Best Side Investments That Build Wealth While You Sleep

Building wealth doesn't require working around the clock. The right side investments can generate monthly income and long-term appreciation while you focus on your career, family, or simply enjoy life. For investors seeking headache-free real estate investing, the challenge lies in identifying vehicles that apply institutional-style underwriting discipline without demanding constant attention. This guide examines seven investment options that can compound your wealth in 2026, starting with mogul, a fractional real estate platform that combines property-level economic ownership with professional management.

Disclaimer: The information provided in this guide is for educational purposes only and does not constitute financial, tax, or legal advice. Always consult with a licensed professional before making any financial or investment decisions.

Key Takeaways

• Fractional real estate offers property-level economic ownership: Platforms like mogul provide membership interests in property-specific LLCs that may allocate depreciation through Schedule K-1, distribute net rental income monthly, and carry appreciation potential, a tax profile that differs materially from the treatment of conventional public-market investments

• Index funds deliver proven long-term growth with minimal fees: Vanguard's VTI posted a 14.53% ten-year annualized NAV return as of July 31, 2026 with just a 0.03% expense ratio, making it a cornerstone for wealth building

• Dividend ETFs create consistent income streams: Schwab's SCHD reported a 30-day SEC yield of 3.18% as of August 14, 2026 while focusing on companies with strong dividend growth histories

• Real estate has historically compared favorably to stocks: According to mogul's August 2026 single-family rental analysis, single-family rentals produced a 13.8% historical annual return versus 9.8% for the S\&P 500 over 1993 to 2023, with 45% less volatility, drawing on data from NAREIT, the US Federal Reserve, the Case-Shiller Home Index, and Bloomberg

• Diversification across asset classes reduces risk: Combining fractional real estate, domestic stocks, international equities, and fixed-income investments creates a portfolio that can weather different economic conditions, although diversification does not eliminate the possibility of loss

1. mogul

mogul delivers fractional ownership in income-generating single-family rental properties, giving investors access to real estate's four wealth-building pillars: appreciation, monthly income, tax advantages, and accretive leverage. A fractional real estate platform club founded by former Goldman Sachs executives Alex Blackwood and Joey Gumataotao, who report over $10 billion in collective deal experience, mogul brings institutional-style underwriting to individual investors.

How Does mogul Work?

mogul's investment process enables investors to hold membership interests tied to specific properties through LLC structures. Key highlights:

• Property Selection: mogul reports that less than 1% of reviewed properties pass its diligence process, with research analysts using proprietary underwriting models

• Property-Specific Ownership: Each property is associated with a state-registered LLC, and investors purchase membership interests in an investment-club LLC that owns or is associated with the property-owning entity, rather than exposure through a broadly pooled REIT. This asset-level structure ties an investor's economic ownership to an individual home

• Monthly Distributions: Once a property is operational and has distributable net rental income, mogul generally distributes each investor's proportional share monthly, after applicable operating expenses, debt service, fees, capital expenditures, and reserves

• Tax Benefits: mogul's pass-through property structure may allocate depreciation through Schedule K-1, which may offset some or all property-level rental income depending on the offering and the investor's individual circumstances. mogul notes that depreciation does not automatically make distributions tax-free

• Professional Management: mogul coordinates professional property management, including tenant coordination, maintenance, and rent collection, while certain major property decisions above specified thresholds can be submitted to investors for a super-majority vote

Performance Metrics

mogul's platform reports the following results for its investors:

• 18.8% average annual returns (IRR) as of April 2025

• Property-level yield targets that vary by strategy. mogul's underwriting targets describe cash-on-cash targets of roughly 8% to 12% depending on property type and strategy, with approximately 10% to 12% NOI yield for mid-term rentals, 8% to 10% for short-term rentals, and a roughly 9% to 11% weighted-average NOI target

• A target of roughly 15% to 20% levered total returns on a weighted-average basis across strategies. These are underwriting targets that vary by property and strategy, and returns are not guaranteed. Individual offerings on mogul's current property listings carry their own stated return profiles, including offerings with stated annual returns of approximately 12.1% and 12.5%

• Record monthly yield of 2.6% as of June 1, 2026

• mogul invests in every property offered, aligning management interests with investor outcomes

• 90% of mogul investors invest a second time, and when they do, it is 3x their first investment

• 40,000+ investors on the platform

Risk Mitigation

mogul offers investor protections that stand out in fractional real estate investing:

• $10,000 Loss Protection: First $10k protection for new members. mogul covers up to $10k in losses: if the total return on a member's first 7 days of investments is a loss of $10,000 in the first year, mogul trues that member up with its own balance sheet capital

• Skin in the Game: The company personally invests in every property on the platform

• Institutional Partners: Property sourcing leverages off-market and pre-market relationships with institutional and inventory partners, and opportunities are purchased 8% to 10% below market value with verified operating actuals

• Capitalized Reserves: Reserves are capitalized at the property level, including 12 months of operating reserves per asset, alongside property and business interruption insurance

As with any real estate investment, returns are not guaranteed and results vary by property.

Best For: Investors seeking property-specific real estate exposure with professional management, monthly distributions of net rental income, and potential property-level tax benefits, without the headaches of being a landlord.

2. Vanguard Morningstar Total Stock Market ETF (VTI)

Vanguard's Morningstar Total Stock Market ETF provides exposure to the entire U.S. equity market through a single, low-cost investment vehicle. Effective July 29, 2026, Vanguard renamed this fund from Vanguard Total Stock Market ETF, adding "Morningstar" after Morningstar's acquisition of CRSP and the rebranding of the underlying index. The ticker, investment objective, and management are unchanged. With approximately 3,500 holdings, VTI offers instant diversification across large-cap, mid-cap, and small-cap companies.

Core Characteristics

• Expense Ratio: 0.03%, one of the lowest in the industry

• 30-Day SEC Yield: approximately 1.03%, a figure that changes daily

• Entry Point: VTI can be purchased at Vanguard with an initial investment as low as $1 through dollar-based investing. A whole share trades at the prevailing market price, which changes throughout each trading day

• Trading: Available during market hours with high liquidity

Historical Performance

VTI has established a strong track record over multiple market cycles. The figures below are NAV returns as of July 31, 2026:

• 1-Year Return: 19.80%

• 10-Year Average: 14.53% annualized

Year-to-date performance changes every trading day and goes stale quickly. Past performance does not guarantee future results.

Why VTI Matters for Wealth Building

VTI's broad market exposure captures growth across all sectors of the U.S. economy. The fund's extremely low expense ratio means more of your returns stay in your pocket, compounding over time. For investors building diversified portfolios, VTI serves as a foundational domestic equity holding.

Best For: Investors seeking low-cost, diversified exposure to the U.S. stock market with maximum liquidity and a proven 20+ year track record.

3. Vanguard Total International Stock ETF (VXUS)

Global diversification reduces portfolio risk by spreading investments across different economies. Vanguard's Total International Stock ETF delivers exposure to developed and emerging markets outside the United States through approximately 9,000 holdings. The exact portfolio count changes as the underlying index portfolio changes.

Key Features

• Expense Ratio: 0.05%

• Geographic Scope: Developed markets (Europe, Pacific) and emerging markets

• Holdings: Approximately 9,000 international companies

• Currency Exposure: Diversifies currency exposure beyond the U.S. dollar, although foreign-exchange movements can increase or reduce U.S.-dollar returns

Performance Data

Reported on a consistent NAV basis as of July 31, 2026:

• 10-Year Average: 9.38% annualized

Shorter-period results, including year-to-date and one-year figures, are published on both a NAV and a market-price basis and change frequently, so the reported basis matters when reading any single snapshot.

The Case for International Exposure

While U.S. markets have outperformed in recent years, international diversification provides important portfolio benefits:

• Economic Cycle Variation: Different regions experience economic growth at different times

• Valuation Opportunities: International stocks often trade at lower valuations than U.S. counterparts

• Currency Diversification: Reduces dependence on U.S. dollar performance, while introducing currency risk that can work in either direction

Best For: Investors building globally diversified portfolios who want exposure to international growth opportunities while maintaining low costs.

4. Schwab U.S. Dividend Equity ETF (SCHD)

For investors prioritizing consistent income, Schwab's U.S. Dividend Equity ETF focuses on high-quality, dividend-paying companies with strong fundamentals. The fund tracks the Dow Jones U.S. Dividend 100 Index, targeting companies with at least ten consecutive years of dividend payments.

Fund Characteristics

• Expense Ratio: 0.06%

• 30-Day SEC Yield: 3.18% as of August 14, 2026. This metric moves frequently

• Dividend Frequency: Quarterly

• Quality Focus: Screens for dividend sustainability and financial strength

Recent Performance

SCHD has delivered strong total returns combining income and appreciation. The figures below are market-price returns as of July 31, 2026, and NAV results differ slightly:

• YTD Return: 24.03%

• 1-Year Return: 30.92%

• 10-Year Average: 12.66% annualized

Sector Allocation

SCHD maintains concentrated positions in defensive sectors. Weights as of June 30, 2026:

• Healthcare: 20.72%

• Consumer Staples: 20.38%

• Energy: 14.07%

• Industrials: 11.55%

• Financials: 10.05%

The portfolio's sector and quality tilts can produce different risk characteristics from the broad market, though equity funds still participate in market downturns. Schwab reports a worst three-month return of -21.55% over the performance history shown for the fund.

Best For: Income-focused investors seeking a balance of dividend yield and capital appreciation through high-quality, dividend-growing companies.

5. Vanguard Real Estate ETF (VNQ)

Real Estate Investment Trusts (REITs) offer another avenue for real estate exposure without direct property ownership. Vanguard's Real Estate ETF provides diversified exposure to publicly traded U.S. REITs spanning residential and commercial property sectors, including health care, data centers, industrial, retail, telecommunications, and self-storage, through a 0.13% expense ratio.

How VNQ Differs from Fractional Real Estate

Understanding the distinction between REIT ETFs and property-specific fractional ownership helps investors make informed decisions:

FeatureVNQ (REIT ETF)mogul (Fractional)Ownership TypeShares of an ETF that holds securities issued by REITsMembership interests in property-specific investment-club LLCsProperty SelectionNone (pooled)Individual propertiesDepreciation BenefitsNo direct property-level depreciation deduction to the ETF shareholderPotential K-1 depreciation pass-through, subject to the investor's tax circumstancesLiquidityHigh (daily trading)Designed for multi-year hold periodsTax TreatmentTaxable distributions can carry multiple classifications, including ordinary and qualified dividends, capital-gain distributions, return of capital, and potentially Section 199A REIT-dividend amountsSchedule K-1 reporting that may include depreciation offsets

Sources for the VNQ tax characterizations: Vanguard fund tax information, IRS Topic No. 404, and the IRS Instructions for Form 1099-DIV.

When VNQ Makes Sense

VNQ works well for investors who:

• Prioritize maximum liquidity

• Want broad listed real estate exposure across residential and commercial property sectors

• Prefer diversification across hundreds of properties held by multiple REITs

• Don't need property-level depreciation deductions

However, for investors seeking property-specific ownership benefits including potential depreciation pass-through and property-level selection, platforms like mogul provide a more aligned solution.

Best For: Investors seeking liquid real estate exposure through a diversified REIT portfolio without property-level depreciation benefits.

6. Arrived

Arrived offers fractional investments in single-family rental properties and vacation rentals, allowing investors to participate in real estate starting at $100 per property.

Platform Overview

• Minimum Investment: $100 per property

• Property Types: Single-family rentals and vacation rentals

• Fee Structure: The published structure includes a sourcing fee and an ongoing AUM charge, alongside property-level management and operating expenses that vary by property type and strategy

• Return Information: Arrived publishes historical and illustrative return information by strategy and distinguishes individual-property performance from fund returns. Actual returns vary by property and investment product and are not guaranteed

Key Considerations

Arrived has built a substantial investor base with property-by-property selection similar to mogul's approach. Eligible individual-property shares may be listed during monthly secondary-market windows, generally after the property is fully funded and the shares have been held for a stated minimum period, subject to platform terms.

When comparing platforms, investors often weigh factors like:

• Return potential and historical performance

• Complete fee structures, including property-level management and operating expenses, and their impact on net returns

• Property quality and underwriting standards

• Tax benefit optimization

For investors prioritizing higher return targets and institutional-style underwriting, mogul's 18.8% average IRR and Goldman Sachs alumni leadership present a compelling combination of institutional pedigree and asset-level transparency.

Best For: Investors seeking fractional real estate exposure with a lower entry point.

7. Groundfloor Notes

Groundfloor offers a different approach to real estate investing through short-term debt investments. Rather than owning property equity, investors purchase Notes backed by diversified pools of residential real estate loans and earn fixed stated interest rates.

Note Products

Groundfloor offers several note options with varying terms and rates. The terms below reflect what was displayed in August 2026, and rates may be adjusted for new Notes:

• 1-Month Notes: 5.0% fixed APR with $100 minimum, interest paid at maturity

• 3-Month Notes: 6.0% fixed APR with $100 minimum, interest paid at maturity

• 12-Month Signature Notes: 8.5% fixed APR with $1,000 minimum, currently distributing interest monthly

Track Record and Features

• Payment History: Groundfloor reports that 100% of notes have been paid principal and interest on time since 2018

• Investor Fees: 0%, with no stated management or performance fees

• Collateral: The underlying loans in the pools are secured by first liens on the financed properties

• Not FDIC-Insured: Groundfloor states that its Notes are not bank deposits and are not FDIC-insured

How Notes Compare to Equity Ownership

Groundfloor's fixed-income approach provides defined terms with a different return profile from property ownership:

• No Appreciation: Fixed stated returns mean no equity upside from property value increases

• No Property-Level Tax Benefits: Interest income is taxed as ordinary income without depreciation offsets

• Shorter Horizon: 1 to 12 month terms don't capture long-term real estate appreciation

• Credit Exposure: Returns depend on the performance of the underlying loan pools

For investors with a multi-year time horizon, fractional ownership through mogul offers equity appreciation potential, monthly distributable rental income, and potential property-level tax benefits that fixed-income real estate products do not provide.

Best For: Investors who want defined terms and fixed stated rates over shorter commitment periods.

Why mogul Stands Out for Wealth Building

Property-Specific Ownership Through LLC Structure

Unlike REIT ETFs or debt investments, mogul provides property-specific economic ownership through membership interests in investment-club LLCs associated with individual properties, rather than exposure through a broadly pooled REIT. This structure means investors may benefit from:

• Depreciation Pass-Through: mogul's property LLCs pass income and expenses through, and investors receive Schedule K-1s. Depreciation may offset or even exceed property-level rental income, though the usable benefit depends on the offering and each investor's individual circumstances. Depreciation does not automatically make distributions tax-free

• Property-Level Selection: Choose specific properties that match your investment criteria

• Appreciation Upside: Participate in potential property value increases, not just fixed returns. Appreciation is potential, not guaranteed

Institutional-Style Underwriting for Individual Investors

mogul's founding team reports $10 billion in Goldman Sachs real estate deal experience on a platform accessible to individual investors. That track record includes growing Goldman Sachs' single-family rental business from $0 to $1 billion in under 12 months. According to mogul's How It Works page:

• Less than 1% of reviewed properties pass mogul's selection criteria

• Proprietary underwriting models identify maximum upside potential

• Institutional and inventory partnerships provide access to off-market and pre-market opportunities

Return Performance in Context

mogul's 18.8% average annual return (IRR) as of April 2025 sits at the top of a long-run comparison against other asset classes measured from 1993 to 2025: single-family rentals at 13.8%, the S\&P 500 at 9.8%, REITs at 9.3%, gold at 5.7%, and corporate bonds at 5.2%, drawing on NAREIT, US Federal Reserve, Case-Shiller Home Index, and Bloomberg data. Those returns do not factor in the tax benefits of the underlying asset class. Recent market benchmarks provide additional context:

• Broad U.S. equity market: VTI returned 14.53% annualized on a NAV basis over the ten years ended July 31, 2026

• Savings accounts: the FDIC national average savings rate was 0.38% as of July 20, 2026, though selected high-yield savings accounts may offer materially higher rates

Monthly Income Without Landlord Headaches

Once a property is operational and generating distributable net rental income, investors receive their proportional share monthly, after operating expenses, debt service, fees, capital expenditures, and reserves, without:

• Tenant screening responsibilities

• 3 AM maintenance calls

• Property management logistics

mogul coordinates day-to-day operations, while certain major property decisions are subject to investor governance, making real estate investing genuinely low-touch.

Risk Mitigation That Sets mogul Apart

mogul's $10,000 loss protection for new members provides a safety net during the first year, a feature not commonly found in fractional real estate investing. Combined with mogul's practice of investing in every property alongside investors, interests remain aligned. Members can also refer a friend and get $50 when that friend invests.

For investors ready to add real estate's wealth-building benefits to their portfolios, mogul represents the intersection of institutional expertise and individual accessibility. mogul describes a 3 to 10 year hold framework, with offering-specific terms governing each actual investment. Explore current properties to see specific investment opportunities, or schedule a call to discuss how fractional real estate fits your wealth-building strategy.

Disclaimer: The information provided in this guide is for educational purposes only and does not constitute financial, tax, or legal advice. Always consult with a licensed professional before making any financial or investment decisions.

Frequently Asked Questions

What is the difference between fractional real estate and REITs?

Fractional real estate through platforms like mogul provides property-specific ownership through membership interests in investment-club LLCs, enabling investors to select individual assets and potentially receive depreciation allocations. With a REIT ETF such as VNQ, you own shares of the ETF rather than direct interests in individual properties, and the ETF in turn owns securities issued by multiple REITs. A REIT itself is not necessarily a fund; it is a company that owns or finances real estate. This distinction matters for tax purposes: fractional ownership typically generates K-1 forms that may include depreciation allocations capable of offsetting property-level income, while REIT ETF distributions can carry several classifications, including ordinary and qualified dividends, capital-gain distributions, return of capital, and Section 199A REIT-dividend amounts.

How much money do I need to start investing in these side investments?

Entry points vary significantly across these seven options. ETF entry points depend on the share price at the time of purchase, and those prices change daily. Vanguard's brokerage platform lists a $1 initial minimum for Vanguard ETFs through dollar-based investing, so the practical entry point can be well below the price of a whole share. Groundfloor Notes start at $100 for the 1-month and 3-month products or $1,000 for the 12-month Signature Note as of August 2026. Fractional real estate platforms like mogul accept investments alongside other investors in specific properties, with terms set per offering and an average investment of roughly $10k. The right starting point depends on each investor's own circumstances and objectives.

Are these investments truly hands-off, or do they require active management?

All seven options discussed require minimal ongoing involvement. ETFs trade like stocks and require no management beyond periodic rebalancing. Groundfloor's 1-month and 3-month Notes pay interest at maturity, while the 12-month Signature Note currently makes monthly interest distributions. Fractional real estate through mogul is designed to be headache-free: professional property managers handle tenant relations, maintenance, and operations while investors receive monthly distributions of net rental income when a property generates it. You won't be handling 3 AM emergency calls or screening tenants, though certain major property decisions are put to an investor vote.

How do I choose the right mix of these investments for my financial goals?

Allocation decisions commonly reflect time horizon, income needs, and risk tolerance rather than age alone. Investors with longer time horizons and sufficient risk capacity may lean toward larger equity allocations through index funds like VTI and VXUS. Those seeking current income may emphasize dividend ETFs (SCHD) and real estate with monthly distributions (mogul). Investors prioritizing defined terms sometimes look at fixed-rate note products. Real estate can provide income, diversification, and potential tax benefits for some portfolios, including inflation hedging characteristics, and an appropriate allocation depends on your objectives, liquidity requirements, time horizon, and risk tolerance. mogul's free investment calculators can help analyze real estate return potential.

What are the tax implications of these different investment streams?

Tax treatment varies significantly. In taxable accounts, ETF distributions (VTI, VXUS, SCHD, VNQ) are generally reported on Form 1099-DIV, but their tax character can include ordinary or qualified dividends, capital-gain distributions, return of capital, foreign taxes paid, and other fund-specific items. Treatment varies by fund, account, and taxpayer, and tax-deferred accounts generally do not generate a 1099-DIV. Groundfloor Note interest is taxed as ordinary income via 1099-INT. Fractional real estate through mogul generates K-1 forms that may include depreciation allocations, which may offset some or all property-level rental income depending on the offering and your individual circumstances. Depreciation does not automatically make distributions tax-free. This potential tax efficiency is one reason real estate has historically been a preferred asset class for building generational wealth. Consult a tax professional for advice specific to your situation.