this instead (basically, an exponential curve — I've used 30 years to illustrate the curve):
You will notice that the actual compound interest has things that are missing from the S&P 500:
- A lack of any noticeable drawdowns; and
- Actual interest earning more interest vs. just capital gains for S&P 500.
So, while compound interest is good, buying an ETF that tracks a stock index does not actually earn you compound interest. It is just math and the capital gains “equivalent” of compound interest.
This then brings me to the second point: buying high dividend yielding stocks, since the dividend can be “reinvested” into more stocks and thus act more similarly to actual compound interest. The key point here to note is:
You are buying a business, not buying guaranteed dividend yields.
It would be so great if I could just park my money somewhere and earn 4% year on year compounded returns (side-eye at CPF SA, but I want to take out my money sometime before 65 …)
Many people (myself included, when I first started investing) will only look at the dividend yield of the stock, forgetting that we are actually buying a business and not a series of cash flows.
A high dividend yield can be good but if the underlying business doesn’t do well, the dividends can be cut and the stock can lose value — i.e. the main risk of the carry trade, or as it is known colloquially, “picking up dollar coins on the train tracks”.
You need to be nimble enough to get out of the way when the train comes barrelling through.
Many of the articles totally miss this risk and just suggest picking stocks based on dividend yield — they may be in for a rude awakening if the underlying business is weak. No amount of dividend yield will be able to compensate for the capital loss if the stock goes south due to bad business decisions.
With all that, the next area about anything investment related is your time (or lack thereof).
Time (the time spent analysing)
As mentioned above, stock picking is a tedious process. While there are individuals out there who enjoy poring over a company’s financial statements, I doubt it is an interesting hobby or passion for the mainstream.
Thus, you either have to invest time researching what you are buying, or outsource that task (and pay the appropriate fees) to professional managers who will do that for you.
This is a personal decision. For those that have a high locus of control and want to feel in control of your investment decisions (note my choice of words), you may want to invest the time to research what actually constitutes a good business.
For everyone else, there are a plethora of investment professionals out there who will willingly take your money to do the research for you. You would then just need to research the investment managers themselves. I personally use several robo-advisors for this — if you’d like, you can use my referral links for Stashaway or Endowus to show some support.
One key point that I would like to end off with relates to the language I used about feeling in control of your investment decisions. While this can be a whole article in itself, based on what I have seen in the markets, your control is mainly limited to the amount you put in and any rules you set for capital preservation. No matter how much time you invest into research, there will be market moves (both positive and negative) that have nothing to do with your quality of work, but rather, extrinsic factors (the COVID episode for one).
So, if you have a high locus of control, remember to breathe (and not panic) because you cannot control the market!
2. Content creation
Another side hustle that the listicles talk about is content creation. While there are many forms of this, the fundamental principle is that you are creating content for others to consume. This can manifest itself in several ways:
- Writing (e.g. blogs or via platforms like this!)
- YouTube
- Other mediums (e.g. podcasts)
Let’s cover the key point here:
It is easy to create content, it is difficult to get people to pay to consume your content.
This is simple enough, because the ideas here are supposed to be side hustles, right? If you are willing to give away content for free, then it’s not really a side hustle, just a hobby.
While the methods differ, the key point applies across all mediums (pun intended). For instance, in one of Medium’s own emails to writers, they state that:
- 66.4% of writers or publications who wrote at least one story for members earned money.
- 6.2% of active writers earned over $100.
- $49,581.31 was the most earned by a writer, and $9,958.82 was the most earned for a single story.
While the last figure looks impressive and gets you thinking “Wow! I want to earn that!”, you have to realise that you would most likely fall within the ~94% of writers who do not make over $100.
To note, while the 66.4% looks impressive, “earned money” is very vague. I have received payments of $0.01 from Medium before, so I would fall into that category, but I highly doubt that a 1 cent payment would be considered a side hustle.
Do also note that there is a 30% withholding tax since Medium is based in the US (and likely many of the companies that host creator content), so I hope that the US IRS is happy with my literal 2 cents!
Medium also recently reviewed their guidelines and require writers to have 100 followers to even qualify for their partner program… So… well.
Even for YouTube, while it is easy for anyone to state “start a YouTube channel!” and point out specific niches where very random YouTube channels get views (e.g. one channel where the creator just films him/herself walking through Ginza), YouTube will not start paying you money for the ads shown until you hit the following milestones (as stated on their website), particularly the milestone where you have to hit at least 1,000 subscribers and reach 4,000 valid public watch hours.
So, it is not as if you can just start a YouTube channel and post videos for money. You would need to jump through several hoops, starting with Google’s AdSense, and then meet the criteria above.
Not exactly a walk in the park, eh?
Now you also know why all the YouTubers end their videos by asking you to subscribe — it is literally their KPI.
You must remember that there is virtually no barrier to entry to create content on the internet. While this means that anyone can jump into it, it also means that ANYONE can jump into it. You are literally competing with everyone in the world with an internet connection.
So, the challenge comes because not only do you need to make your content stand out from the pack, but also to get people to pay you to consume your content! It is quite a tall order.
“If it is so hard”, you may ask, “why are you still doing it?”
Well, that brings be back to the first part of this section — if you are willing to produce content for free, then go ahead. I have my own personal reasons for writing, even though it may not be the most efficient or optimal way to earn some money on the side.
3. GPT sites
Get-Paid-To sites are deceptively simple — you do certain tasks and get money. If you have certain hard skills (e.g. coding), the listicles will point you to certain freelance sites such as Fiverr. Otherwise, there are a plethora of other job sites that allow you to pocket some spare change with little to no effort.
What is the catch? Again, there are 2 big ones — your time, and the minimum payout.
If a GPT site requires you to spend hours slogging at it, you might as well go find an actual part time job.
There are certain sites that pay you to do things like surveys. However, each survey can range from 20 minutes to 40 minutes long. If you get enough surveys, you can spend long hours sitting at your computer completing surveys… Which kinda seems like a job to me.
If you intend to spend hours clicking, you might as well go get an actual part time job (e.g. safe distancing officer if you like to walk, or the safe check-in officer if you want to sit down). That, at least, gives you regular hours and a regular paycheck that you can actually encash, not some vouchers or Paypal balance that you have to accumulate.
Or, you could just drive Grab part-time or do food deliveries on a bike.
Basically, for the time you spend sitting down and doing the tasks, you might as well be properly employed and compensated.
So, then you might want to shift your attention to those that require less effort, that you can really do ‘on the side’ and not impact your day-to-day life as much.
Well, that’s where the minimum balance payout kicks in…
If little to no effort is required, it takes a long time to hit the minimum payout.
I have three on my list right now that you can register for, all of which require minimal effort, but we can do some math to see how long it will take to actually cash out:
i. Serpclix (my referral link here)
For Serpclix, the premise is simple — they pay you to actually click on websites. It is almost like a speed-hack for SEO, because instead of paying an SEO company to get their google search rankings up, companies pay Serpclix to get actual humans to click, and Serpclix will pay you about $0.05 to $0.10 per click.
All you need to go is accept the order, paste the keyword into Google, scroll until you find the page, and click it. Very little effort required.
But, their minimum payout is $5. That means I would need between 50 to 100 clicks to cash out — and I don’t receive an order every time I launch it.
So, if I manage to even click on one order a day, it will take me a few months to be able to cash out $5. Not exactly something that I can retire on.
ii. Ember Fund (my referral link here)
While this claims that you ‘cloud mine crypto’, I suspect that it is nowhere near as fancy as it claims — they just pay you so that you ‘check-in’ every day and refer friends. It is an acquiring cost to them.
Basically, you just need to open the app once a day and click. They will pay you a base rate of 5 satoshis an hour (a satoshi is the smallest unit of a Bitcoin) for 24 hours, after which, you would need to click again.
By inviting friends (hence my referral link above), you can increase it to up to 200 sats an hour (5 sats per friend invited).
However, the minimum cash out is US$5. At the current price, US$5 is approximately 12,000 sats. If you don’t invite anyone, you will hit the minimum cash out rate in 100 days (120 sats per day), and that is if you click at the end of every 24-hour period and not waste any time. Again, not something you can retire on, considering that you will still need to pay the mining fees when you want to transfer out your Bitcoin, which would eat up a substantial portion (if not all) of your ‘free’ sats.
iii. Honeygain (and its equivalents)
My referral link for Honeygain is here, and it is even more straightforward — you run the app, you let people use your wifi / data, and you get paid for every KB of data used. Basically, you are letting people use your wifi for their own purposes (e.g. think of a VPN or TOR).
So, what’s stopping me from running Honeygain on all my devices 24/7 to try to maximise the data usage? After all, just because you run Honeygain, that doesn’t mean that someone is paying to use your data.
Well, this is an ISP (internet service provider) risk, which can be found in the reddit thread here. It seemed that this Honeygain user was red-flagged by his ISP because they detected that someone was using his wifi to install trojans, so they suspected that his account was compromised. Instead, what he suspects happened was that Honeygain was selling his data to some sketchy folks who were using it to run a botnet of sorts.
So… fair warning. You can use my referral link to get a free $5 head start, but the minimum payout is $20, so you will still need to run it for quite a bit to get any money out of it. I would suggest finding a public wifi hotspot to reduce the risk of an ISP warning…
The bottom line?
It’s going to take approximately 100 days to see the minimum payout of $5. It’s going to be a slog.
4. Anything crypto related
Some of the listicles give examples of staking or contributing a stablecoin to a DeFi pool to get yield. The yield is attractive, ranging upwards of 5% per year, and you don’t participate in the price volatility of crypto if you stake a stablecoin.
Well, the obvious drawback to this is that it is crypto, notwithstanding that you are staking a stablecoin. The key thing to remember is:
If you put money into crypto, be prepared to lose it.
The benefits of staking or DeFi yield, to me, is a bit odd. You must realise that there is no “low risk" alternative in crypto. You may think that staking a stablecoin is “low risk", but please, anyone with any knowledge of how markets work will tell you that you are still earning a risk premium.
In this instance, let’s call it an “uncertainty risk premium". You are faced with numerous risks, such as contract and liquidity pool risk, for that 5%++ or so per annum. You also don’t even know how stable the DeFi pool is (pun very intended) and if you really want to see actual dollar returns and not just fancy percentages, you have to be prepared to allocate a substantial amount of money to this (as a reminder, each $10k will earn you $500 a year).
Additionally, if you stake a stablecoin, it kinda defeats the purpose of going into crypto anyway. After all, I don’t go into crypto to earn 5% p.a., I go into crypto for that moonshot chance to retire.
Let’s just use BTC as a proxy. Even if you bought at the peak of 2017/2018 of approx. US$19k, the recent peak of US$60k means that you would have made 300% in a span of 3 to 4 years. That’s a simple return of 75% a year, if I use 4 years.
If you compare trough to trough, after the crash in 2017/2018, BTC bottomed at around $3k. The recent pullback was about $30k. That is a 1,000% return (10x, as they say) over 3 to 4 years, or approximately 250% a year if I use 4 years.
Even if I use peak to trough, $19k to $30k in 3 to 4 years, that is still a 50% gain, or approx. 12.5% a year using 4 years.
Do I even need to talk about the 2018 trough ($3k) to the late 2021 peak ($60k) — 2,000% over 3 to 4 years?
What is 5% per annum compared to that, particularly if you only intend to allocate a small portion of your portfolio to crypto?
If you intend to allocate any amount of capital into crypto, you might as well take the moonshot. You can find your 5% p.a. returns in other traditional investments.
5. Getting signing up bonuses / promotions
Thus far, this was the only “side hustle” that legit-ly put money in my pocket that I could feel, with no risk to capital (unlike investing).
Your mileage may vary, but typically, these will be offered by finance companies / banks and/or the promotion aggregators such as Singsaver (a local example). What you must be wary of are the Terms and Conditions, or T&Cs.
When obtaining promotions, always read the T&Cs!
Many of these have certain minimum requirements to get the free item. Some examples include:
- Minimum spending for credit cards;
- Minimum deposit for deposit accounts;
- Minimum transactions for brokerages; etc.
You get the idea.
You also should be aware of the hidden fees and charges. One example is the early closure fee for deposit accounts. Banks will typically charge you a fee if you close the account early, so do consider the opportunity cost of meeting the minimum deposit for the CASA. For example, if you needed to deposit $10k to earn $100 and can only close the account in 6 months, you would have effectively earned 2% p.a. on that $10k.
Additionally, you will want to focus on the exclusions. Typically, these promotions have exclusions. It is rare (but not impossible) that there are no exclusions — I have obtained $300 just by signing up for a credit card before with no minimum spending (and then cancelling it immediately once the cash was credited). However, that is unusual. More often than not, they will exclude certain transactions from the minimum spending criteria — you will have to do your homework and ensure you can hit it.
A pro tip to hit minimum spending is usually to buy vouchers, e.g. grocery store vouchers (NTUC in my local case), as that would count as grocery spending but you can then utilise the vouchers are a later date.
Another key risk here is your credit score.
If you take too many credit facilities, it could negatively impact your credit score.
This is important if you are gunning for a big loan down the road (e.g., a property loan). If you sign up for too many of these free credit cards for the cash rewards then cancel them after getting paid, your credit score may take a hit as the algorithm may recognise you as “credit hungry” and ding you accordingly. You have been warned.
Lastly, if you want to take this to the next level (after all, you will be spending a lot of time reading the T&Cs), you can start to explore manufactured spending… But just like fight club, the first rule of MS is that you don’t talk about MS… ;)
Well, I hope that shows you how hard it is to actually earn something from a side hustle. I am not saying that they are not legit — most of them will earn you something, but the question is whether you enjoy doing them and whether you actually need a significant income boost. If you really need additional cash immediately, the above side hustles may not be the ideal solution. Just go get a part-time job or drive Grab / do Grab deliveries.
Hopefully, this helps you dive into the world of side hustles with a balanced view. Don’t expect to be able to quit your day job any time soon…
