The good news is, nowadays there are alternatives to investing in property. In other words, you would not need to buy a real property, like an apartment unit, in a traditional way where you become landlord who rents out an apartment unit.
The concept of investing in “invisible property” has gained popularity over the last few years. If you are looking to generate some passive income, such investing strategy is an excellent solution. Let us take a look at some of the best ways to make it happen.
Invest in real estate funds
Real estate funds come with many options, such as exchange-traded fund (ETF), real estate mutual funds and real estate investment trust (REIT). Basically, ETF is a single fund that offers a collection of bonds or stocks whose benefits include low-cost investment and broad diversification. Similar to ETF, mutual funds also allow you to seize investment opportunities that come with low fees and broad diversification.
On the other hand, REIT is an alternative for you if you are not interested in investing in physical property. Without having to be landlord, you can benefit from holdings diversification based on the type of property your REIT invests in.
Moreover, some companies in Singapore do not operate as REITs but they own and manage real estate, such as real estate developers and hotels. This will be a great alternative for you if you aim at investing in a specific type of property.
An alternative investment solution that you can opt for is using savings plan from an insurance company that can offer guaranteed return and dividend. The way this alternative work is rather simple and easy. You are required to pay a premium amount for a period of time and the amount will remain unchanged throughout the period. The insurance company would usually invest in different types of instruments, including property and real estate, to help grow your assets.
Coupon and dividend will then be distributed and paid out, depending on the policy of your insurance company. If you choose not to withdraw your dividend or cash your coupon, you can leave it in your account to accumulate higher returns from the interest.
This concept is similar to renting out your own apartment unit because it helps you generate passive income. However, this alternative is better because your insurance company will take care of the rest (see the detailed benefits below). And, you will be able to surrender your savings plan easily at the end of the day, even easier than selling your real property.
This investment solution is particularly excellent for existing property owners who are looking to invest in subsequent properties in Singapore. Because you are not investing in a real physical property, the noteworthy benefits offered by this kind of investment alternative include:
- No down payment is needed
- No additional buyer stamp duty payment
- No Total Debt Servicing Ratio (TDSR) will be applied
- When being compared to investing in a real property, this investment solution requires lower capital
- You are not required to pay for property tax and there will be no property agent fee
- You will not have to suffer from headache of finding a tenant, this becomes difficult when your property gets older
- You will not have to deal with maintenance, for example you do not have to worry about re-painting the wall of your rented apartment unit, fixing its washing machine, changing the air conditioner, etc
- Easier to sell out at the end of the term
+6594380070