“Passive income.” At some point in your life or maybe even now, you might have thought of the idea of passive income.
Some of us might hit financial roadblock at some time in our lives. Thus, we might turn to banks, licensed moneylenders, or other traditional financial institutions for help. However, it pays to have your own passive income so that you will not be completely dependent on loans.
What Is Passive Income?
Contrary to popular belief, passive income is not solely defined as money that is earned on a regular basis, with little or no effort from the individual receiving it.
What many tend to discount is the amount of effort put in place. A lot of work is needed to build up the right foundation for a stable passive income.
Examples of passive income sources in Singapore include earnings from rental property, earnings from the capital market such as bonds, unit trusts and real estate investment trusts.
If you’re not a finance enthusiast, fret not! Renting out a room in your house, selling old clothes, selling your intellectual property, also count as ways to earn passive income.
Ways To Earn Passive Income
1. High Yield Savings Account
Stuck with your DBS/POSB savings account which gives you a measly 0.05% interest per year?
A high yield savings account is great for rookie investors. Only minimal comparison work is needed.
For instance, the DBS Multiplier offers you up to 3.80% interest per annum! That said, there are a list of criteria that you have to fulfil. These include minimum monthly spend, salary credit and minimum account balance.
You can check out this informative list for the best savings accounts in Singapore.
2. Investing In Rental Property
The demand for apartments, whether office blocks or homes, in Singapore is ever growing. This is thanks to the conducive business climate of the country and the nation’s attractiveness as a place to live.
If you’re business minded, you can take advantage of this situation by investing in apartments and lease them to people who are looking for places to live or offices to set up a business.
As an owner of a rental property, you will be assured of a steady income from the property once it is ready to be occupied.
You can also rent out part of the property in which you live. This way, you will get a regular passive income from your rental property.
3. Investing In Real Estate Investment Trusts (REITs)
A real estate investment trust (REIT) is a firm that owns, manages or finances an income-generating real estate business.
The income that is generated by a REIT from the various properties that it is in charge of is shared by the entity’s shareholders in terms of dividends.
Investing in a REIT is pretty much the same as buying a company’s shares, save for the point that in the case of REITs, the investor gets an opportunity to put their resources in the real estate business.
Through a REIT, an investor is able to own and manage properties. REITs are a popular way of making passive income in Singapore because the country’s property market is very vibrant.
4. Buying Company Shares
Many companies seek to expand their operations by going public.
When a company goes public, it means that it has offered part of its shares for the members of the public to buy. At this point, the company’s shares are listed on the stock exchange to give members of the public an opportunity to trade in the shares of that company.
When you buy shares in a public company, you get to own part of the company, represented by the value of the shares that you buy. Earnings and the passive income from shares come when companies pay out dividends to their shareholders.
In Singapore, investors can buy shares through the Singapore Exchange Limited (SGX) and also get an opportunity to buy shares when companies go public for the first time through initial public offerings (IPOs).
In today’s age of the Internet, there are many freelancing opportunities. A person can work on a part-time basis as a writer, blogger, transcriber, translator, or foreign language teacher.
There are also people who work as freelance affiliate marketers and product reviewers among others. With freelancing, you can choose the best time to work, which can be after attending to other regular jobs.
Freelancers may be paid directly by their clients or through the earnings that they make by placing advertisements on their webpages.
6. Rent Your Items At Home
Whether it is a camera, polaroid, musical instrument, bicycle or any other videography equipment, there will definitely be someone there that will require such items.
Instead of letting these items collect dust at home, you can start looking around online for any platforms that allows you to make some money out of your valuables!
7. Offering Tuition And Related Training Services
The demand for good education never wanes. Many parents in Singapore want their children to get the best education and to have the children’s talents developed to the best possible level.
Individuals can take advantage of this by providing tuition services to supplement what children learn at school. If you’re an entrepreneur, you can also open talent academies to offer training for activities. Activities can include swimming, football, karate, music schools and so on.
You do not need to be involved in offering tuition and related training services on a full-time basis since the sessions can be arranged at the most convenient time.
Once your business takes flight and if you have hired enough people to get the business up and running, you can then sit back and generate passive income from your school!
8. Investing In Annuities
An annuity is a type of investment or insurance that entitles an investor to a series of yearly earnings.
It is best to start investing in annuities from young so that you will reap the benefits of a regular income when you are older.
Annuities are offered by financial organizations, which take and invest money from individuals and provide a series of payments later on based on the agreement between the institution and each client.
9. Investing In Unit Trusts
Investors in Singapore can also earn passive income through unit trusts.
A unit trust is an investment that allows an investor to pool their money together with other investors through an investment fund.
The investment fund then invests the money in bonds, equities and other avenues that enable it to generate profits and pay the investors some returns.
10. Investing In Bonds
A bond is a fixed income security that is created by governments and other organizations for the purpose of raising capital.
The bond issuer makes a commitment make a certain payment to the investor after a defined period of time.
Therefore, when an individual invests in a bond, they are assured of some passive income arising from the investment after some period of time.
11. Peer To Peer (P2P) Lending
P2P lending involves providing loans to individuals who need money through a P2P platform.
You can lend your money to a wide range of borrowers. This includes people or businesses.
Some famous P2p platforms include Funding Societies, Minterest and Validus.
While P2P lending can be highly risky, it offers the potential for high returns for people who need passive income.