Setting aside different accounts and trying various strategies to grow your money is worthwhile. While working a typical 9 to 5 position five days a week for a paycheck is part of life’s inevitability, there’s nothing wrong with options and earning some extra cash here and there.
So how does one get more expendable income? Passive income! This is cash flow that comes in when you’re not actively working to earn it. Sounds too good to be true? Here are some simple ways to start you off on the right foot.
High Yield Savings Account
Using this type of savings account is simple for a newbie investor! A high-yield savings account is a special account that usually pays 20-25 times the national average of a standard savings account according to Investopedia.
Of course, this savings account should only be used as an overall portion of your finances. Meaning, this isn’t an account to put all your savings into. If it’s used as an emergency fund, keep around six month’s worth of living expenses. What if you’re using it as a nest egg savings? Put a few hundred dollars into it per month and then withdraw at the end of the year for your big purchase!
Singapore Savings Bond (SSB)
Another option is opening a Singapore Savings Bond, otherwise known as an SSB. The Singapore Government fully backed these and you’re able to get your investment amount back with no capital loss if you so wish. These savings bonds are open to any individual 18 years and up.
As a low-risk option, these accounts increase interest each year until the 10th year. If you hold on to your SSBs until maturity, you’ll reap a high return. If there’s an emergency where cash flow is needed, these accounts also have high liquidity, meaning you can withdraw investments at any point in time no matter the reason.
Short, Medium, and Long-Term Goals
These financial goals are a little different, so let’s talk through them! Short-term goals are financial goals within the next 1 to 5 years. Some types of short-term goals are buying a new car, furthering your education, or planning a big travel trip! If you’re aiming for short-term goals, a savings account yielding at least 2% is a great option.
Medium-term goals are between 5 – 10 years. These include paying off loans and debts, including a home payment or college education debt. If you’re wanting to save up for medium-term goals like this, earning that 2% interest in an account is great, but you can also think through trusts and investment-linked funds that are low risk.
For long-term goals, think 10+ years into the future. This will primarily be retirement planning and housing loans. Again, the 2% yielding accounts are optimal, but you also have the choice of medium to high-risk investments. Of course, diversification is key!
Real Estate Investment Trusts
Now onto some fun things! Investments in real estate can offer great payoffs and these investments can be long term. The unfortunate part is that few can afford a home, let alone a second property for rental income. But you know what you can do? You can invest in REITs! Real Estate Investment Trust, or REITs, earn a nice passive income through the dividends.
According to The Smart Local, “These are listed trusts that own properties, so whatever rental income they make–a portion is also paid to you as dividends. You can also invest in REITs through ETFs, like NikkoAM-StraitsTrading Asia ex Japan REIT ETF which gives investors access to Asia’s well-known REITs.”
Summary
While not exhaustive, these four steps will get you started on diversifying your assets and making some passive income while you and your partner watch TV on the weekends!
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https://thenewageparents.com/how-to-invest-and-grow-your-money/