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Ask HN: My side hustle made $2mm in the last 4 months, what should I do now?
Like many others during the pandemic I began speculating on various cryptocurrencies in the past year. I had some modest success earlier in the year but the past few months of have been a whirlwind thanks to a lucky trade where I was able to turn a $5000 NFT purchase into $1.5mm. I have also had good success running various bots to profit from arbitrage opportunities across various blockchains and exchanges, and after scaling up the volume of this activity have made around $500,000 from this in the last half of the year.
I am a software developer in a mid-size, medium cost of living city in the US making ~$150k/yr with around 6 years of experience. I'm in my early thirties and recently got engaged to be married in the next year. I own my home outright, have saved 20-30% of my income for my entire career but do have ~$100,000 student loan debt between myself and my future husband. Since I live in a high tax state I can expect to take home maybe a bit over $1mm after taxes, with a net worth of around $1.3-1.8mm at that point. Most of the money I've made in crypto last year is held in stable coins (USDC, DAI, USDT etc.) but I also hold low six figures of ETH and various other tokens. I've pulled out around $200k to my traditional bank account.
I've been making an effort to not change my lifestyle despite this new wealth, aside from updating my personal office, computer etc. since I will be able to take those expenses as tax deductions. At this point I feel like I am almost losing money by keeping my day job, since I haven't been able to optimize my bots/capitalize on opportunities that I would have otherwise. On the other hand, I have no idea how long I will be able to continue to make money from my bots as it continues to become more competitive. I'm working to find tax and legal professionals but I'm not sure where to start really and it's hard to find someone who will work with me given the nature of my income. My current job has begun to feel like a bit of a dead end, and I get along fine with my co-workers but don't feel a strong connection to anyone. On the other hand my current job is very flexible and I can do many of my responsibilities on "autopilot" giving me the bandwidth to to pursue my side projects while holding down my day job. At this point it feels like my options are:
- stay at current job but reduce hours
- find a new job, maybe in crypto
- quit job and go full time into crypto
Is there anything I'm not thinking of or advice that folks who have been at a similar crossroads can impart? Thanks in advance, I apologize for the length of this post and I hope I distilled all the relevant details here.
- MilnerRoute 5y agoTalk to a professional. For your taxes -- there may be some lesser-known strategies for reducing your bill that only a professional would know. But maybe also see a professional for financial planning. (Just choose carefully; some of them are mostly interested in selling you their own products.)
- fire_thrwaway 5y agoThank you for the reply - this was one of the first things I did but it's actually fairly difficult to find an accountant or lawyer who's willing and qualified to discuss my particular situation. Would love for links if anyone has folks they can recommend! We do have a meeting with a financial planner at our credit union scheduled, I'll be interested to see what they say!
- gostsamo 5y agoYou can diversify your gains into less risky investments and continue on with the side hustle until you reach your level of accepted risk. Also, you can switch jobs to optimize for better income/less hours/more free time.
- fire_thrwaway 5y agoIt's difficult to say what feels less risky investments are these days! I've been slowly moving profits out and DCAing a portion of those into my traditional investment portfolio (i.e. index funds). I think the second part of your answer is the key - trying to adjust the current balance between my side hustle and day job piece by piece rather than all at once. Thanks!
- bell-cot 5y ago> On the other hand, I have no idea how long I will be able to continue to make money from my bots as it continues to become more competitive. +10 to this bit (if I could). Very generic amateur advice - take ~50% of your profits out, don't change your lifestyle or expectations (of your future financial situation), and make sure that your future husband is as reasonable and discreet as you seem to be.