Even for the pros, outperforming the market or producing “alpha” is a difficult task – but what about for the average investor?
For those Fools that are looking for some extra cash on the side of their existing job, maybe it’s worth taking a look at active investing as your “side hustle” in 2019 and beyond.
Beating the market isn’t as easy as it seems
While the average punter might have done well by pouring some money into Afterpay Touch Group Ltd (ASX: APT) at $6 per share or jumping on the Appen Ltd (ASX: APX) train in its early stages, the reality is that beating the market consistently is an incredibly hard feat.
But that’s not to say that it can’t be done.
There are plenty of investors out there who can beat the market and generate some serious side cash from their hard-earned income or their retirement funds.
While index funds can generally track the market and generate a solid return in line with the economic and business cycles, the fact that you’re reading on means that you’re probably looking for that something extra.
It can be said that your “side hustle” in active investing could involve either growth stocks or dividend stocks, with either having the potential to outperform and deliver you realised or unrealised gains over your investment horizon.
It’s important to do your homework
Active investing isn’t for the faint-hearted: the reality is that for every winner you get there may be several losers and it can be difficult to stomach the losses and ride the waves to long-term success.
We’ve all sold out of a super growth stock too early, or held on to a personal favourite when we knew we should have sold.
The real secret to active investing is to do your research thoroughly and look at the industry (and the company’s) growth prospects over your desired horizon.
Once you’ve picked a winner, it’s often best not to bet against psychology and just hold that stock until it’s reached your target level – irrespective of short-term gains and losses.
In the end, active investing is a tough game and the amount of data at the disposal of institutional investors can make it difficult to outperform the market.
But if you’re a well-informed investor who is only putting in what you’re willing to lose, there’s no reason you couldn’t be one of the many Fools to outperform the market and make a decent side hustle out of your investing activities in 2019.
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of June 30th
Motley Fool contributor Lachlan Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO and Appen Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
- Why it’s a good time to buy and hold ASX shares – August 8, 2020 9:30am
- Magellan share price falls despite strong July inflows – August 7, 2020 10:45am
- Pointsbet share price on watch after ANOTHER new partnership – August 7, 2020 10:02am