What Are The Best Passive Income Streams In Singapore?
Increasing your monthly income is the best way to get you closer to financial freedom. Whether you’re still living paycheck to paycheck, or you already have a lot of money saved in the bank, there are hundreds of ways you can multiply your earnings. One of the best ways to do this is to look for sources of passive income.
Wondering how to earn passive income in Singapore? This guide is for you.
Earning passive income is something everyone should strive for. Perhaps you may already know people in your life who’ve already achieved this. It may be a friend who started investing in stocks using her allowance in college, or it may be your aunt abroad who is renting her vacant apartment.
These people have figured out passive income and can confidently say (perhaps in the future) that they can finally quit their jobs but still have the income to maintain their quality of life.
Ready to earn passive income? Here’s our quick guide to helping you earn money while you sleep.
Here at OMY, you will discover the following:
Passive Income Explained
So what is passive income? Passive income refers to earnings that are made through various investments in which you’re not actively involved. Meaning, the work you do is very minimal or nothing at all. It can mean income from investments, rental properties, partnerships, and other business ventures that do not require major supervision.
Based on this definition, you can conclude that passive income is not your job. It’s only there to boost your regular earnings. Additionally, passive income also doesn’t cover your side hustles, which are forms of active incomes that require effort and attention.
Categories Of Passive Income
In Singapore, passive income can be split into three.
Investments
This is when you allocate capital or money into an investment vehicle to get potential earnings.
Rentals
This refers to the payments or earnings you have from leasing any property. When it comes to rentals, you must take into consideration your estimated ROI, and the effort and cost of maintaining the property.
Online
You’ll be surprised at how much you can earn online. With the majority of consumers and businesses in Singapore using the internet, this passive income avenue is hard to pass up.
How Can I Generate Passive Income In Singapore? 14 Passive Income Ideas You Can Try
We’ve gathered the best ways on how to earn passive income in Singapore below.
Rent Out An Extra Room In Your HDB Flat
If you’re not using one of the rooms in your HDB flat, consider putting it up for rent. Your first choice should be to call your family and friends because they’re most likely to be the ones to stay on your property. If you’re not satisfied with their response, look for strangers on websites like Airbnb or the classifieds in your local newspapers if you prefer long-term tenants.
Not comfortable renting out your extra room to people? Then rent it out as storage. By doing this, you can earn extra income without having to deal with people living or staying on your property.
Before doing this passive income idea, make sure to check HDB rental restrictions. For example, here’s the maximum number of occupants that are allowed in each flat.
| Flat type | Maximum number of tenants allowed in each flat^ | Maximum number of bedroom(s) allowed | Maximum number of occupants allowed in each flat |
|---|---|---|---|
| 1-room and 2-room | 4 | Not allowed to rent out the bedroom | |
| 3-room | 6 | 1 | 6 |
| 4-room and bigger | 6 | 2 | 6 |
CPF Life
While this may not be the first thing that pops into your mind when thinking of passive income streams in Singapore, learning to maximise this will help you earn more money.
Check out our in-depth guide on CPF here.
Singapore Savings Bonds
These bonds are issued every month by the government through the Monetary Authority of Singapore. With its low starting investment of only S$500, it’s something you should consider if you want guaranteed earnings.
This guide on SSBs will help you learn more about this passive income stream.
Retirement plans and annuities
Wondering how to earn passive income in Singapore? This is one of the best passive income investments you can make. It refers to products offered by insurers. It will give you amazing returns and protection, as well as give you a regular payout when you retire. Each month, you just need to pay for premiums.
One of the major advantages of this passive income stream is flexibility. Insurers allow clients to tailor payment plans based on their specific personal needs and income.
Dividend Stocks
By now, you may have heard of individuals hitting it big in the stock market. While this passive income strategy is not something you’ll immediately benefit from in a few months, it’s definitely something you should look into, especially if you’re in it for the long haul.
When the market is right, invest in dividend-yielding stocks. This will help you receive regular dividends each quarter.
Rent Your Car
This is one of the best ways in how to get passive income in Singapore. Some people may not be comfortable sharing their vehicles, but if you are not using them regularly, you can rent them out to your peers or visiting friends. If you have a larger vehicle like a truck, it can even be used for moving furniture or appliances.
REITs
If you have a fair amount of capital, then you can invest in real estate investment trusts (REITs) which are alternative income investments. The benefit of investing in REITs is that it is a passive investment vehicle, as income is automatically distributed to shareholders.
When investing in REITs, you should analyse the real estate market in order to make the right move. If the real estate market is saturated with investors, you may not earn as much as you’d expect. Thankfully, the REIT market in Singapore is performing well.
Curious about REITs in Singapore? Read this guide.
Peer-To-Peer Lending
Peer-to-peer lending is one of the most popular passive income streams in Singapore. By becoming a lender, you can receive interest payments on a monthly basis without doing anything.
Thanks to the internet, it is easier to connect people who need money with potential lenders like you. If you want to earn more passive income, increase your money lending totals. The best P2P lending platforms you can sign up for include:
- BRDGE P2P Lending
- Minterest P2P Lending
- Funding Societies
- CA Funding P2P Lending
Invest In A Business
Getting your hands dirty by creating a business through your own hard work is not a form of passive income. Instead, become an investor or a silent partner. For example, you can invest in a coffee shop and get part ownership of the business by simply providing capital. The business can then take care of its own operations, without requiring your physical assistance. Some of the most profitable business industries in the country today include:
- Catering
- Restaurants
- Cleaners
- E-Marketing
Dropshipping
This is one of the greatest ways to earn passive income Singapore. Dropshipping involves the selling of goods without going through traditional distribution channels. When you become a dropshipper, you can resell products from the internet and earn revenue from each product sold. The good thing about dropshipping is that you don’t have to stock any physical products, making it a hassle-free passive income stream.
Because you’re not required to personally touch the product before it’s shipped, you get to sit back, relax, and wait for your income to flow in.
When starting a dropshipping business, you can use services like Oberlo and Shopify, as they provide dropshipping services at a reasonable price. These platforms will allow you to set up a website and run ads on Google seamlessly.
However, dropshipping may not be the right choice for you if you don’t know the first thing about researching trends and marketing your products. This is because the success of a dropshipping business largely depends on the products being sold.
Credit Card Cashback And Rewards
As a credit card user, you can earn some passive income by getting cashback from your credit card company.
Although this is a form of passive income, it’s not as passive as your other options. You’ll need to plan well and spend money on credit cards that offer high cashback rates to get the maximum benefits. Here’s a quick guide on the best cashback credit cards in Singapore.
Fixed Deposit Accounts
If saving money is something you’re passionate about, you might want to sign up for fixed deposit accounts. They allow you to set aside money at specific interest rates, usually up to 1.4% per annum.
By making a fixed deposit account with a local bank or financial institution, you can benefit from higher interest rates compared to traditional savings accounts.
When you make a fixed deposit, you’re not required to do anything in order to earn interest. This makes it a passive income stream.
Take a look at this article on the best Singapore dollar fixed deposit rates.
Sell Online
Take advantage of your talent and skills. Take your time to create a course, offer music, or even photos for sale. If you have your own website, you can also set up an online shop for people to purchase your work. If this is too much of a hassle, there are other websites that you can use to sell your work. For example, you can sell photos on Shutterstock.
Affiliate Marketing
One of the best forms of passive income is affiliate marketing, as you don’t have to physically do anything to earn revenue. For example, if you love using TikTok, you can recommend products there. When someone purchases your recommendation using the link you provided, you can earn a commission.
Tips To Remember
To increase your chances of earning more money, remember these tips below.
Know The Risks Involved
For some other passive income streams, you may be required to invest large sums of money. So before you invest, it is advisable to know the risks involved. Just like other investment avenues, always do your due diligence.
Start Small
If you want to earn passive income but have limited funds, don’t hesitate to start small. Choosing a passive income stream that pays more at the start could be risky, as you may not be able to sustain the income flow.
Don’t Quit Your Job Yet
Even if you’re already earning passive income for a few months, don’t quit your day job just yet. Take this time to get used to your new cash flow.
Once you feel familiar with how a passive income stream works, then you can focus more on growing your money this way.
Assess Your Skills
Before you dive into a passive income stream, you must assess your skill sets. For example, if you want to try selling online courses, then you must know how to make one. If not, simply outsource this.
If you don’t have any prior background or skills for a passive income stream, you’re interested in, you can always acquire them. For example, if you want to try dropshipping but don’t know where to begin, research is key.
Be Realistic
Be realistic about the amount of time and dedication you need to put in. If you are unable to commit to your passive income stream, especially to get it up and running, you may find it hard to make money.
The most important aspect of passive income is the commitment to the path. The path itself may be challenging for some people, especially if you’re doing it for the first time.
Be Patient
If you rush through your passive investing journey, you may find yourself going in circles. So, to increase your chances of success, work hard and be patient. If you don’t see results in the first few months, don’t get discouraged. This is completely normal.
Remember That Time Is Your Most Valuable Resource
Keep in mind that you can do thousands of ways to generate income, but not all of those are the best ways to generate passive income. For instance, if it takes you 5 hours today to make S$300, and another 4 hours to make S$200 a week from now, it’s not passive because it consistently takes effort.
On the flip side, opening an investment account may take effort the first time, but because it grows consistently even without you touching it, it’s considered passive.
What Is The Most Profitable Passive Income Singapore?
There is no set answer for how to earn passive income and what the most profitable business is. Ultimately, it depends on your skills and the market you’re in. That said, some of the most profitable passive income options in the past 5 years include affiliate marketing, property rentals, and drop shipping.
How Can I Make S$1,000 Monthly Passive Income?
There is a common misconception that passive income is easy to make. However, making S$1,000 a month can only be done if you do enough research, and you make plans to have multiple passive income streams.
How Can A Beginner Earn Passive Income?
Everyone started out as a beginner, so don’t be disheartened or overwhelmed if you don’t have a lot of money to invest right away. You can earn a passive income even if you’re a beginner. The first thing you should do is research.
If you’re still a beginner, start small. Do your research to find the passive income idea that’s best for your skill and situation. This is the ultimate strategy in how to make more passive income.
A Word From OMY
Passive income Singapore can be rewarding, but it’s not a magic money-making strategy everyone can follow. The bottom line is that passive income is about having an additional income stream you can fall back on for your retirement, or to pay for certain expenses.
To know how to earn passive income in Singapore, you must be willing to research and plan accordingly. Once you’ve mastered the concept of passive income, you can use it to create a more flexible, balanced, and secured financial future.
