How to earn a passive income in Singapore

Joanne Poh
June 21, 2024

When misfortune strikes, your emergency fund can step in to save the day, footing the bill for unexpected expenses and offering a layer of financial security. An emergency fund is there to catch you when you fall.

You’ve probably heard of the saying “A passive income lets you make money while you sleep”, but is it really possible? Can you genuinely earn a passive income in Singapore? 

The answer is yes, you can.

Whether you aim to bolster your savings or make some extra cash on the side, passive income could be your answer. The best part? You can start today!

From making your spare cash work harder for you to launching an online business, this guide will cover the essentials to help you begin earning a passive income in Singapore. Let's dive in!

Types of passive income in Singapore

Higher saving yields as passive income

Unlocking passive income  isn’t rocket science, heck, you don’t even need to lock up your money! One of the easiest ways to get started is by parking your spare cash in the right place For example: 

1.Fuss-free savings accounts

Many of us keep our spare cash in savings accounts that offer a sad 0.05%. Fuss-free savings accounts work like these accounts, except on nitro! 

All you have to do is add your spare cash to these accounts, and you get high interest rates with no conditions, and no fuss.

Chocolate Finance is one example, offering 4.2% per annum on your first S$20,000. That’s about an extra S$840 per year, just for parking your money with them.

That’s way better than most current fixed deposit rates and you can access your money whenever you need it. What a way to have your cake chocolate and eat it too! 😜

2.High-interest savings accounts 

Banks offer high-interest savings accounts that reward you with higher saving rates if you fulfil certain criteria. 

For example, credit your salary, save, and spend via your OCBC 360 account to unlock rates of up to 4.65%! You can even unlock top gear and hit up to 7.65% by insuring and investing with them. That’s an extra $7,000 per year on a $100k account - perfect for that Japan trip you’ve been thinking about 😏

3.Fixed deposit accounts

Fixed deposits are like time capsules that multiply - bury your cash and unearth it later for your rewards. But these days, finding good spots to bury your cash is as difficult as finding a needle in a haystack.

4.CPF life

It’s the most underrated form of passive income, backed by the government! Did you know that you can earn up to 5% on the first $60,000 of your combined CPF balances (for those below 55)? 5%! 

That’s probably higher than your salary increment!

Plus, you don’t even need to lift a finger. 

If you have a job, your boss is already contributing to your CPF! Of course, if you want to max out your returns, you may want to top up your CPF to $60,000. You’ll even enjoy some tax relief while doing so. 

But remember, you won’t be able to withdraw your CPF funds in the short term, so don’t go all in! Refer to the Central Provident Fund board website for more information about CPF interest rates and how CPF works.

Business opportunities for passive income

If you have spare time on hand and don’t mind the risk, a side hustle could become a significant source of passive income, when done right. 

Here are some business opportunities for a passive income to consider:


You might be thinking “Freelancing isn’t passive!” But, hear me out. The easiest way to start a business is to start freelancing, here’s why. 

You’ll learn the ropes and everything they don’t teach you in school about running a business. From getting leads, and closing sales to delivering your service. You’ll also get to build your portfolio and client base. With these skills, you can start outsourcing various parts of the business and unlock your passive income. 

Freelancing doesn’t have to be complicated either. You could start by offering writing services like what I’m doing now, services like photography or videography, or if you love teaching, you could even start tutoring kids! I also have friends who went from being freelance swim coaches to launching their own swimming academy!

2.Start your own home business

Since the pandemic, we’ve seen an increase in home businesses selling bakes, coffee, and even stickers. Like freelancing, you’ll need to do most of the work during the initial stages of your home business. But the rewards will be sweet.

Other popular home business ideas in Singapore include beauty services like hairdressing or manicures, sewing services, retailing handmade goods like bags and accessories, design services, accountancy services, private tuition, and many more.

Not sure where to start? 

Explore your hobbies and skills! You could turn what you love into a business idea.

3.Online businesses

If becoming a Tiktoker or Youtuber has always been your dream, then give it a go! You might become Singapore’s Mr Beast or Khaby Lame, with your own online empire. 

But remember, building an online business will take time and effort. Beware of get-rich-quick schemes!

Other popular online opportunities for passive income include graphic design, digital marketing services, building e-commerce brands, and more.

Investment strategies for a passive income

Building a business usually requires capital, time, managing people and clients, dealing with an endless trail of emails/text messages, worrying about cash flow, and…you get the picture. It may not be for everyone. 

So, instead of risking your resources building a business, why not “put your money to work” by investing?

Here are some investment strategies for a passive income you could consider:

1.Singapore savings nds

Imagine having an unbreakable piggy bank that grows over 10 years!

Singapore Savings Bonds (SSB) are like savings accounts issued by the Singapore government, and they pay out interest every 6 months.

The best part is, you can choose to unlock your piggy bank anytime and get your money plus whatever interest you’ve earned.

There are a few catches to a deal this sweet. First, you can't hoard SSBs, there's a limit of S$200,000. Second, interest rates are based on the Singapore government securities rates, which is “meh” most times.

2.Dividend stocks

You probably have a basic POSB or DBS bank account that offers a 0.05% rate. But did you know that DBS Bank pays 4.98% to its shareholders? That’s even higher than what the DBS Multiplier account is offering!

DBS isn’t the only dividend stock in Singapore. Imagine if you owned a portfolio of dividend stocks that sent money straight to your bank account regularly, regardless of how well you performed at work!

As a bonus, in Singapore, dividends are not taxable which makes dividend investing even more appealing. Wouldn’t we all have way more money if our salary wasn’t being taxed? 

3.Real estate

Another popular investing strategy for passive income is real estate investing where you buy properties and rent them out for income, much like playing Monopoly. 

Real estate investing requires a more strategic cash flow and debt management as well as higher capital compared to dividend investing. 

It may not be for everyone. But if you have won Monopoly before, you probably have an idea of the crazy rewards that come with successful real estate investments.

Tax implications of having a passive income

Now, you’re probably wondering “If I make more, I’ll need to pay more tax, right”? 

Well, not exactly. 

According to IRAS, only “income earned or derived from Singapore is chargeable to income tax”, with a few exceptions. Here’s a quick summary of the types of passive income mentioned above and their tax implications:

Types Of Passive Income In Singapore Is It Taxable?
Savings Account No
Credit Card Bonuses and Cashback No
Side Hustle or Business Yes, generally
Commission or Income as Influencer Yes
Capital Gains from Stocks or Real Estate No, generally
Rental Income from Property Yes
Dividend Income from Stocks No

I’m no tax expert, so refer to the IRAS guide on what is taxable here for more information on how you’re being taxed in Singapore.

Common pitfalls of passive income

Passive income opportunities in Singapore are not all rosy, I’ll spill the beans on some common traps that could save you from painful decisions here, so don’t skip this section!

1.There Is no such thing as a Free Lunch

If you’ve read the list above, you’ll undoubtedly come to the conclusion: there isn’t a passive income that is truly “passive”

Truth hurts but let’s face it, you’ll need to put in some time and effort to build and maintain your passive income. Even fuss-free savings accounts and high-interest savings accounts don’t last (*cough* UOB *cough*).

So make sure to stay ahead in the game, and the returns will definitely be worth it!

And always beware of:

2.Scams and get-rich-quick schemes

Scams and get-rich-quick schemes prey on greed - the idea of earning money without having to do any work is very tempting. If someone asks you to provide ‘capital’ on the promise that it will grow and reward you over time, your job is to find out how it works and if the payout is sustainable.

Do not make decisions in the spur of the moment. Give yourself a week or two to mull over it. 

It has been proven by psychology studies that the pain we feel when we lose outweighs the pleasure we feel when we win. It’s always better to miss out on a too-good-to-be-true deal than lose your hard-earned money.

3.Overextending your resources

Let’s face it, it is impossible for you to unlock all the passive income streams at once, so be chill and don't get too carried away. 

Instead, focus your energy on one new passive income stream at a time. That way, you will be able to maximise your returns and be sure that your passive income is sustainable.

Tips for maximising passive income

1.Emergency fund

Having an emergency fund allows you to protect your passive income streams during the rainy season. Imagine you needed $10,000 for an urgent surgery and you had to sell your stocks for a 50% loss during the bear market to afford it. That’s a double whammy! So always have an emergency fund! It should be stored in a trustworthy, liquid, and easily accessible account. Chocolate Finance offers 4.2% per annum on your first S$20,000. Interest is paid out daily, so you can withdraw anytime without worrying about losing your passive income. SSBs at a high yield are also a good option because you can redeem them at any time.


Why stop at one when you can have multiple streams of passive income? Having a diverse range of passive income protects you against the risk of a loss or drop in passive income should circumstances change. For example, imagine if you owned rental properties during the pandemic and couldn’t secure tenants in the lockdown. There goes your passive income, plus you have to cover the cost of maintaining the property. A more recent example is when UOB One reduced its rate lately. If that was your only stream of “passive income”, you would be in an uncomfortable place. 

3.Hunt for high-yield opportunities that are safe

We have limited resources, so allocate them to the best high-yield opportunities where possible. But again, remember to do your own due diligence and stack the odds of success in your favour!

Building a passive income in Singapore is easy, you just need to start!

I've shared a variety of ideas on how you can earn passive income in Singapore. The ball is now in your court. 

Take the first step towards creating a more prosperous tomorrow by exploring these strategies and setting your plans into motion. All the best!

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