You may have noticed prices rising in Singapore unless you’ve been living in a hut in the Mandai forests and growing your own food.
The Consumer Price Index (CPI), which measures overall inflation in Singapore, increased to 7.5% year over year (y-o-y) in August 2022 from 7.0% y-o-y in July 2022.
While the Core Inflation reported by the Monetary Authority of Singapore (MAS) (which excludes prices for lodging and private transportation) increased sharply from 4.8% in July 2022 to 5.1% in August 2022.
As for this year, Channel News Asia has reported that the Singapore economy faces an “uncertain and fragile” outlook in the near term, as the slowdown in the global electronics industry and recent bank collapses abroad dampen growth prospects.
This circumstance serves as a stark reminder that having numerous sources of income is now considered as a necessity rather than a luxury.
In addition to providing a cushion against the effects of a recession, alternative income sources open up opportunities. They could support your 9–5 job, give you a way out of the grind, or just let you live up to the adage, “the golden rule of wealth building is to never stop working”.
Income comes in two forms: active and passive
The money that is earned directly from the job that is done is known as active income.
‘Exchanging time for money’ is the phrase used to describe this practice.
On the other hand, earning money without putting in any effort is called passive income, and it may be generated by investing in various assets.
The concept of passive income has been more popular in recent years since it allows people to make money while they sleep and without having to be physically present.
However, keep in mind that passive income typically requires a significant initial time and financial investment.
Having said that, passive income is unquestionably worthwhile, especially for individuals who aspire to an early retirement and a carefree lifestyle.
Here are a few different kinds of income sources for you to think about:
Income Stream Types
- Income from Earnings
- Profit Income
- Interest Income
- Dividend Income
- Capital Gain
- Rental Income
1. Earned Income
Earning money through doing what we do for a living is the most prevalent income source that most of us are aware of.
Most of us trade a large chunk of our time for monetary compensation, and this is our principal means of financial support.
This type of revenue is active income.
While it’s true that passive income has gotten a lot of attention, it’s still crucial to diversify your income streams, especially when you’re just getting started.
This is so that your capital can be used to create passive income before it is built up through your working income.
2. Profit Earnings
Profit income is the cash earned through the sale and purchase of goods and services.
Instead of working for money, people exchange goods for cash to make money.
Nowadays, more digital items are emerging on the internet, opening up the possibility of profit income for all of us, where skills and knowledge may be simply exchanged for money.
Additionally, higher prices might be charged for high-value products, increasing individual income.
3. Interest Earnings
These days, high-yield savings accounts are extremely popular.
Most of us enjoy searching for savings accounts with the highest interest rates and checking around to take advantage of the perks.
Why then do we receive interest rates?
We are essentially lending the bank money when we deposit our savings.
The bank will then lend the money to borrowers, earning interest on the loan and pay deposit account holders interest as well.
We refer to this as interest income.
The same holds true for bonds like the Singapore Savings Bond (SSB), where the issuer receives a fixed-term loan of money in exchange for a coupon payment that represents interest income.
4. Income from Dividends
The emphasis on starting investments early has never been higher than it is now, with articles all over the place yelling “START. INVESTING. NOW!”
This is likely the preferred source of income for proponents of investing, and being able to live off of dividends is likely the ultimate objective for many.
Cash payments received in exchange for holding shares of stock in a corporation are referred to as dividend income.
They are normally paid every three months, giving investors with sizable investment portfolios a consistent income stream.
Although relying only on dividend income is undoubtedly enticing, it is vital to consider asset allocation and take into account the varying levels of risk associated with various types of investment products.
It is essential to exercise caution and keep a variety of retirement income streams in place if one wants their nest fund to be sustainable and last a lifetime.
5. Capital Gain
A growth in an asset’s value that makes it worth more than its acquisition price is referred to as a capital gain.
Real estate or investments may be used for this.
The boomer generation enjoyed a golden period during which they could observe sky-high levels of financial gain.
Current properties are still being sold for appealing prices, even though this trend is less pronounced presently, enabling homeowners to keep their gains.
As markets are unpredictable in the near term but often trend upwards over the long term, this income stream for investments may be quite favorable for those with a long term perspective.
The fact that capital gains are not taxed in Singapore, which is a blessing, makes this income stream even more alluring.
6. Rental Income
Rental revenue is exactly what it sounds like: money you get from renting out premises that you own.
Renting a house or commercial real estate spaces are two examples of this.
Although not typical, you might be able to earn $800 by renting out a room in your HDB apartment.
Contrary to other revenue streams, rental income doesn’t require any additional “skills” and may be useful as a secondary source of income.
For HDB apartments, make sure to confirm your eligibility to rent with HDB and request their approval before the tenancy begins.
Original works are protected as intellectual property and cannot be used without the owner’s permission. People would have to pay the owner for their consent, of course.
Creations can take the form of documents, works of art, patterns, or even computer operating systems.
The beautiful thing about this sort of income is that it may be generated continually once the product is finished, unlike other types of revenue where work only needs to be done once to receive payments over an extended period of time.
Income Streams That Anyone Can Have
The things mentioned above are some income sources that you can use to start.
Today, it is possible to have multiple sources of income, and many people are doing so successfully and moving closer to their goals of becoming millionaires.