Wealth Accumulation Today: How to Build a Passive Income for Millennials

One of the biggest arguments amongst Millennials today is what do we do with our money? Save OR Invest?

While saving for our retirement is logically sound, we procrastinate more and more because there never seems to be any concrete ideas that seem structured, safe and worthwhile for us to consider.

It’s definitely enticing to find the next best get rich marketing scheme, or go for another course that teaches us how to start our dream business. But how many of us can say that that’s the one model that works for us and guarantees our success?

The thing is we as millennials are not different from any other generation, if anything we are less stable when it comes to job security due to our continuous hopping around, we face increasing costs for basic necessities compared to our parents. Finally, we rarely meet anyone that has a lump sum to invest into our retirement confidently. Ultimately, we know planning for our retirement is important but we just don’t have the time, less the resources to think about generating an income to sustain us through our lives.

Is it then still sound to think about wealth accumulation for our retirement? Or even just for life-style enhancement?

Of course it is! I’ll show you why below.

Why do we need a passive income?

If we look to Google on wealth accumulation, there’re going to be a 101 definitions and meanings. Particularly for this article, I want to define wealth accumulation as “Using less to accomplish more, letting $1 do the work of many dollars”. This is precisely what I want to show you, starting small, and more importantly, starting early, ensures that we make our money work as hard as we do for that better life.

There are however, a few common thoughts that have been around this issue, however should any of these ring a bell, I do encourage you to read on!

Click the above image to enlarge.

I hope you’re still with me!

Before we go into that, a good first step would be to identify which stage of your financial life you’re in!

For this article in particular, I would be focusing on the first 2 stages, where most millennials would be within our financial lives.

Why should we still prioritize generating a continuous stream of income then?

As mentioned, we are no different from the previous generations, BUT we face increasing costs going forward due to inflation.

As millennials, we are gifted the option to chase our dreams of becoming business owners, becoming an entrepreneur and being our own boss. It makes us take more and more risk in our careers on top of inflation.

Doesn’t it then make more sense to ensure that we build a passive income to ensure we have a financial parachute regardless of our career choices?

Even more so then, we need our money to work harder for us. Ensuring this helps give us the confidence that we are not just relying on ourselves.

Undeniably, we work hard for our money. We work long hours to prove that we are valuable in our jobs. But the sad truth is that we mostly live month to month with our income when all we want is to earn enough fast to retire in comfort. We can probably take all the risks in our careers and with our money now, we can even drive for Grab and earn a pretty decent living. But we all talk about the same thing: “We want to retire early and let our money work for us through a passive income.”

A common misconception is that we need a lot of money to start. However, what we actually need is a more systematic, and proven process that makes our money work for us instead of relying on the next big Multi-Level Marketing (MLM) ‘get rich’ Youtube course.

Let’s look at some examples of how we can “use less to accomplish more”. Let’s assume a monthly investment/premium of $200.

*illustrations taken from fundsupermart.
Click the above image to enlarge.

To illustrate, when we put our money in a bank (even with a multiplier), gives you at max 3%, assuming you hit ALL their requirements
– eg. Credit your salary, credit card spend, bill payments, invested money

The thing is, when we put our money in a bank, the bank actually continuously invest our money (that’s how they make money as well), HOWEVER, we don’t get to participate in the huge investment returns. We get back that max 3% interest rate as per our favorite Terms and Conditions.

Compared to the returns seen above, we can definitely make sure our hard earned money works EVEN harder for us.

It is scary to invest or to even consider taking your money out of the bank account. Hence, it should be done in a structured and safe manner that gives you a reasonable return.

The main consideration here, is how are you going to start making your money work hard for you?

Investing in today’s tech driven world is so simple to do, but difficult to get right. Usually, we aim to make sure we get a few things done with our investments

  1. Decent growth
  2. Stability and diversified risks
  3. Dividends that gives us a passive income

This then leads to your own risk appetite, your ability and willingness to accept risks that justifies the type of investment you should make.

The main result we want to see is that we are confident in our investments and we don’t have to solely rely on our income to survive what the years to come.

Why should I start now? 

Building up a passive income at this point of time in our lives doesn’t seem to make much sense. Why do this when we’re so far away from retirement?

However, there are actually so many uses for a continuous stream of income (passive income) that could be applied to us even before retirement.

Click the above image to enlarge.

There are tons of things we could use a continuous stream of income that we don’t see. Aside from the more popular “Retirement Income”, this continuous stream of income could be used in ways that really makes the financial burdens of life that much simpler.

You could think of, allowances to give either parents/future children, servicing your insurance premiums, further continuous investments, grocery money, or even that additional bonus at the end of the year for the holiday you and your partner want to take! The possibilities are endless!

Click the above image to enlarge.

For those who want to start off their investment journey, a typical start would be to ensure your ‘base’ is supported with a safe fund that grows consistently and pays out dividends.

This can be achieved through dollar cost of averaging.
– Placing a fixed amount of money into a particular investment for a regular period of time

The illustration above makes use of two financial tools, unit trust investments (that pays out dividends = passive income) and annuities (insurance product that guarantees a yearly/monthly payout, typically used for retirement planning).

One thing to note is that we can’t control the market, however what we can take control of is (1) how much we invest and (2) how often we invest that suits our comfort level and (3) which fund we choose to invest in:

  1. Starting your investments through regularly investing into a fund (using dollar cost of averaging)
  2. Taking the dividends after to service the premiums for your annuity/endowment (retirement income)
  3. After all premiums are paid for, dividends are still there, payouts from annuities will begin and you have two streams of ‘passive income’ that will last a lifetime

There are more than a 1000 funds out there that we can place our money into. At the end of the day, what is important is finding a fund that helps you achieve your goals.

What can YOU do NOW?

A common thought for us is that the longer we are in the workforce, the closer we want to be to generating that continuous ‘passive income’ that we can retire with.

The common misconception though, is that we can ONLY start when we have a lot of money or capital to play with. What I hope you (the reader) can see now is that your ‘passive income’ journey can be started off even when we’re fresh in the workforce if we allocate our money to the right places!

If you have thoughts of building that passive income but you’re unsure of how to start, please download the guide below to see how we can take the next step towards accumulating your wealth in a safe and structured way that ultimately YOU would be comfortable with!

Click HERE to download “Guide to Kickstarting your Unit Trust Investments!

Article by Leon Lee
Email: leon.lee@gen.com.sg

The writer is a Financial Services Consultant representing GEN Financial Advisory


If you want to know more about Wealth Accumulation or any other enquiries, you may contact me through whatsapp, schedule an appointment with me or fill up the form below and I will get back to you as soon as possible.


Leon Lee
Financial Services Consultant

RNF No. LLM300038680
Bachelor’s Degree in Economics


April 2021
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