Enough With the Side Hustles! There’s a Better Way to Make More Money

The need for extra cash in recent years has never been higher, but are side hustles really the answer? A new BMO study sheds light.

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The latest BMO (TSX:BMO) Real Financial Progress Index has unveiled an interesting trend among young Canadians. They are increasingly seeking guidance on side hustles, money growth, and achieving financial security. This comes in a landscape marked by concerns over rising interest rates, inflation, and economic uncertainty. Among the array of personal finance topics, the survey found that Gen Z (ages 18 to 24) and Millennials (ages 25 to 44) are most interested in learning how to grow their existing wealth and diversify their sources of income.

Getting anxious, but are side hustles the answer?

Financial anxiety is a pervasive issue among young Canadians. The survey revealed that concerns about their overall financial situation are the leading source of financial anxiety among Gen Z (90%), as well as younger (ages 25 to 34) (88%) and older (ages 35 to 44) (86%) Millennials. These worries have led them to explore various avenues for financial growth and stability.

Younger Millennials, in particular, are eager to seek advice on how to grow the money they have, with 56% expressing interest. Gen Z is not far behind at 47%, followed by older Millennials at 47%. This underscores a growing awareness among young adults about the importance of managing and multiplying their wealth.

Side hustles have been a buzzword in recent years, but the survey shows that not everyone is equally enthusiastic. While 48% of younger Millennials are looking for more information on generating additional income, Gen Z follows closely at 40%, and older Millennials at 36%. Interestingly, only 23% of Gen X (ages 45 to 54) and 15% of Baby Boomers (ages 55 to 64) are actively seeking side hustles.

The reasons are clear

Inflation and rising prices are causing concerns among Canadians. The survey found that concerns about their financial situation continue to be the leading source of financial anxiety for 78% of respondents. A quarter (25%) of Canadians feel less financially secure today than they did in 2022.

Sal Guatieri, Senior Economist at BMO, offers insights into the inflation landscape, emphasizing that although CPI inflation has fallen from its peak, it is likely to decline slowly, keeping financial concerns alive.

Despite these economic worries, there’s optimism on the horizon. Half (51%) of Canadians believe they are making real financial progress, and 72% remain hopeful about their financial future for the next year. Their top financial goals include saving for retirement (60%), planning a vacation (51%), and paying down debt (38%).

So if you’re one of these young Canadians seeking out more income, there could be a better option than a side hustle.

Consider a high-yield dividend ETF

In this era of financial uncertainty, diversifying your income streams is key. One attractive option is a high-yield dividend exchange-traded fund (ETF). These investment vehicles offer several benefits, including high-yield income and low management fees.

A prime example is the BMO CA High Dividend Covered Call ETF (TSX:ZWC), currently offering a remarkable 7.71% dividend yield. Investing in such ETFs can provide you with a reliable source of long-term income while allowing you to collect passive income instead of engaging in a side hustle. The beauty of ETFs is their simplicity and accessibility, making them an excellent choice for both novice and experienced investors.

As the ETF focuses on blue-chip companies on the Canadian market, it has become a popular choice. Also, a safe one. Add in a 0.65% expense ratio and you’ve got a winner.

Bottom line

While side hustles have gained popularity, it’s important for young Canadians to explore diverse avenues for financial growth and stability. The BMO Real Financial Progress Index highlights their growing interest in passive income, investments, and professional financial guidance. In an era of inflation and economic uncertainty, diversifying income through options like high-yield dividend ETFs can offer a safer and more sustainable path to financial security. By making informed choices and seeking professional advice, young Canadians can build long-term wealth and achieve their financial goals with confidence.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has positions in the BMO Canadian High Dividend Covered Call ETF. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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