6 ways to grow your ang bao money into passive income in 2026

What happened?

With Chinese New Year comes a familiar question: what should we do with the ang bao money we receive each year?

Because it arrives as a festive bonus rather than earned income, it’s easy to underestimate how quickly it adds up.

Left in a regular savings account, it earns little and often gets spent before we realise it.

But ang bao money can be a practical starting point for building passive income.

Whether through fixed deposits, Singapore Savings Bonds, dividend ETFs or Singapore REITs, even a modest amount can begin compounding over time.

The more important consideration isn’t the size of the sum, but how it fits into your broader financial plan.

In this article, I’ll share six ways to grow your 2026 ang bao money into passive income, even if you’re completely new to investing and starting with a small amount, based on your risk appetite and investment horizon.

6 ways to grow your ang bao money

One of the biggest mental barriers to investing is the belief that you need a large lump sum to begin.

In reality, most people don’t start their investing journey with tens of thousands of dollars. They start with spare cash, bonuses, or festive money — just like ang bao.

The key thing to remember is this: starting small is completely fine. 

When it comes to building wealth, time matters more than starting big. 

A modest amount invested consistently over many years can potentially grow more than a larger amount invested much later.

Here are six ways you can start depending on your comfort level with volatility. 

#1 - Fixed deposits - Guaranteed returns with lock up

If you’re cautious by nature, that’s completely fine. Not everyone needs to jump straight into the stock market.

One of the simplest ways to put your ang bao money to work is through a fixed deposit.

Fixed deposits are offered by banks and function similarly to a savings account. The key difference is that your money is locked in for a specific tenor — whether that’s one month, six months, one year, or even longer. In exchange for committing your funds for that period, you typically earn a higher interest rate than a regular savings account.

This makes fixed deposits suitable for those who prioritise capital preservation and predictability.

Unlike many investment products, fixed deposits are capital guaranteed. They are also covered under the Singapore Deposit Insurance Scheme, which protects up to S$100,000 per depositor per bank.

The drawback is that you may lose all your interest earned if you decide to withdraw your fixed deposit before the lock-up period is over.

Because of this, fixed deposits are generally considered one of the safest options available, but they also tend to offer lower yields compared to market-based investments.

If you’re simply looking for a safe way to earn more than a regular savings account without taking market risk, a short-tenor fixed deposit can be a practical starting point.

To get the latest list of best fixed deposit rates this month, check out our guide to the best fixed deposit rates in Singapore.

For those who received ang bao money in USD, you can also find out the best foreign currency fixed deposit rates in Singapore here.

#2 - Singapore Savings Bonds (SSBs) - Safe investment with flexibility

For those who prioritise capital protection, Singapore government-backed options like Savings Bonds can also be part of a conservative income strategy.

SSBs are government-issued bonds with step-up interest, meaning the longer you hold them, the higher the average interest rate you enjoy. 

They offer predictable returns while retaining flexibility.

They have a 10-year maturity but allow monthly redemptions with a small fee. 

The latest 10-year average return of 2.16% is lower than the rate of 2.25% p.a. offered by the previous SSB.

As of 16 February 2026, our SSB interest rate projection estimates that the next SSB may offer a 10-year average return of approximately 1.98%.

If you redeem early, your principal is returned in full, and interest is pro-rated based on how long you held the bond.

Interest is paid every six months, and the step-up structure rewards long-term holding.

This combination of capital protection and liquidity makes SSBs appealing to conservative investors who want stability without fully locking up their money.

However, SSBs have a minimum investment of S$500, which means they become more accessible once your ang bao money reaches that level.

For a deeper explanation, check out our guide to Singapore Savings Bonds (SSBs) here..

If you are deciding whether to apply for the current issuance of the SSB or wait for the next issuance, check out our SSB interest rate projection here. 

#3 - CPF savings - Long-term compounding for retirement

Almost every Singaporean is familiar with the Central Provident Fund (CPF), a government scheme that helps you save for retirement. 

If you do not need your ang bao money for many years, topping up your CPF Account can be one of the most powerful, low-risk ways to grow your money.

You currently earn 2.5% per year on your CPF Ordinary Account (OA) and 4% per year on your CPF Special Account (SA) balances – both higher than the latest yields on 6-month T-bills. 

On top of this, there’s an extra 1% p.a. interest on the first S$60,000 of your combined OA and SA balances, capped at S$20,000 for OA.

Your CPF Special Account earns 4% per year, with additional interest on the first S$60,000 of combined CPF balances.

While this is not income you can spend immediately, it compounds steadily and helps you build towards higher CPF LIFE monthly payouts in the future.

For working adults, voluntary CPF top-ups may also provide tax relief.

It may not feel exciting, but over decades, it can be extremely effective.

#4 - Dividend-paying ETFs - Diversified income with small capital

With smaller capital, building a diversified portfolio of individual stocks can be difficult.

Dividend-paying Exchange-Traded Funds (ETFs) solve this problem by allowing you to invest in a basket of companies in a single transaction.

Instead of relying on one stock, you spread risk across many companies — which is especially helpful when starting with modest sums.

For example, Straits Times Index (STI) ETFs provide exposure to major Singapore blue chips. Singapore REIT ETFs offer access to multiple property trusts across sectors. 

Bond ETFs provide fixed-income exposure. We’ve also covered the top 10 Singapore ETFs with highest dividend yields in 2025 here.

Dividend-paying ETFs distribute income periodically, allowing your ang bao to generate cash flow over time.

The minimum investment for SGX-listed ETFs is typically just one share, making them accessible even with modest ang bao amounts.

If you’re new to ETFs, you can learn more on what ETFs are and how they work here.

#5 - Singapore REITs - Income from real estate

As your capital grows and you become more comfortable with investing, Singapore REITs are worth considering.

REITs own income-generating properties such as shopping malls, offices, logistics warehouses and data centres. Instead of buying a property yourself, you invest in a professionally managed portfolio that collects rental income.

Because Singapore REITs are required to distribute at least 90% of their taxable income, they are naturally structured as income vehicles. 

Many pay distributions quarterly or semi-annually, making them popular among income-focused investors.

Some popular REITs in Singapore include CapitaLand Integrated Commercial Trust (CICT), CapitaLand Ascendas REIT, Mapletree Logistics Trust, Mapletree Industrial Trust, and Keppel DC REIT, with distribution yields generally ranging from around 4% to 6% depending on market conditions.

However, REITs are not without risks.

As REITs take on debt to buy properties, REITs are sensitive to interest rate movements as a rise in rates will result in higher finance costs, thus leading to lower distributions.

Real estate is also cyclical by nature, and the REIT’s properties could suffer a valuation decline should an economic downturn occur.

To find the right Singapore REIT for your portfolio, check out our best Singapore REIT with highest dividend yield screener. 

If you would like to gain broad-based exposure to Singapore REITs in a simple way without analysing individual REITs, learn more about top Singapore REIT ETFs here. 

#6 - Singapore blue chip dividend stocks - Income with growth potential

Beyond real estate, you can also use your ang bao to invest in large, established Singapore companies that pay regular dividends.

Blue-chip stocks have long track records and resilient business models.

Some examples of solid blue-chip stocks include DBS Group, United Overseas Bank (UOB), Singtel, and ST Engineering. 

Many typically provide dividend yields of between 4% to 6%, alongside the potential for long-term growth.

Unlike REITs, which focus primarily on income, blue-chip stocks provide exposure to operating businesses that can grow earnings over time. This means your ang bao could generate both dividends and capital appreciation.

Of course, dividends are not guaranteed, and share prices can be volatile. But for long-term investors, blue-chip dividend stocks can offer a balanced mix of income and growth.

Instead of spending your festive money on something temporary, investing in quality businesses allows your ang bao to keep working long after Chinese New Year is over.

To find the right Singapore blue chip stock with highest dividend yield for your portfolio, check out our best Singapore high dividend stocks screener. 

Things to do before you invest your ang bao money

Before thinking about passive income or returns, it is important to get the basics right.

Ang bao money may feel like extra cash, but how you treat small amounts often shapes how you manage larger sums in the future. 

Building good habits early matters more than maximising returns in the first year.

#1 - Build a simple cash buffer

The first question I would ask is whether I already have sufficient emergency savings.

A common guideline is to keep three to six months of essential expenses in a liquid account. This buffer protects you against unexpected events and ensures you will not need to sell investments at the wrong time.

If I do not have this buffer yet, my ang bao money would not go into market investments. Instead, I would place it in a high-interest savings account or a short-tenor fixed deposit where the capital remains safe and accessible.

We’ve compared the best savings accounts in Singapore and latest fixed deposit rates to help you make your cash work harder while keeping it easily accessible.

Stability should come before returns and liquidity is one of the best defences against uncertainty. 

Having enough cash on hand means you won’t be forced to sell investments at the wrong time or rely on credit if something unexpected happens.

#2 - Set expectations as a first-time investor

It is also important to set realistic expectations, especially if you are new to investing.

Passive income does not mean immediate income. Dividends take time to accumulate, and market-based investments will experience fluctuations along the way.

If your ang bao amount is modest, the initial returns may be small. That is normal. At this stage, the objective is to understand how different instruments behave and to build consistency over time.

Often, the biggest return from your first ang bao investment is not the yield earned, but the discipline developed.

Passive income calculator

You can find out how much passive income your portfolio could generate with our calculator.

This tool helps you estimate your total potential earnings across a mix of investments, including fixed deposits, SSBs, T-bills and more.

What would Beansprout do?

If I had to sum it up, I’d treat ang bao money as a low-pressure way to begin.

I wouldn’t overthink it or try to optimise every dollar. 

First, I’d make sure my foundation is solid. If my emergency fund isn’t fully built yet, I’d prioritise liquidity through a high-interest savings account or consider strengthening it using the latest fixed deposit rates we’ve compared. Financial stability comes before passive income.

If I don’t need the money in the near term, I’d decide based on the amount I received, how long I plan to invest it, and my tolerance for market volatility.

If I’m more conservative and want capital protection and have S$500 worth of ang pow, I could consider Singapore Savings Bonds. 

If I’m comfortable taking on market exposure, I’d likely begin with a dividend-paying ETF rather than jumping straight into individual REITs or blue-chip stocks. ETFs provide diversification from day one, which is especially important when starting with a few hundred dollars.

If you prefer broad exposure to blue chips without picking individual names, you can learn more about the Straits Times Index (STI) ETFs.  Alternatively, if you prefer diversification without picking individual REITs, you can also gain exposure through Singapore REIT ETFs.

As my portfolio grows over time, I might gradually add selected Singapore REITs or blue-chip dividend stocks to enhance income and introduce more targeted exposure.

To screen for Singapore REITs with lowest price-to-book valuation or highest dividend yield, check out our best Singapore REIT screener. 

To screen for other Singapore stocks with attractive dividend yields and potential upside, you can explore our Singapore dividend stocks screener. 

If you have not opened a brokerage account yet, you can also check out Beansprout's guide to the best stock trading platforms in Singapore with the latest promotions to invest in blue-chip stocks, REITs and ETFs.

If I’m confident that I won’t need the money for many years, and especially if I’m thinking about retirement planning, I would also consider topping up my CPF. While CPF doesn’t provide immediate cash flow, the 4% interest in the Special Account and the additional 1% on the first S$60,000 of combined balances make it a powerful long-term compounding tool. For working adults, voluntary top-ups may also come with tax relief.

You can learn more about the various options to generate passive income in Singapore here.

Ultimately, the real value of ang bao money isn’t in chasing the highest return. It’s in what it helps you start.

Even small steps today can turn festive money into long-term passive income, not through luck, but through consistency, one that compounds quietly year after year.

And once your ang bao money is working for you, the next step is simply to stay consistent.

Read more about Chinese New Year promotions to leap into prosperity in 2026 here.

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