Earning an income doesn’t have to stop at your monthly salary. With the right investments, your money can generate returns on its own — quietly growing in the background while you focus on life and work. Passive income is about making your savings productive, not speculative. For Malaysians looking to strengthen their finances, here are six practical ways to create steady, long-term income streams that work for you year after year.
1. Dividend stocks
Dividend stocks are shares of profitable companies that pay out a portion of their earnings to shareholders. In Malaysia, many blue-chip stocks — such as Maybank, Public Bank, and Tenaga Nasional — pay regular dividends with yields ranging from 4% to 7% a year.
Dividends are usually paid semi-annually and provide predictable cash flow. The best part? Dividend income in Malaysia is tax-exempt for individuals (for the first RM100,000 in dividend income), and there’s no capital gains tax on stock profits. That makes dividend investing one of the most tax-efficient ways to grow long-term wealth.
2. Real estate investment trusts (REITs)
REITs allow you to earn from income-generating properties like malls, hotels, and offices without having to own or manage them yourself. They’re listed on Bursa Malaysia and pay regular dividends, usually quarterly or semi-annually.
Some popular Malaysian REITs include Sunway REIT and KLCCP Stapled Group, with average yields around 5% to 6%. REITs are required by law to distribute at least 90% of their taxable income to shareholders, making them a reliable source of passive income. If you want regional exposure, you can also consider Singapore REITs through local brokers or regional ETFs.
3. Employees Provident Fund (EPF)
EPF is one of the safest and most dependable long-term income sources in Malaysia. It paid a 6.3% dividend for 2024, its highest since 2017, with a 10-year average of 5.9%. Your EPF savings are essentially risk-free and grow steadily over time.
Although it’s a mandatory contribution, you can make voluntary top-ups to accelerate your retirement savings. These top-ups are also tax-deductible up to RM7,000 per year, making EPF not just safe but also tax-efficient. For conservative investors, this is one of the best “set-and-forget” income builders.
4. Government bonds
For investors who value stability and capital preservation, government-backed securities are among the safest options available. Malaysian Government Securities (MGS) and Government Investment Issues (GII) are bonds issued by the government to raise funds for national development. In return, investors receive fixed coupon payments, typically every six months until maturity, making them reliable sources of passive income.
Yields on these instruments usually range from 3% to 4%, depending on market conditions and tenure. MGS are conventional bonds, while GII are Shariah-compliant alternatives structured based on Islamic finance principles. Both are considered virtually risk-free, as they are fully backed by the Malaysian government.
Investors can buy them through licensed banks or brokers, or the Bond+Sukuk Information Exchange (BIX Malaysia) platform. They are ideal for conservative investors looking to preserve wealth, balance a portfolio, or reinvest income for predictable returns.
5. Amanah Saham
Alternatively, you can consider Amanah Saham Nasional Berhad fixed-price funds like Amanah Saham Malaysia (ASM) or Amanah Saham Bumiputera (ASB) for Bumiputera investors. These funds have a strong track record of consistent dividends. For example, ASB paid 5.75% in 2024 and the unit price remains fixed at RM1, meaning you won’t lose your principal.
These funds are especially suitable for Malaysians who prefer steady income without market volatility, and who value capital protection alongside consistent annual distributions. They can be purchased and redeemed easily through major banks, ASNB branches, or online platforms such as myASNB.
6. Peer-to-peer (P2P) lending
P2P lending allows you to lend money directly to small businesses via regulated online platforms such as Funding Societies, CapBay, or B2B Finpal. Returns can range from 5% to 15%, depending on the borrower’s risk level. However, this is the riskiest option here. Businesses can default, and you could lose your principal if they fail to repay. Consider this only if you understand the risks and can afford to take potential losses.
The fifth perspective
These six options range from very safe (EPF, government bonds, Amanah Saham) to moderate risk (REITs and dividend stocks) and higher risk (P2P lending). The smartest approach is diversification; spreading your investments across different instruments to balance risk and reward.
Start with one or two strategies that fit your comfort level and goals. As your experience grows, gradually expand into others. The key is to start early, stay consistent, and let your money work for you over time because financial freedom comes not from how much you earn, but from how well you invest what you keep.
