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Before you continue reading on, do check out our previous post “What is Financial Independence, Retire Early (FIRE) Movement and How do I Know if I am Already There” if you have not done so. If you have already read it, thank you for your support and do read on to find out more about “Investing to grow your money”.
With the rising cost of transport, food, utilities, housing and lots more, people are often looking for ways to make extra income besides their day job. In Singapore, we have people that make extra money by selling stuff on Carousell, doing Facebook Live Sales, driving for Grab or taking on Wedding Photography jobs.
Besides using your time to trade for money, why not make use of your money to make more money. This means while you were sleeping, eating or pooping, your money is working hard to make more money for you. How awesome is that!
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Below is the list of 7 things that you can invest in to grow your money which I have personally invested in before. I will also provide screenshots of the actual returns that I get into my bank account from making these investments.
Dividend Stocks are companies listed on the stock market that give out dividends to people who own the company’s shares. One dividend stock that most people should be familiar with if they have a phone line is Singtel. Another dividend stock that most drivers are familiar with is Vicom.
2. Exchange-Traded Funds (LION-PHILLIP S-REIT ETF)
3. Real Estate Investment Trusts (CapitaLand Mall Trust)
4. Singapore Saving Bonds (SSB)
5. Fixed Deposits (CIMB Fixed Deposits)
6. Savings Accounts (CIMB Fastsaver Account)
7. Crowdfunding (CoAssets)
The reason why these companies on the stock market give out dividends could be to reward shareholders for investing in the company. It could also be due to the lack of opportunities to invest the money and the company wants to give it back to shareholders.
Do take note that not all companies that give out dividends are good dividend stocks to invest in. There are criteria that you should consider first before investing in the company.
Below is a screenshot of the dividends paid into my bank account by Singapore Telecommunications Limited.
Besides dividend stocks, you can also invest in dividend-paying Exchange Traded Funds (ETF). ETF is an investment fund that invests in a portfolio of stocks. It allows you to own multiple stocks just by owning one stock of the ETF. Is like buying a basket of eggs and having shares in all the eggs in the basket.
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Let's say you want to invest in the tech industry but you do not know which company is going to do well. By buying an ETF that focuses on tech stocks, you not only have exposure to the tech industry as a whole but you are subjected to lower risk since your returns is based on the sum of all stocks in the ETF.
Investing in ETF reduces that trouble of knowing which company is the best to invest in and some do pay dividends such as the LION-PHILLIP S-REIT ETF which is a portfolio of Singapore listed Real Estate Investment Trust (REITS).
The LION-PHILLIP S-REIT ETF consists of stocks such as Mapletree Commercial Trust, CapitaLand Mall Trust, CapitaLand Commercial Trust, Ascendas Real Estate Investment Trust, and Mapletree Logistics Trust.
Below is a screenshot of the dividends paid into my bank account by LION-PHILLIP S-REIT ETF.
Did you know that the first Real Estate Investment Trust (REITS) launched on SGX was in 2002? 17 years have passed and there are now more than 35 REITS on SGX. What makes REITS different from the other stocks is the business model and mandate.
The main business model of REITS is to own property and earn rental income. In order to qualify as a REITS, it is required to distribute at least 90% of taxable income each year to enjoy tax-exempt status by IRAS.
Investing in REITs can be considered as investing in properties indirectly as you get to enjoy the rental income paid out to you as dividends and also benefit from the increase in the property value while not having to handle any of the paperwork or hard work involved in managing a property directly.
Below is a screenshot of the dividends paid into my bank account by CapitaLand Mall Trust
The Singapore Savings Bonds (SSB) was launched in 2015 to allow investors to invest their money with the Singapore Government and in return be compensated with interest. It can be considered zero risks since you are literally investing your money with the government who is definitely a lot more stringent and risk-averse compared to private companies that issue bonds.
Do note that the interest rate when I invested in SSB was about 2.2% pa. Compared to the rates now, it might be better to put your money in fixed deposits. You can click here for more information about Singapore Savings Bonds (https://www.mas.gov.sg/bonds-and-bills/Singapore-Savings-Bonds)
Below is a screenshot of the interests paid into my bank account for Singapore Savings Bonds (SSB).
Most of you would probably know what is a fixed deposit. It is basically locking up your money with the bank for about a year and being paid back your principal plus interest. Since the money is to be loaned out to others by the bank, you are being compensated with low-interest rates in the region of 1-2% and is principal guaranteed.
So far based on the research that I have done, CIMB’s Fixed Deposits give the highest rate at 1.85% pa. This is considered quite good compared to the fixed deposits by DBS which is only 1.40% for the same period.
Below is a screenshot of the interests paid into my bank account for CIMB Fixed Deposits.
The bank that you use to save your money is also important to choose wisely as well. If you were to have a savings account with DBS, you are probably getting about 0.05% pa. Now compare it with CIMB Fastsaver account which gives 1.00% pa.
Let's do a simple math calculation. Imagine someone who has $100,000 and put it into DBS savings account. Another person with the same amount of money put it into CIMB Fastsaver Account. There is no reinvestment of money and interest is taken out. At the end of 5 years, the more financially savvy person who put the money into CIMB Fastsaver Account will have $4,750 more money than the person with DBS savings account. Look at how expensive ignorance can be!
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Below is a screenshot of the interests paid into my bank account for CIMB Fastsaver Account.
Some businesses borrow money for various reasons. It could be due to a lack of working capital, delay in payments from vendors or business expansions. In order to overcome this issue, businesses would try to borrow money from the banks. Alternatively, they could also look at crowdfunding platforms such as CoAssets, Moolahsense, Seedin, and Funding Societies.
What these crowdfunding companies do is provide a platform for companies and retail investors to convene and offer each other what they need. For the companies, they are able to have access to capital to fund their business needs. For retail investors, they are able to get higher interest rate returns compared to fixed deposits and bonds.
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I wrote an article about crowdfunding sites previously which you can check it out here (https://justbeingernest.blogspot.com/2017/07/moolahsense.html) I have taken part in a few of these crowdfunding platforms before. Some I made money from it while there are also those which I lost money in. It is important to do due diligence when investing your money regardless of what is it and there is no such thing as zero risk products.
Below is a screenshot of the interest and principal paid into my bank account for my investment via CoAssets.
Now that you know what are the investment products that you can invest in to make money while you sleep, eat or poop, do take some time to seriously think through on how to grow your wealth. All of us have limited time each day to change our time for money. It is definitely better to start early than late. Let me know what other products that you invest in so that I can check it out too =) Go ahead to comment on it here and don't forget to subscribe via email or like our Facebook page for the latest updates! Stay tuned for our next blog post as I share how to save money while eating out with friends or family. Also let us know what you would like us to blog about next!
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