How to Start Earning Passive Income in 3 Ways

Imagine doing something once and getting paid for it every month. Wouldn’t it be something you’re dreaming of? That is what passive income is.

Passive income is more attractive than active income because earning passive money means you still receive payments regularly for work that has been completed in the past or requires little to no effort to complete every day.

It’s like you get money while you sleep! Now, who wouldn’t want that?

Let money work for you

Robert Kiyosaki, the author of the all-time bestseller Rich Dad, Poor Dad once said: “Don’t work for money, let money work for you.”

We used to think having a stable job is the ultimate measure of fulfilment... and well, having money to buy what we need and what we want. Yes, having an active income (meaning the steady monthly payments we receive) is essential. But what if it’s not enough?

Here’s where having a passive income source enters the equation. It supplements our active income, so we have the funds to do what we want, for example, travel the world, support our parents and families, pursue higher education, commit to something we love, help the needy, or even save for retirement.

Unlike money, time is limited. It cannot be bought, and we only have a fixed amount of hours per day. Although you will not be completely free of worry, passive income allows us to spend our extra time doing things we like rather than just working to pay the bills.

With a passive income source, we can stop working just for the money. Instead, money will work for us. We’ll just sleep soundly at night, do what we usually do, and still get paid.

The option to focus on building money rather than simply living the life we currently have brings financial clarity and speeds up how fast we can achieve our financial goals.

3 ways to earn passive income

Don’t get us wrong. Creating passive income requires a lot of time, effort, and money.

There are so many opportunities to start earning passive income, and each comes with its set of pros and cons. We’ll introduce 3 ideas and we’ll leave it up to you to choose one that suits you best.

1. Affiliate marketing

Anybody with a social media account, a blog, or a website can explore affiliate marketing to get passive income.

You might have seen this being done by popular bloggers, celebrities, or even your friends most active on social media.

Affiliate marketing works by connecting or advertising a third-party product on your personal page. Every time a customer clicks on your link, you’ll get paid.

For example, in a Facebook group for home interior design enthusiasts, you can post your affiliate links to a furniture shop. When someone clicks on your link, you’ll receive a certain commission. Easy, right?

2. Rental properties

This option is one of the most popular ones. If you have extra space to rent out, you can have a stable source of passive income. You can rent it to students, foreigners and expats, and even tourists (now that borders are slowly reopening).

Setting this up might be the hardest part, as you’ll need to do renovations and look for tenants. But once you have these settled, you literally can just sleep at night and just wait for the monthly rent to come.

If you do not want the hassle of being a landlord, you can also hire a professional management firm to handle your property.

See also: Property Investing in Singapore: Dos and Don'ts

The only drawback that pushes a lot of people away from this option is the capital it requires. However, if you’re really keen, you can always opt for a bank loan and do your best to pay off the loan with the rental income you’ll be getting.

3. Dividend stocks

One of the simplest methods for you to generate passive income is through dividend stocks. Dividend stocks are basically stocks that pay you money either monthly or quarterly whenever the company makes profits.

After buying a stock of a company and holding it, the company would redistribute a part of its profits back to you in the form of dividends. You then have the option of keeping the money or reinvesting it in more shares.

The most popular dividend stocks include Coca-Cola, Apple, Johnson & Johnson, and Unilever. However, you can’t just anyhow buy these stocks just because they give out dividends. You also need to review their business fundamentals besides their dividend yield.

This list can go on, but we believe these three are the most popular choices to create passive income. It’s high time you consider these options and let money work for you.

Learn more ways to create passive income. Join our free investing bootcamp with Pauline Teo.