Mother and son spending time at home

How to earn extra income in Singapore for my family

As parents, you’re always looking out for ways to grow your money to better provide for your family and loved ones. A side hustle here and there… or perhaps by investing to get passive income in Singapore. A little more cash never hurts.

Having a stream of smart passive income can definitely benefit you and your family in many different ways: it can help supplement your current salary, so you can save up more comfortably for the groceries… a family holiday… your children’s multiple tuition and enrichment classes… even retirement – both yours and your parents’.

So, if you’ve ever wondered how to make your money work harder for you and earn passive income through investments, here are five smart tips to investing for passive income in Singapore:

1. Understand what is passive income and what are the benefits

It may be hard at first to invest your hard-earned money because of the risks involved, but the key to taking that first step is:

  • Understanding what is passive income; and
  • What are the benefits of passive income.

Simply put, passive income is steady income that comes from your investment “side hustle”. If structured and set up correctly, passive income has these benefits:

  • Does not require as much time and effort as you put into your 9 to 5 job; and
  • Can give you regular extra income without as much maintenance.

With the financial commitments required to support your children and parents, it is important to invest within your means. You can do this by establishing how much you are willing to invest, and with a little discipline, sticking to it.

There is also something for everyone who is interested in passive income investing. If you have a big lump-sum to invest, there are investments for that. If you are more comfortable with smaller, regular commitments, there are investments that allow you to do that too. For those, look out for regular savings plans such as POSB Invest-Saver, which is a popular option among parents seeking to save for their children’s education, or their own retirement.

(Read more: You do not have to break the bank to start investing.)


2. Invest within your risk appetites with different types of passive income

Before you start investing, you first need to understand your risk appetite. That’s because higher returns are typically accompanied by higher risk. If you have a lower appetite for risk, look for investments that provide lower returns such as Singapore Savings Bonds (SSBs). If you have a higher appetite for risk, that’s when you may want to look at investments that provide higher returns, such as dividend-paying stocks.

Risk versus Returns for different types of passive income ideas

Once you have your investment profile and financial objectives set, you can then start looking into the different investment opportunities to find the most suitable ones for you.

There are many investment opportunities available and each come with their own risks and returns. Starting your investment plan early means you will have a longer investment timeline to work with and in some cases, can achieve the same outcomes with lower risk (and returns), because time is in your favour.

3. Earn passive income through a dividend stock portfolio

Investing in dividend-paying stocks is another way, however it will be very important to search for companies with a good track-record that pays decent and stable amounts of dividends. These are the blue chip companies with boring but stable outlooks, which are more likely to have extra cash profits to pay their shareholders – compared to the next global success that is likely to be burning cash for their expansion plans.

Another investment option is to invest in Exchange Traded Funds (ETFs), which are based on market indexes. Again, look for those ETFs that track companies with a good dividend-payout track record.

Just remember: investing in stocks and ETFs requires some attention and monitoring. But in today’s digital, mobile world, you can easily incorporate it into your daily routine and schedule by adding it to the watchlist on your digital trading platform. With careful planning and some flexibility, you can keep a close watch on your stocks, fulfill other day-to-day commitments and enjoy quality time with the family.

Earn extra income through smart investments

4. Earn extra income with Unit trusts

For passive income side hustles that require less monitoring than the stock market, unit trusts might be for you:

  • Unit trusts allow you to be more hands off with your investments as they are managed by experienced fund managers who can provide support in research and other investment opportunities.
  • There is great variety with unit trusts that cover various geographies and types of investments (such as stocks, bonds).
  • There could be hundreds or thousands of companies within a unit trust. Look out for share classes that can provide you with regular payouts on a monthly, quarterly, or semi-annual basis.

If you prefer not to touch your cash, you can also invest with your CPF monies, or Supplementary Retirement Scheme (SRS) monies.

Putting your trust in a more experienced fund manager will help minimise the stress of constantly checking on your portfolio. With less time spent monitoring your account, you’ll have more time to spend where it matters – with your family and loved ones.

5. Earn passive income through property

Investing in Real Estate Investment Trusts (REITs) isn’t as expensive as purchasing a property on your own. REITs also allow you to invest in commercial properties such as malls and hotels, and earn rental income from the tenants.

A typical REIT process has three key components: first, money is raised from investors through an initial public offering (IPO) and is used to purchase the real estate; these purchased properties are then leased out to tenants; and finally, the income generated from rent is then distributed to investors such as yourself. In a nutshell, you earn income from rent without actually owning any property, but instead investing in one.

In addition, Singapore REITs (S-REITs) are required to distribute at least 90% of their annual rental income as dividends to unitholders, and these dividends are usually paid out at least twice a year, making REITs a good source of regular/consistent income. Like unit trusts, REITs allows you to spread the risk of investments, while having it professionally managed as well.

(Read more: How do you find a good REIT?)

Monitoring investments on a tablet

Be smart when it comes to passive income!

While there are plenty of ideas that may inspire you to generate more passive income, it still boils down to you making the right choice by taking the first step of keeping the future of your family in mind.

If you are a rookie investor, you can start by budgeting a small portion of your monthly salary for investments, even cut down a restaurant dinner or two and use that money to invest instead.

Once you start investing, you will learn the ropes and build confidence as you go along. In time, you would have had your fair share of monitoring your investments and knowing the right time to buy or sell, and even how to spot opportunities ahead of everyone else.

Once you feel that the time is right, you can increase your investment budget and further diversify your portfolio by allowing your earnings to roll with each monthly contribution by investing smart.

If you’d like someone to work through a portfolio plan with you today, let us know. After all, what are neighbours for?

Speak with a Wealth Planning Manager

Disclaimers and Important Notice
This article is meant for information only and should not be relied upon as financial advice. Before making any decision to buy, sell or hold any investment or insurance product, you should seek advice from a financial adviser regarding its suitability.

All investments come with risks and you can lose money on your investment. Invest only if you understand and can monitor your investment. Diversify your investments and avoid investing a large portion of your money in a single product issuer.

Deposit Insurance Scheme
Singapore dollar deposits of non-bank depositors and monies and deposits denominated in Singapore dollars under the Supplementary Retirement Scheme are insured by the Singapore Deposit Insurance Corporation, for up to S$75,000 in aggregate per depositor per Scheme member by law. Monies and deposits denominated in Singapore dollars under the CPF Investment Scheme and CPF Retirement Sum Scheme are aggregated and separately insured up to S$75,000 for each depositor per Scheme member. Foreign currency deposits, dual currency investments, structured deposits and other investment products are not insured.

Disclaimer for Investment and Life Insurance Products

Ready to start on your passive income investment journey?

Thank you. Your feedback will help us serve you better.

Was this information useful?

That's great to hear. Anything you'd like to add?
We're sorry to hear that. How can we do better?
Enter only letters, numbers or @!$&-/()',.