Business & Economy Personal Finance How to Build Passive Income in Singapore—Here are the Top Methods for...

How to Build Passive Income in Singapore—Here are the Top Methods for 2023

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Here are five ways to generate passive income in Singapore, from investing to property ownership and utilising your passion and hobbies


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The MAS Monetary Policy April Statement offered some good news: core inflation is expected to ease progressively in the lower half of the year, resulting in an inflation rate of 3.5% to 4.5% for the year on the whole. While it warned of a dimmer outlook for Singapore on the back of continued troubles in the global economy, the statement is nonetheless hopeful.

Troublingly, CPI-All Items inflation is forecast to be higher at 5.5% to 6.5% for the year, mainly due to a tight supply of COEs and firm accommodation costs. For the average Singaporean, everyday prices will likely remain elevated.

Perhaps there is no better time than now to consider increasing your income by taking on a side hustle or setting up a passive income stream. Here are five ways to generate passive income in Singapore, from investing to property ownership and utilizing your passion and hobbies.

Related: Cost of Living in Singapore: How Much Salary to Live Comfortably Here?

dividend reits stocks bonds
Source: Unsplash



  • True passive income on a regular basis


  • Dividends from stocks and REITs may fluctuate
  • Income from bonds may be low
  • Need to build up a large position to reach significant passive income levels
  • Does not offer much capital appreciation
  • Underlying stocks, properties, and bonds may fall in value

Investing is one of the best ways to achieve true passive income – all you have to do is to put in the money, let the market work its magic, and pay out returns in time.

Of course, to achieve a passive income stream, you have to invest in income-generating instruments such as REITs, stocks, and bonds.

Let’s start with stocks. Companies that have matured and achieved consistent profits often offer dividends to share profits with their shareholders. Each share held entitles you to a payout, for example, S$0.50 per share. So, the more shares you hold, the higher the amount you will receive.

Dividends may be paid out quarterly, every six months, or once a year, and it is this regularity that makes dividends attractive to those who invest for income. However, note that dividends paid out from one tranche to another are not guaranteed and may not be stable.

The idea is simple: Collect enough of these dividend-paying stocks, and you could attain a considerable passive income stream to supplement your regular income. And because you need to own the stocks to be eligible for the dividends, you’d be building up a stock portfolio simultaneously.

Similarly, REITs (real estate investment trusts) generate regular dividends for investors holding their shares. The difference is the dividends are mainly generated from rental income collected from the commercial properties held in the trust.

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Meanwhile, bonds – which may be issued by governments or private corporations – also generate passive income for holders. Instead of dividends, bondholders receive coupon payments throughout the duration of the bond.

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So, for example, if you have a 10-year bond with a coupon rate of 3%, you will receive 3% interest per year for 10 years (or until you sell the bond off). As bonds are traditionally negatively related to stocks, it’s a good idea to include a mixture of dividend stocks and bonds to hedge against market risks.

Dividends and coupons sound pretty appealing, so what’s the catch?

Generally speaking, dividend-paying instruments don’t offer much in the way of growth, so having too many income-generating assets may not be the best strategy for investors looking for capital appreciation.

Also, the underlying stocks, bonds, and properties may fall in value, bringing down the value of your overall portfolio.

Lastly, while it’s nice to live purely off dividend income, you’d likely need to have a large portfolio, perhaps seven figures, which may not be easily attainable for everyone.

Related: How to Pick Dividend Stocks For Your Portfolio

endowment insurance savings plan
Source: Pexels



  • Can choose to receive regular payouts or defer them to accumulate interest
  • You’ll receive insurance coverage for the duration of your plan


  • Such plans are often inflexible and require a disciplined approach
  • Investment returns may be poor compared to investing in the market

Endowment plans – aka insurance savings plans – commonly come with a cashback feature. This means you can withdraw from your plan up to a fixed amount every year.

In an endowment plan, the premiums you pay are invested by the insurance company on your behalf. In return, you are entitled to a certain level of interest on your premiums each year. Any cashback not withdrawn will also earn interest, although the rate may be slightly lower.

By compounding your yearly gains, your endowment plan grows in value. This also helps you have cashback without wiping out your endowment plan. And to ensure that your endowment plan continues to grow over the long term, your cashback amount is restricted to a percentage of the total premiums paid each year.

Based on the premiums you pay, you will also receive a certain level of life insurance coverage. Your insurer may also offer additional riders for coverage against other events, such as total and permanent disability or critical illness.

In summary, endowment plans can serve as a handy tool for those figuring out how to build passive income in Singapore and can act as a source of passive income that you can tap into whenever the need arises. Since the cashback you can withdraw is a fixed amount, you have clarity about how much additional income you’ll have each year, making it easy to plan your year-end holidays.

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You can also accumulate your cashback – say, over 5 or 10 years – and withdraw the entire sum at one go to meet large expenses, such as a wedding or a car down payment.

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However, be mindful that endowment plans come with strict terms and conditions, often fixed and immutable. Thus, you must be sure of your ability and willingness to commit to the plan’s duration once you sign up for it. The cashback amount is also fixed, so you should be cognizant of the potential limitations that may arise.

Related: Best Endowment Insurance Plans Singapore 2023

Rental income
Source: Unsplash



  • Can be lucrative, if managed properly
  • Scalable over time
  • Regular monthly income


  • Requires substantial starting capital
  • Must be prepared to deal with multiple issues, from property maintenance to tenant troubles

Another popular method for passive income is collecting rents on properties you own. This can range from renting out your spare bedroom to purchasing an entire condo unit, shophouse or office space and renting it out for income.

Given Singapore’s perpetual red-hot property market, this could be a prominent solution for those exploring how to build passive income in Singapore. But you’ll have to own a property, to begin with.

Also, while being a landlord is generally seen as good, the reality is far from glamorous. There’s plenty you’ll need to manage between property maintenance issues and troublesome tenants.

Importantly, you may make a mistake calculating your rental yield, overestimating your returns. This can quickly become a financial morass that may be difficult to escape. Hence, proceed carefully; it wouldn’t hurt to consult an expert.

Related: 8 Ways to Optimise Your Rental Property

food delivery rider
Source: Pexels



  • Potential for good pay, especially during peak periods
  • Flexible schedule, can choose your own hours


  • Need to have your own means of transport
  • May have unpleasant encounters while on the job

Private hire and food delivery are resilient mainstays of the gig economy, providing a viable option for those who don’t mind exchanging their free time for some additional income.

The main draw of such professions is flexibility. You can choose your hours, which means you can have a say in how much you want to earn.

However, the reality is a little more nuanced. Your earnings depend highly on customer demand for the day, but on the flip side, this also means the potential for good earnings if you can target the right timings, such as public holidays and peak periods.

Of course, you’ll need your means of transport appropriate to the role you choose. Also, as your chances of getting into an accident will be heightened due to increased exposure to the roads, you should make sure you have sufficient insurance coverage.

While the chances are slim, you may encounter a rude or unreasonable customer. If you cannot take such encounters in your stride, you may be badly affected, making the side hustle not worth your while.

part time tour guide
Source: Pexels




Lastly, being a part-time tour guide may be ideal if you’re particularly interested in history or the arts and love talking to others about it. The role will allow you to indulge in your interests while earning some income. This could be an excellent solution for those who want to know how to build passive income in Singapore.

There are some things to note, though. Firstly, you must obtain a tour guide license before you can formally work as one, even on a part-time basis. This means you’ll need to invest some time and be willing to undergo the required training.

Secondly, earnings can be sporadic, especially for part-time tour guides. This is because customers may cancel or not show up, or the weather may take a turn, which can affect walking tours that take place outdoors.

Additionally, being a tour guide can be a physically demanding job, involving a fair amount of walking while lecturing and explaining to your customers the various points of interest along the route.

You’ll also need to have good time management skills, as you’ll need to ensure the tours start and end on time.

**Want to invest in dividend-paying stocks to collect passive income? The easiest way is to sign up with a reliable online broker. Read our coverage of the best online brokerages and trading platforms to help you choose the best one. **

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The article originally appeared on ValueChampion.

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