Whether it’s down to a change of mindset brought on by the pandemic, or simply the latest fad induced by a generation of TikTok followers, there’s no denying side hustles are a growing trend. Here’s how to build an empire of them.

Should you quit your job?

“Build your own dreams or you’ll end up building someone else’s” the saying goes. Whilst I’m a big fan of this quote, I should stress that quitting your job tomorrow – even if you hate it – won’t be the right decision for everyone. It’s usually a good idea to have a game plan, or at least the financial resources in place, before taking the plunge.

It goes without saying that if you enjoy your job and it pays enough for you to live the life you want to live then you should probably stick with it. Likewise, employees with a solid work/life balance can still achieve a fulfilling and meaningful life, even if it isn’t a dream job.

But for those who are unsure, ask yourself “Is this what I want to be doing five years from now?”. If the answer is a resounding “nope”, what are you waiting for? Saddle up and start building your side hustle empire today!

How to start your first side hustle

Once you’ve made the decision to leave your job, this is your chance to get excited and start working towards something you’re truly passionate about.

It’s important to begin with a passion, or else, really, what’s the point? Switching from a job you hate to a side hustle you hate is ‘six of one half a dozen of the other’. Feeding a passion project will give your life purpose and allows for the greatest chance of success.

For most people, quitting isn’t immediately practical for financial reasons, so working on your side hustle out of hours is the most feasible option. Alternatively, you could speak to your employer to see if they’ll consider reducing your hours. Switching from five days a week to four, for example, would give you an extra day to work on a project you love.

Side hustles come in all shapes and sizes but using skills you’ve already picked up throughout your career is a great place to start if you haven’t quite figured out your passion. Offering your services as a freelancer, for example, can provide greater flexibility and earnings potential. Sites like Fiverr or PeoplePerHour can be useful to help you manage your business in areas where your skills are lacking. They’re also great places to advertise your own services.

If freelancing isn’t for you, no problem, there’s no shortage of content out there containing a multitude of creative side-hustle initiatives – from to blogger to beautician to baker – to get you started.

Building multiple side hustles to generate multiple streams of income

There’s a direct correlation between the number of streams of income a person has and their wealth. This is because – as well as the obvious benefits of being pummelled with income from all directions – you’ll gain expertise in several different areas of interest while achieving a well-diversified portfolio.

Keep in mind, though, that there are only so many hours in the day, so taking on more side hustles than you can handle could mean they all suffer. Juggling multiple before you’ve mastered one is a recipe for failure, so it’s imperative that you don’t move onto the next side hustle until you’ve mastered the current one.

Reinvest into passive income sources

Passive income is worth ten times earned income because you aren’t trading your time for the money you earn. It’s for this reason that I recycle every spare penny I earn from side hustles into passive income investments – they don’t require active participation and they allow me to focus on living life on my own terms.

Passive income sources can include investment income, such as interest, dividends, rent, royalties, online courses and more. My primary source of passive income is from high dividend yielding index funds, which I hold through my Stocks and Shares ISA.

Of course, remember investments always involve various risks, and you may get back less than you put in. There is a risk of losing the capital invested.

Conclusion

And there you have it. Your roadmap to building multiple side hustles, generating multiple sources of income, and achieving financial freedom, all the while building a fulfilling and meaningful life through feeding your passions. Good luck to you!

The post Should you quit your job to start multiple side hustles? appeared first on The Motley Fool UK.

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Unless you’ve been living under a rock, you’ll have noticed that UK house prices are booming again.

Residential property prices in the UK were up by around 11% in the year to January 2022 – the fastest growth rate recorded since 2004 (the rate was even higher at 13% in the year to June 2021).

Meanwhile, average earnings have struggled to keep pace — at the time of writing, the average UK house price (£255,556) was more than 10 times the UK median salary (£24,120), the highest level on record!

The number of net additional UK dwellings (the most comprehensive measure of housing supply in the UK) was also down 11% year on year as home builders struggle with a materials shortage, while at the other end of the spectrum buyer demand increased rapidly during the pandemic.

How did we end up here?

The UK’s housing crisis has stemmed from successive short-sighted government’s policies — namely, Maggie Thatcher’s ‘right to buy’ followed by Tony Blair’s buy-to-let initiative and lack of house building. Adding to that, in the years that followed the 2008 crash £445 billion of quantitative easing was released into the economy, which we now know disproportionately found its way into the property market.

Fast forward to now, and we’re at it again. But this time the flames have been fanned by policies deemed necessary to soften the blow of a pandemic.

In 2020 alone £440 billion of new money was invented, and this is already seeping its way into the property market. At the same time, government support schemes — such as furlough and the Self Employment Income Support Scheme — were rolled out and (coupled with a lack of spending opportunities afforded to people while restrictions were in place) helped to significantly boost household cash balances.

Interest rates hit an all-time low and lending criteria was softened, which meant that it also became easier to borrow more.

With large household deposits and cheap borrowing came the ‘race for space’ – a mass exodus of people moving from cities to suburbs in search of larger homes.

But it was the introduction of the (entirely unnecessary, in my opinion) Stamp Duty Holiday in July 2020 that proved to be the icing on the cake, as it provided relief to private landlords looking to expand their portfolios and exacerbated prices at a point when property transactions were at their highest.

Where does that leave us?

Property inflation isn’t the only economic indicator running rampant – it’s been frequently reported now that the Consumer Price Index (a measure of current inflation on consumer goods and services) is expected to reach 6% by March 2022, some way off the 2% target set by the government.

Increasing interest rates is the only effective tool in the Bank of England’s armoury to curb inflation. Any steep or sudden changes, though, would erode confidence in the wider market so they’ll most likely take a ‘little and often’ approach by making small increases incrementally.

Most homeowners are not going to be affected, at least initially, by a Bank Rate hike. This is because 94% of residential mortgages taken out in 2020 and 2021 were locked in at fixed rates. In fact, data from the FCA shows that 5-year fixed rate mortgages were the most popular product in 2021. CPI inflation woes have been on the horizon for some time now, so it makes sense to see more people locking in a fixed rate for a longer term while interest rates are at all-time lows. But there may be more to it…

In 2014, the Financial Policy Committee (FPC) introduced new rules, including a requirement for mortgage lenders to stress-test mortgage affordability. Interestingly, 5-year fixed rate products aren’t covered by these rules, meaning that there is a greater incentive for lenders to offer these products.

Additionally, it’s a requirement that the government-backed ‘Mortgage Guarantee Scheme’ (introduced in April 2021 to incentivise banks to offer riskier 95% loans to homebuyers where they would otherwise not) can only be offered out on 5-year fixed rate terms.

It’s perhaps no surprise then that the ‘5-year fixed’ has now become the most popular product on the market.

Why UK house prices will fall in 2026

If CPI inflation isn’t brought under control in 2022 then interest rates won’t come down as soon as the BoE would hope, and there’s a large proportion of homeowners out there who may find that their repayments have doubled (or tripled or more) when the time comes to remortgage.

As the cost of living outpaces wage growth, the knock-on effects are lower household cash reserves, tighter lending criteria, and fewer property sales.

With more 5-year fixed products obtained during the pandemic — a period of soft lending criteria, nonsensical government intervention to my mind, and low interest rates — than ever, I believe the cracks will show in 2026.

The post When will house prices in the UK finally fall? (Spoiler alert, it’s 2026) appeared first on The Motley Fool UK.

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Stamp duty land tax – I’ll just refer to it as ‘stamp duty’ for now – is the tax that arises on purchases of UK property with a value above a certain threshold. The thresholds vary slightly depending on where in the UK the property is located, but in England and Northern Ireland the charge will apply to purchases of all residential property with a value of more than £125,000 (in Scotland the threshold is £145,000 and in Wales it’s £180,000).

Crucially, these thresholds are extended even further if you‘re a first-time buyer (known as ‘first time buyer’s relief’).

For purchases with a value above the threshold, a relevant percentage is applied to determine the amount of tax due. The rate ranges from 2% to 12% of the purchase price, depending upon the total value of the property and where in the UK it is located.

In addition to this rate, a particularly nasty 3% surcharge is slapped on to the purchase price if you already own a property, and a further 2% surcharge applies if you’re a non-UK resident at the time of the purchase.

Although the amounts are all calculated and paid together, it can be easier to view these as three separate stamp duty charges.

How your relationship status can affect the amount of stamp duty you owe

If you’re a single, ready-to-mingle UK resident first-time buyer, then you’re best placed here. As are UK resident couples who don’t already own a home (or at least, they’re selling their old home and replacing it with a new one). In these instances, first time buyer’s relief is available, and no surcharges should apply.

Problems can arise when two or more people buy a property together and one party is a first-time buyer while the other is subject to a surcharge, either because they own another property or because they are non-UK resident, or both.

This can have negative consequences for two reasons: 1) first time buyer’s relief is now not available; and 2) surcharges are applied to the total value of the property, ignoring the actual ownership split. In short, both parties are penalised for buying the property together.

The rules are even harsher for married couples and civil partners because, for the purposes of stamp duty, they are treated as a single entity – if a surcharge applies to one of them, then it is applied to the value of the entire transaction.

Those going through a divorce should note that you will continue to be treated as a single entity until the date a ‘decree absolute’ is issued. An exception to this is where individuals are not living together, and it can be demonstrated that there is a ‘permanent desire to separate’.

What can be done?

For those who have already tied the knot, there is little that can be done to avoid the loss of first time buyer’s relief and any associated surcharges. However, if you’re engaged and in the process of buying a house, delaying the wedding until after completion could save you tens of thousands in stamp duty (a little extra to put towards that extravagant, Cinderella wedding you’ve always dreamed of).

For unmarried couples intending to buy together, there is potential for one partner to acquire the new property alone so that the purchase is not ‘tainted’ by the property belonging to the other.

‘Joint borrower sole proprietor’ (JBSP) mortgages have been touted as a popular means of achieving this. These products allow both partners to be named on the mortgage while only one of them owns equity in the property. Put another way, both would be responsible for paying the mortgage but only one of them would legally own the property. This arrangement certainly has its benefits but would be considered high risk to many – should the relationship breakdown, lenders could come after either one of them for full repayment of the loan in the event of a default, and this in turn could negatively impact both their credit scores.

Conclusion

As we have seen, your relationship status can be the difference between paying tens of thousands in stamp duty and not paying any at all.

As your relationship status can’t always be planned, steering clear of such traps can be tricky, but equipped with this knowledge it’s my hope that some of you can at least avoid the potential pitfalls. Whether that means it’s time to ditch your partner or not is up to you!

The post Should you ditch your partner to avoid a hefty stamp duty bill? appeared first on The Motley Fool UK.

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