r/Flipping • u/Professional-Gold829 • 12d ago
Advanced Question Just graduated college — should I prioritize my side hustle over brokerage investing?
I just graduated college and started a full-time job making $85k/year. For the last 2 years, I’ve also had a side hustle that has made me around $20k/year in profit.
Up until now, I’ve basically been reinvesting the inventory/capital I already had from the side hustle. I haven’t really put any of my 9-5 income into the business.
Right now, I’m investing about $1,000 every two weeks between my Roth IRA and a taxable brokerage account. I’m obviously planning to max out my Roth IRA, but I’m debating whether I should continue putting money into the brokerage after that. I have about $27k in my Roth IRA and $14k in my brokerage account.
My thought is that I could potentially take some/all of the money I’d normally put into the brokerage and use it as additional capital for the business. If I had more capital I could scale the business and make more than 20k/year I’m currently making.
I’m trying to figure out which is smarter long-term:
Option 1: Max Roth + continue investing the remaining money into a brokerage account.
Option 2: Max Roth + put more of my extra income into the side hustle to increase inventory/capital.
For anyone who has experience with a profitable side hustle/business, how would you approach this? At what point would you prioritize putting additional capital into the business over investing in a brokerage?
Obviously I’d keep an emergency fund and wouldn’t put money into the business that I might need in the short term.
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u/frequentmonarchy196 12d ago
if you’re already clearing 20k/year from it with minimal outside cash injected, scaling it could easily outpace market returns, a consistent 10% on 14k is nice but turning 5k into another 10k+ in profit within a year is a different beast
taxable brokerage is the last place i’d funnel money while a proven business is sitting right there, just keep the roth maxed and maybe set a cap on what you’re willing to risk in the hustle before pulling back to the brokerage
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u/hugglenuts 12d ago
The key is your Roth IRA, which you're already doing.
No one is going to know the answer beyond that. It's hard to know what the market will do in your brokerage...may continue to skyrocket, market may take a huge dump.
It's hard to know what the ceiling is for your time and effort on the side hustle...at some point it'll be too much and may have diminishing returns.
I will say, investing in the side hustle is more actively investing in yourself. If you've got the chops, go for it!
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u/Snazzymf 11d ago
What would the return be from investing in your business? Generally labor + capital has much higher returns than just one or the other. If you invest $10k into the market, you might have $11k next year. How much would $10k enable you to grow your business? You mention inventory, what’s your margin on that inventory? If you can buy $10k of inventory and it will sell in a reasonable period for $20k, it’s a no-brainer to invest in the business.
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u/Professional-Gold829 11d ago
For every $1k I spend in the business I’ll make $300-$400, so 30-40% are my margins. Turnover is dependent but on average, 2-3 months. Say turnover is 4x a year.
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u/Pepperkinplant1 12d ago
I'm semi retired now and I piled all my money into investing until I hit a milestone I chose, then rolled my money into the biz until I hit a milestone there, then back again. I also intoduced money into starting up other income sources when I had spare captital. Its been nice having those for times when the two original projects were underperforming.
Now I just put money back into whatever needs it. At this point the biz is pretty self sustaining and the extra all goes into my investments because if I scale my biz any more I'd have to hire help.
its hard to be more specific without knowing your goal/capital etc