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5 Passive Income Ideas in Singapore 2025: Ways to earn passive income stream

08 November 2023 | 5-mins read

In a rapidly changing economy, finding reliable passive income streams is more crucial than ever. As Singapore continues to evolve into a global financial hub, the opportunities for making passive income are expanding in 2025. Whether you’re a seasoned investor or just a beginner, don’t miss out the 5 ideas if you want to look at earning a secondary income besides your regular job.

Alternative income can be created with passive income streams from investments. By doing so, you open the door to greater flexibility and potentially better financial stability without having to actively earn income by working another job.

Curious to know how you can earn passive income in Singapore? Read on for some ways to start.

What is Passive Income?

Active income is gained from active participation in work (i.e. your daily 9 to 5 job.) On the other hand, passive income gives you secondary earnings that require lesser effort or time to maintain.

This would be an ideal income source, as you avoid needing to exchange more time and effort for more income.

Nonetheless, it is essential to address one common misconception about passive income: it does not mean that you can generate a secondary income without any effort on your part! While it may require less involvement compared to generating active income, you'll still need to put in some work to set up your passive income stream.

For example, earning passive income through real estate requires knowing which properties to invest in, and how to manage rental homes to earn decent returns.

Passive income Ideas in Singapore for 2025

Looking for ways to earn passive income? Here are 5 ideas to consider:

1. Investing in Savings Accounts

If you are a beginner in passive income looking for a low-risk investment option, you can start by putting your money into Savings Accounts to earn interest. Ideal for beginners like students and young adults who have just started working. Savings Accounts are a low-risk investment option which requires little initial fund to begin with.

Choose a High Interest Savings Account - which generally provides higher interest rates if you meet certain conditions like crediting your salary and spending on qualifying credit cards - to earn higher interest on your money.

2. Investing in Bonds & Index Funds

Another example of a low risk investment for passive income beginners are Bonds and Index Funds.

When you invest in bonds, you "lend" your money to an organisation. In return, you receive regular payouts (via coupon payments or dividends) after a predetermined period. Some bonds like Singapore Savings Bonds offer the benefit of guaranteed capital1, which means the initial investment sum you committed is returned to you upon maturity in full.

With Index Funds, you put your money into a diversified pool of assets (which may include stocks, bonds, or both) tied to the performance of a market index (e.g. Straits Times Index). The performance of the fund determines how much passive income you get.

Bonds and Index Funds are low risk investment option for beginners like students and young adults to generate passive income stream as they tend to be more stable. Despite the typically lower returns, they serve as a solid foundation for those looking to dip their toes into the world of creating passive income streams in Singapore.

3. Investing in Dividend Stocks

Dividends are profits paid out to shareholders of a company. By investing in dividend stocks, you earn passive income stream through dividend payouts. They are typically paid quarterly or annually, based on the company’s profits and its dividend policy.

However, it's essential to recognise that investing in dividend stocks carries certain risks. Your passive income stream can fluctuate based on market conditions and the company's performance.

Changes in the economy and shifts in the company's financial health can influence the dividends you earn, potentially leading to variations in your passive income stream.

4. Investing in Real Estate

There are 2 ways to invest in real estate: Rental Income and Real Estate Investment Trusts (REITs). Both serve as excellent alternative income sources for those looking to build passive income streams.

Choosing to earn rental income requires you to invest money to purchase a property and rent it out. With this option, you will have to take on the responsibility of setting your own rental fees, liaising with tenants and resolving any possible maintenance issues which may arise (e.g. fixing a broken toilet bowl or faulty aircon).

On the other hand, investing in REITs requires comparatively less effort and capital because you invest into a diversified portfolio of income-generating real estate properties. You'll receive passive income stream through potential dividends payouts, which depends on the performance of your REITs.

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5. Investing in Savings Insurance Plans

There is another way to create passive income stream which provides both potential wealth accumulation AND insurance protection. It allows you to generate passive income while safeguarding your financial future.

How do Savings Insurance Plans work? It's quite simple: you'll pay regular premiums for the selected plan. Besides the insurance protection it provides, the plan will accumulate cash value along the way. As you approach the end of the policy term, you become eligible to receive the accumulated cash value, helping you generate potential passive income for your financial goals.

No matter what financial goals you have, there are various insurance plans available to suit your risk appetite and investment preferences, making them ideal for beginners looking to earn potential passive income in Singapore. You can opt for capital guaranteed plans, or plans that can be customised to your financial goals.

Types of Passive Income: A quick summary

Type of passive income	Pros	Cons
Savings Accounts	Low risk, requires little initial fund to begin	Low interest rates
Bonds & Index Funds	Capital-guaranteed options available	Typically lower returns
Dividend Stocks	Earn from dividend payouts paid quarterly/annually	Higher risk, dependent on many factors
Rental Income	Collect consistent monthly payments from tenants	Need to liaise with tenants
REITs	Provides regular dividends and potential profits by selling REITs	Requires knowledge of the real estate industry, higher risk involved
Savings Insurance Plans	Provides both wealth accumulation and insurance protection	May offer lower returns compared to other investments

Boost your finances with passive income

The extra money you earn from passive income can come in handy in case of any unexpected expenses or provide additional funds to supplement your retirement planning.

Consider building a diverse investment portfolio using a combination of the passive income examples above, to fit your personal financial goals. A good rule of thumb is to have about 3-6 months of emergency funds2 saved up before you start investing.

It is important to exercise prudence in your investment choices. Conduct thorough research to select the best ways to earn passive income and be sure to only invest within your means. To make the most informed decisions about your financial portfolio, you can choose to seek the advice of Financial Consultants. They can offer valuable insights tailored to your individual financial goals, helping you by recommending suitable insurance plans for your circumstances.

Now that you have a better understanding of the various ways to earn passive income in Singapore, you're equipped to start growing your money with less effort. Take the first steps now to grow your wealth and build greater financial security and peace of mind for the future!