Time is one of our most precious resources. We need to use it as wisely as possible. Unlike money, we can’t earn back the time that’s already been spent – once it’s gone, it’s gone. Not one person on this earth has more time than 24 hours a day.
Passive income is generally defined as a stream of income earned with little or no ongoing effort needed from the individual receiving the passive income in order to grow the stream of income. Passive income is income that is not proportional to the time you physically put into acquiring it. This type of income will generate on its own, which allows you to focus on other areas of your business / work / family / hobbies / life. Simply put, it is literally making money while you sleep.
In contrast, active income (typically one’s regular job or additional part time jobs) is a direct exchange of your time and skills for money.
The simple graphics below will be able to share with you how different people allocate their money. The rich puts money into income generating assets that is able to fund their liabilities and build more assets. Once anyone can achieve that, he has “retired” from the rat race. Warren Buffett once said, “If you don’t find a way to make money while you sleep, you will work until you die.”.
However, creating passive income is far from easy. Some people chance upon it. E.g. Being able to sell a large number of professional looking photos online after taking up photography as a hobby. Some have to plough through years of hard work to finally be able to create a single stream of passive income. Most have to earn the first pot of gold before being able to start a passive income journey.
You will meet all kinds of obstacles along the way. However, these are compelling reasons why we all should start to build passive income.
Covid 19 pandemic makes us realize that our job is not an iron rice bowl. Especially if you work in trades that deals with Travel, Tourism, F&B, Conferences and Events.
Accelerated digitization of the world. Almost no job is safe from automation now. Recently, even a big bank in Singapore is displacing their contact centre with Artificial Intelligence robots to receive calls and answer queries. Bear this in mind, their contact centre cost is already low as it is running from halfway around the globe in another country in the first place. Even the disruptor is being disrupted.
Improved financial stability. 2 is better than 1. If we are able to have more streams of income, we will be more certain about our own future.
Reduced Stress. Highly related to the earlier point. When you have more sources of income, you will feel improved financial stability and in turn, less stressful.
Easier to achieve your goals and freedom of time. Be it financial goals or personal goals like earlier retirement / time to spend with your family. Having additional 1 or 2 other sources of income helps.
It gives you the ability to live and work from anywhere. Imagine you can be anywhere in the world, and your bank account will still grow. You can walk to an ATM machine in Paris, key in your pin and withdraw Euros to spend. How wonderful!
It is going to be exciting! This point is subjective. Not everyone will feel this way. Personally, I love the excitement of trying to create new and additional sources of income. It kept me going, learning and experiencing. I am not going to live again. Why not take this life and live to the fullest? The joy of successfully building each stream of additional source is beyond description in a few paragraphs. 😊
Having know “why” we should build passive income, let’s go through “what” are the things that can build your passive income. This list is definitely not exhaustive and we welcome you to introduce more to us. With this gig economy, I am sure there are secret methods to earn more money without having to spend money to build passive income sources.
Rent out real estates. I can write a whole article on this as like all Singaporeans, I am deeply passionate about properties. However, owning a second property in Singapore really cost an arm and a leg. On this passive income source in Singapore context, most of us can only rent out spare rooms in our HDB / condos. In recent times, I have also seen friends renting big units from landlords, convert them into co-living spaces, and sublet them out at a higher price.
Dividend paying stocks. This is one of the most common and traditional way of creating passive income. REITS investing are the all time favourite as it pays higher dividend. This method of earning passive income is easy to set up, low cost to maintain, stable and easily diversifiable. Not to sugar coat this method too much, do take note that it takes skills, knowledge of the market and ability to tolerate risks to take this step.
Buy annuities or put more into CPF accounts. Like buying stocks, this is easy to set up. The main difference between stocks and this, is that it requires even lesser time to maintain and receive income.
E-Commerce. Many gurus online have tried to conduct courses on drop shipping and how to sell products online to the rest of the world. You can also learn from countless websites and YouTube videos trying to teach you how to do this. Many has tried. However, few has succeeded. Do not be disheartened. The rewards are huge if you are successful in this area. Remember, the world is your gem.
Sell your hobby. If you are good in writing, start a blog or e-book. If your are able to design websites or create Facebook business accounts, or building apps, you may make a good living from working on such hobbies on weekends. If you stay near landed enclaves, you may also walk dogs daily and keep yourself fit at the same time.
Sell your skills. If you have expertise in certain area, especially within the digital space, you can package it and conduct courses. After the initial creation, there should be little work in repeating the content.
Affiliate marketing / blogging / vlogging. Social media influencers make some of the most money in this gig economy. They enjoy their life and is paid to enjoy. If you have the knack for it, give it a go!
It may be tempting to pick from the above and try to start something now. However, it will be good if you can speak to a subject matter expert who is already successful in that particular passive income idea. They will be in a better position to advise you.
Thankfully, in this modern world, they are plenty of options available using financial instruments. If you are ever thinking of starting your passive income from items 1 – 3, WE ARE the subject matter expert. Give us a ring, we have vast experience in those areas and will be able to give you insights to make an informed decision.
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