5 ways to grow your ‘honey pot’ (truly) passively in Singapore

  • 5 ways to grow your ‘honey pot’ wealth  (truly) passively in Singapore5 ways to grow your ‘honey pot’ wealth  (truly) passively in Singapore
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Singaporeans are busy bees. As of 2019, we were already ranked the second-most overworked city in the world; and life in the hive can be tough.

And while most of us would love to have different honey streams and accumulate a full pot, it’s a challenge to find time to take on a second job or side gig. But that doesn’t mean that you are out of options.

Singapore is a financial capital, and with it comes a hive of financial activity. That means besides drawing income from work, we also have options to passively grow our honeypot. Here are some methods to consider:

  • Unit Trust Funds
  • Exchange Traded Funds
  • Singapore Real Estate Investment Trusts
  • Robo-Advisers
  • Insurance Products with a Savings Component



1. Unit Trust Funds

Bees do not make honey alone. They are team players, synchronising their efforts towards what will benefit the colony in the long run; and that is similar to what unit trust funds are.

In a unit trust, multiple investors pool their money to buy a portfolio of assets (e.g. stocks, bonds, commodities, and many others). This portfolio is then managed by a full-time financial professional (the fund manager), who receives management fees and sometimes a percentage of the net performance returns.

Investors are not burdened with the day-to-day decisions of which assets to buy, sell, or hold; the fund manager handles all of it.

And the sweet pay-off? Investors in a unit trust may receive their returns in the form of dividend pay-outs (and perhaps capital gains as well, if they decide to sell their units in the fund) depending on the respective type of unit trust invested into.

Take note though: unit trusts often have specific investment objectives; for example, a unit trust could invest mainly in a geographical region (e.g. Asia, USA, EU), or emphasise a certain asset class (e.g. equities, corporate or government bonds, gold).

The different objectives and approach of each unit trust means they are not “one size fits all” – different unit trusts can have different risk levels, that may suit different risk appetites. Some bees venture far, some bees prefer to stick closer to the hive.

The decision on which unit trust to pick should come after consultation with a financial professional.

2. Exchange Traded Funds

Exchange Traded Funds (ETFs) are all the buzz these days.

ETFs also involves investors pooling their capital to purchase a portfolio of assets; however, the assets in the fund will mirror a particular index.

For example, the index used might be the STI, the Nasdaq, the FTSE 100, and so forth.

ETFs are listed on stock exchanges, so they can be bought and sold just like regular stocks.

Because the fund only tracks the index, there’s no need for an active fund manager to make decisions like what to buy or sell; the whole fund can be run by a simple computer programme. This means lower management fees, which might potentially mean better returns.

Beware of a potential sting though: if an index doesn’t perform too well, an index fund will follow suit (but like a sting, those bumps will smoothen out over sufficient time).

3. Singapore Real Estate Investment Trusts (REITs)

How are landlords like beekeepers?

Answer: We may think the job is easy, just waiting around for others to make the honey. But in reality, it takes hard work. Likewise, landlords spend huge amounts of time on keeping their “hives” and “bees” happy.

REITs provide a passive alternative to owning income generating real estate assets. Using a REIT, investors pool their funds to purchase a portfolio of real estate assets. The assets are then managed by the REIT’s professionals, who handle a variety of responsibilities from finding tenants to maintaining the buildings.

The rental income from the properties is then passed on to investors, in the form of dividends.

Note that in Singapore, REITs that pay out 90 per cent of their taxable income receive special tax transparency treatment by IRAS, thus incentivising good dividend pay outs; this is different from equities, where companies may or may not give out dividends.

REITs are also more liquid; they are easy to buy and sell unlike physical real estate, and tie up less of your capital. The minimum to start investing is lower, compared to buying physical property.

Think of it as owning multiple hives for honey, without having to feed and care for every one simultaneously.

4. Robo-Advisers

Bees are some of the most systematic and organised insects - they do not just wander out at random, they have planned routes and responses; that is why they are so successful at keeping the hive going.

One of the best ways to invest with a system is to use a robo-adviser. This is not an investment in and of itself; rather, it is a computer programme that allocates our capital to buy, sell, and hold various assets, according to the goals we set for it. Besides being passive, a robo-adviser helps us to stick with our long term investment plans, without letting emotion or impulse get in the way.

An example is UOB Asset Management Invest (UOBAM Invest). Simply let this robo-advisor know your financial goals, and it will allocate your money to various investments to help you meet your goals. Success probabilities for each goal is available for you to track investment performance via the portfolio planner tool.

The busy bees running the app will regularly review and rebalance your portfolio to make sure it stays relevant.

5. Insurance products with a savings component

Bees have a lot of natural predators; but while some bees may get swatted, the hive must go on. And the closest analogy to that is to be well-insured. Just as bees ensure there’s a good supply of honey to last through the winter, we need to make sure we are provided for in rough times.

After all, there is no point in having elaborate investment plans when it can all be wiped out by a single crisis.

Fortunately, there are insurance products that also include passive ways to grow your wealth. One example of this is an endowment plan, which grows your wealth until it matures (it could be 10 years, 20 years, etc. depending on your preference.)

Upon maturity, you will receive a lump sum pay out, which you can use to pay off your remaining loans, pay for your children’s education, or other needs.

If something goes wrong however – such as death or total permanent disability – the endowment plan will also provide a pay-out to your beneficiaries.

The range of insurance products with a savings component are very diverse and it is important to consult a qualified financial advisor to find the appropriate plan.

Or, go for a mix of strategies

Bees do not confine themselves to one type of flower or to one area – they are constantly adapting and on the search. You should be as well; it is possible to have a portion of your portfolio run by a robo-advisor, another portion in insurance plans, some in REITS, and so forth.

All of these passive ways of growing and protecting your wealth, so your portfolio can be productive as a bee, without you having to work like one!

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