Saturday, March 10, 2012

Passive Income and how to get them

Been going through our finances, looking at replacing a car (reaching year 9 of 10 year COE) and changing to a bigger place recently. Figured we won't get far with whatever our day job pays us. There are many way to obtain passive income according to Wikipedia:

1) Earnings from a business that does not require direct involvement - Basically that means being an investor in a business or a non-active shareholder. Would love to know what kind of business and what kind of input I will have to make to obtain such an income. And then what about the risks involved?

2) Rent from property - My wife owns a 4-room HDB which has been rented out. A search for another property which started a long time ago came back to nought since the property market has risen to spectacular heights and the government has come up with an Additional Buyer's Stamp Duty (ABSD). It's easily another S$30,000 to the national coffers for a S$1mil property. We love our country but we don't love it that much... Heard that the resale market is slowing down and the asking prices for several big developments are coming down. It may not be long before its a good time to strike... just hope they take away that pesky ABSD...

3) Royalties from publishing a book or licensing a patent/intellectual property - Given my writing skills I don't think I will have much chance here. But who knows what might pop out of my brain when I wake up tomorrow~

4) Earnings from internet advertisements on websites - First I need a website. Then I need an idea for a website. So far the only thing I can think about is one for bowling because that is the only passion I have now. But then again there are many bowling websites out there already. Although none yet for the Singapore market... Doable... doable...

5) Dividend - Some income here. Its long term but relatively stable form of income. Nothing much to add here except we are preparing for the next crash to buy in a few more blue chips~

6) Pensions - In Singapore context that means CPF. You work you pump in 20% of your salary and the government will throw in another 16%. Good deal when you have a mortgage to finance. Bad deal when one way or another you cannot use that money to finance your property...

Of the 6 methods above I have some interests in items 2, 5 and 6. Totally given up hope on 3. Would love to look into 1 and 4 in more detail. One will involve capital investments while the other will involve more time and effort. I can't say we have neither but I can't say we have much of them either. In the current financial climate everyone is cautious with their money so taking out money for a business is pretty risky but he who risks will win, no?

The website is a doable thing but it will take alot of discipline and effort to accomplish. Looking at how I've been updating this blog for the past several months, I think it will take a lot of willpower for me to get this done...

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