Wouldn't it be the dream to receive money without actually needing to work? With the majority of Singaporeans worried about having insufficient funds for retirement, passive income could provide the extra funds needed to help you supplement your retirement lifestyle.1 However, while the idea of generating passive income may be enticing, can it actually be done? In this article, we review 5 methods that you can consider using to generate a lifetime of income.
(See "How Much Should You Have In Your Emergency Stash?")
#1 Rental income
Room type |
Rent received* |
3- Room HDB |
$1,400 - $2,200 |
4-Room HDB |
$1,700-$2,750 |
5-Room HDB |
$1,800-$2,850 |
Executive Flat |
$2,000-$2,580 |
*Figures reflect the rental statistics of the 4th quarter of 2017.
Do you have a spare room in your house? If you do then perhaps consider renting it out to collect rental income. While the idea of living with strangers may not appeal to some, collecting rental income is possibly one of the more practical ways to earn passive income. Additionally, consider renting out the entire apartment if you have spare properties on hand. Rental prices start from $1,400 for a 3-bedroom HDB flat and goes up to $2,850 for a 5-bedroom HDB with condominiums and private properties able to fetch even higher rental prices. By renting out your other properties you could then potentially earn enough passive income for your daily expenses.2
(See "Can You Really Afford A Condominium By 30?")
#2 Car advertising
How would you like to get paid for driving your car? With car advertising services available, you can now convert your car into a moving billboard and have advertisements placed on your car. All you have to do is drive your car around and make sure you meet the minimum monthly distance required. In return, you get paid for these advertisements which could then help to cover your petrol and/or car maintenance costs. This thus lowers the costs of owning a car while also helping you to generate additional income.
(See "Here's How Money Can Buy You Happiness")
#3 Dividend income
A third option would be to receive dividend income from your investments. Paid out by a company to its shareholders, dividend pay-out varies with the amount dependent on a company's performance and profits. To receive dividend income, consider investing in unit trusts, Exchange-Traded Funds (ETFs) and/or stocks. Do also take note of the financial standing and past performance of the company to ensure that you will receive your desired dividend income in the long run.
(See "Income Focus List: Top Dividend Stocks For Your Portfolio")
#4 Bond coupons
Ever thought about being a lender to corporations? Bonds allow you to do just that, and receive income from the company's interest repayment. Investment grade bonds allows you to receive regular coupon payments semi-annually, with significantly less volatility on the overall value as compared to equities of the same company. Ideal for investors who favour a powerful but relaxing way to generate income.
(See "The Secret To Financial Planning (Pst, Coffee Helps!)")
#5 Annuities
Lastly, consider using annuities if you are looking to generate extra income to supplement your retirement lifestyle. By providing a regular stream of income for as long as you live, annuities prevent you from outliving your savings. This offers some reassurance knowing that you would be able to afford your desired retirement lifestyle. Additionally, while Singaporeans and Permanent Residents (PRs) receive monthly pay outs from CPF Life, they may be insufficient with the CPF Life Standard Plan offering monthly pay outs of approximately $720 to $770 each month.3 Therefore an annuity plan could then be used to help fill the shortfall required each month while in retirement.
(See "Want An Early Retirement? Find Out How Much It Costs”")
How FSMOne can help you get on track
Our team of friendly advisers are able to help you review your financial objectives, long term commitments, and offer you investment and insurance advice specific to your needs. If you would like assistance in reviewing your financial and protection portfolio, or simply to get a quote for an insurance plan,
Available Products on FSMOne Insurance |
Term Life, Whole Life, Critical Illness, Annuity, Health, Endowment from Manulife, NTUC Income and Tokio Marine Life Insurance *Please check with our advisory team if the product you want is available on FSMOne Insurance |
3Source: https://www.cpf.gov.sg/members/schemes/schemes/retirement/cpf-life
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