How to Earn a Passive Income in Singapore: 10 Proven Ways

Passive income is your ticket to early retirement and financial success. Whether you are a beginner investor or someone who wants to make the most of their surroundings, there are options available to suit your needs. Let us dive in and explore these opportunities.

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What is Passive Income and Why Do We Need It?

Passive income refers to earnings from investments or activities that require little to no ongoing effort once established. Earning an extra income is essential for several reasons, and it plays a crucial role in achieving financial independence and security. Here are some reasons why having a side income is important:

1. Financial Freedom. Passive income allows you to reduce your reliance on a traditional job or active work. It provides an additional stream of income that can cover your expenses, pay off debts, and contribute to your savings and investments. By diversifying your income sources and having numerous income streams, you gain financial freedom and flexibility.

2. Time Freedom. Passive income frees up your time and allows you to pursue other interests, hobbies, or spend quality time with loved ones. Instead of being tied to a job and trading your time for money, having a steady stream of side income enables you to have more control over your time and live life on your own terms.

3. Income Stability. Passive income is typically more stable and predictable than active income. While active income relies on your continuous effort and availability, the latter can generate earnings consistently, even when you are not actively working. This stability can provide a sense of security and reduce financial risks.

4. Wealth Accumulation. Passive income can accelerate wealth accumulation. By reinvesting your income into additional income-generating assets, such as stocks, bonds, real estate, or businesses, you can create a compounding effect and increase your overall wealth over time. Let us explore the various ways to earn an extra income in Singapore.

Learn more in our article: HDB Flat Eligibility (HFE) Letter and HFE Application: What’s new in 2024

How to Earn Passive Income in Singapore: Invest

Investing is a tried and tested method to generate passive income in Singapore. By putting your money to work in various investment products, you can earn returns without actively participating in day-to-day operations. Passive investing in Singapore is not as difficult as it seems. Here are some of the well-known and relatively safe investment options that you can consider:

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Read more about all the most popular and safest investments in our article "Best Investment options in Singapore".

1. Alternative Investments

Alternative investments generally refer to investments made outside of traditional financial products. Examples include private equity, hedge funds, art, and commodities. However, these investments tend to be less accessible to retail investors, and may also be less liquid. Nevertheless, they offer the potential for significant returns.

Kilde is a reputable digital platform based in Singapore that offers investors access to investing in private debt, which has the potential to generate attractive annual returns of up to 13.5%*. Kilde serves as an excellent gateway for investors seeking access to alternative investments that may not be available otherwise.

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2. CPF Life

The Central Provident Fund (CPF) Life scheme offers Singaporeans a reliable source of passive income during retirement. By contributing to your CPF account, you can receive monthly payouts that serve as a steady income stream. The CPF Life scheme provides financial security and peace of mind in your golden years.

Learn more in our article "CPF Investment Scheme (CPFIS): How To Use It To Generate High Income".

3. SSBs (Singapore Savings Bonds)

Investing in Singapore Savings Bonds (SSBs) is another safe and low-risk option to earn passive income. SSBs are government-backed bonds that offer attractive interest rates and flexible terms. With SSBs, you can enjoy regular coupon payments while preserving your capital.

4. Dividend Stocks

Dividend stocks are shares of companies that distribute a portion of their profits to shareholders. By investing in dividend stocks listed on the Singapore stock market, you can earn regular dividends, which provide a steady stream of passive income. It is important to research and choose reputable companies with a history of consistent dividend payouts.

Learn more in our article "Top 5 Dividend Stocks in Singapore & Guide On How to Find More".

5. ETFs & REITs

Exchange-Traded Funds (ETFs) and Real Estate Investment Trusts (REITs) are popular investment vehicles that offer diversification and passive income opportunities. ETFs allow you to invest in a basket of stocks, while REITs enable you to earn rental income from real estate investments. Both options provide exposure to different asset classes and can generate consistent returns over time.

These investment options offer varying levels of risk and return potential. It is important to conduct thorough research, assess your risk tolerance, and consider your investment goals before making any investment decisions. Diversification is also key to reduce risks and maximise potential returns. Consider seeking advice from financial professionals or utilizing online investment platforms to help you make informed investment choices.

Remember, investing involves risks, and it is important to carefully evaluate your financial situation and goals before committing your money.

Passive income from investments may take time to accumulate, and it is crucial to have a long-term perspective and patience. Start with a solid investment plan, stay informed about market trends, and monitor your investments regularly to ensure they align with your financial goals.

How to Earn Passive Income in Singapore: Use Your Surroundings

In addition to investing, you can also leverage your surroundings to generate passive income. Here are some practical ways to make money without much effort.

Rent Out Your Property

If you own property in Singapore, renting it out can be a lucrative source of passive income. Whether it is residential or commercial property, renting provides a regular stream of rental payments, helping you to generate a significant source of additional income. 

For example, if you live in a HDB flat, you can earn approximately $800 - $1,600 per room rented out, and between $2,300 to $4,300 for the whole flat. The amount that you can earn from renting out your property will depend on factors such as location, and proximity to schools or MRTs. 

Gain Interest on Accounts and Deposits

Many banks in Singapore offer attractive interest rates on savings accounts and fixed deposits. By keeping your money in these accounts, you can earn passive income through interest payments. It is essential to compare rates and terms to maximise your earnings. The following are a list of highest bank interest rates offered as of February 2024 (terms and conditions apply):

1.  RHB ― 3.35%
2.  Maybank ― 3.05%
3. ICBC ― 3.35%
4. Bank of China ― 3.45%
5. HSBC ― 3.0%
6. Citibank ― 3.40%
7. CIMB ― 3.5%
8. DBS/POSB ― 3.2%
9. Hong Leong Finance ― 3.1%
10. Standard Chartered― 3.10%
11. UOB ― 3.1%
12. OCBC ― 3.1%

Earn Cashback and Points from Credit Cards

Using credit cards that offer cashback or rewards points can be an easy way to accumulate passive income. By utilizing these cards for your everyday expenses, you can earn cashback or points, which can be redeemed for various benefits, including discounts or additional funds.

Make Money Online

The internet provides numerous opportunities to earn passive income. Here are some additional details about three popular online avenues for generating side income:

1. Affiliate Marketing. Affiliate marketing involves promoting other people's products or services and earning a commission for each successful referral or sale. As an affiliate marketer, you can join affiliate programs offered by companies and promote their products through various channels such as websites, blogs, social media, or email marketing. When someone clicks on your affiliate link and makes a purchase, you earn a percentage of the sale. By strategically selecting high-quality products or services that align with your niche or audience, you can build a passive income stream by earning commissions on ongoing sales.

2. Blogging. Blogging allows you to share your knowledge, expertise, or passion with a wide audience. By consistently creating valuable and engaging content, you can attract readers and build a loyal following. Once you have established a substantial readership, you can monetise your blog through various means, such as display advertising, sponsored content, product reviews, or offering digital products like e-books or online courses. While blogging requires an initial investment of time and effort to build a readership and create quality content, it can eventually become a passive income source as your blog generates ongoing traffic and revenue.

3. Online Courses. If you have specialised knowledge or skills in a particular area, creating and selling online courses can be a lucrative passive income stream. Platforms like Udemy, Teachable, or Skillshare provide a user-friendly infrastructure for hosting and selling online courses. You can create comprehensive video-based courses or educational materials that teach others valuable skills or knowledge. Once your course is created and published, you can earn a stable source of income as students enroll and pay for access. Promoting your course through online marketing channels or leveraging your existing online presence can help drive traffic and increase enrolments.

It is important to note that building a successful online income stream requires time, effort, and consistency.

Sell Your Intellectual Property

If you have expertise in a particular field, consider monetizing it by creating and selling intellectual property. This can include writing books or offering paid subscriptions to exclusive content. By leveraging your knowledge, you can generate passive income from your intellectual assets.

Final Thoughts on Passive Income in Singapore

While passive income offers exciting opportunities, it is crucial to approach it with careful planning and realistic expectations. Not all of such income streams guarantee immediate or substantial returns, and there are inherent risks involved. Before embarking on your journey, conduct thorough research, diversify your investments, and seek professional advice if needed.

With the right strategies and mindset, you can steadily build your portfolio and work towards achieving financial freedom. Start taking steps towards financial independence today and enjoy the freedom and flexibility that passive income can bring.

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Sources:

1. www.propertyguru.com.sg
2. sg.style.yahoo.com
3. rhbgroup.com.sg
4. www.maybank2u.com.sg
5. singapore.icbc.com.cn
6. www.bankofchina.com
7. www.hsbc.com.sg
8. www.hlf.com.sg
9. www.sc.com

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_{*KILDE PTE LTD (“Kilde”) is incorporated in Singapore (registration no. 201929587K) is licenced and regulated by the Monetary Authority Singapore and holds a Capital Markets Services Licence (CMS101016) and an Exempted Financial Advisor License under the Financial Adviser Act. The information provided in this marketing material is intended for “accredited investors” and “institutional investors” (collectively “qualified persons”) only. This marketing material, and any information in this marketing material, or any documentation that Kilde provides in relation to this marketing material is provided without any representation or any kind of warranties whatsoever (whether express or implied by law).}

_{This advertisement has not been reviewed by the Monetary Authority of Singapore.}