10 Perfect Passive Income Ideas for Physicians

16

As a physician, I am well aware of the current financial and legal pressures we all experience daily. The state of medicine is ever-changing, and sometimes it can be hard to keep up. Still, despite these realities, I also know that most of us are not looking for another day job. We choose to do what we’re doing because we enjoy it.

Still, wouldn’t life be so much better if we also had some additional, consistent streams of income? More money is great, but the real value here is that it would take some of the pressure off of us. It might free up some of our time. Even better, it would probably help us enjoy our day jobs more.

I’ve personally met some physicians who have figured out how to do exactly that, and it motivated me to do the same.

I’m most interested in reliable sources of income that can ultimately begin to replace my current income, and set me on the path to gradual retirement.

If this idea appeals to you as well, then you’ve come to the right place. Recently, I’ve begun assembling a list of ways to make some passive income that are absolutely perfect for physicians – from the obvious to the low risk, to the higher risk, to the more creative. (For more on my definition of PASSIVE INCOME, see here.) To see what I’ve found so far, keep reading.

1. High Yield Savings Account

This one may seem simple, but that’s only because it is. If you were to move your savings from a traditional, brick-and-mortar bank with a low interest rate and into a high-yield savings account online, over time you can make a surprising amount of extra cash. Online banks are FDIC-insured just like the traditional brick-and-mortar institutions, so your money is just as safe.

You can find online banks that give you a return up to 100 times higher than many traditional banks. When you look at it like that, it’s almost a no-brainer.

2. CDs (Certificate of Deposits)

These are like a savings account that you have to keep in place for a certain amount of time, for a guaranteed return. Again, simple, but a great place to park some cash that you may need in a specific amount of time and don’t need immediate access to.

3. Dividend-paying Investment Portfolio

Build an investment portfolio that pays out dividends (Stocks / Bonds / Mutual Funds). Dividends are payouts that companies give to their investors as a portion of their earnings. They’re often paid out quarterly. If you’ve already got an investment portfolio, it’s time to take a good look at which stocks, bonds, or mutual funds you own. You’ll see consistent returns from the ones that pay dividends. This is a fantastic way to earn passive income. Invest once and watch the returns pile up.

4. Invest in REITs (Real Estate Investment Trusts)

This is like a mutual fund that holds various real estate projects. Perfect for someone who wants exposure to the real estate market, but wants the investment to be totally passive. They typically pay higher dividends than stocks, however, transparency and liquidity are often lacking.

5. Own Rental Property

This one is fairly straightforward on the surface – just buy a property, find a tenant, and get some cash flow as your income exceeds your expenses. The initial capital needed can be steep, and might require a larger time commitment than other things on the list, however, the payoff can be huge and last for many years.

Read How I Bought My First Apartment Building.

6. Real Estate Crowdfunding

Crowdfunding is a newer way to invest, having emerged onto the scene just within the last few years. Most people have heard of sites like Kickstarter and GoFundMe, and a very similar concept exists for real estate. Developers are always looking to raise capital to fund their projects. Through the various online platforms, investors have access to these projects and can choose to invest in both residential and commercial properties. See the list of my favorite crowdfunding sites here.

7. Peer-to-Peer Lending

This option utilizes web-based platforms, such as Lending Club and Prosper (two of the best), that connect people who are looking for loans with people who are willing to lend. Lenders, in this case, are essentially acting as the bank.

Basically, people looking to borrow money will make a listing on the site. Those borrowers are then placed into a category and given a “rating” based on their credit history and rate. You, as an investor, will contribute money to these loans and then be paid back at the predetermined rate of interest. Invest and see those monthly interest payments deposited into your account.

Read the latest on my peer-to-peer lending experiment.

8. Create an Invention

If you’ve ever thought to yourself, “I wish there was a product that did this,” then invent it! Create a product, medical or otherwise, and sell it as a company or get royalties for it. It’s not impossible to figure out, I have many friends who have taken a concept to market. Don’t overlook an invention as a fantastic means of attaining passive income.

Read the True Doctor Series interview with Dr. Edna Ma, How I Launched a Business and Ended Up On a Deserted Island.

9. Create an App

Have you seen a problem that might have an app-based solution, medical or otherwise? These days, there are great resources to help take your idea out of your head to reality. If your app takes off, you can expect the checks to start rolling in.

10. Make It Big on YouTube

This might sound a little crazy, but again, I personally know physicians who have used this incredible platform to create some passive income for themselves. There are physicians acting as educators, entertainers, and musicians on YouTube, and collecting income through the ads that pop up on the videos.

Read the True Doctor Series interview with ZDoggMD, How Youtube is Helping Me Change Healthcare As We Know It.

Final Thoughts:

If you’re looking for a way to begin gradually replacing your income, these are just some of the best ways you can do it as a physician. Remember the idea of gradual retirement? Passive income streams like the ones mentioned here are perfect ways to allow you to spend more time with family, enjoy your day job more, and, of course, make a little money while you’re at it.

Have questions? Am I missing anything? Feel free to comment.

 

16 COMMENTS

  1. How do you get royalties for a product of invention? I have a few ideas I would like to invent or sell those ideas 💡

    • The first step is protecting the intellectual property by way of a patent. Start with that, at least a provisional patent. Then you can begin to approach companies with your protected product / invention.

  2. Half of these are not ‘passive.’ Creating an app or invention is hardly passive. Owning a rental can be tons of work. please define what you think ‘passive’ means.

    • Thanks for asking. http://passiveincomemd.com/what-is-passive-income/ gives a good summary of the definition I use. But in brief, it’s income that isn’t proportional to the time you physically put into acquiring it. It doesn’t mean it’s not without work or effort. It’s just that most of the work is done up front and it continues to pay off long after that initial effort. Real estate fits into that box. There’s definitely a spectrum but compared to what we do as doctors, where our compensation is directly linked to our time, most of these things are quite passive.

      I would consider a “successful” app or invention most definitely passive income. There are some pretty cool stories of physicians who came up with some amazing inventions and their incomes from it make their clinical incomes pale in comparison.

  3. Good suggestions. I have many of these. One word about the “app” idea. I had a great idea related to personal taxes that I tried to get off the ground with my accountant as a partner. I would say it’s difficult to do this unless you have a coder on your team. Hiring someone is not really viable financially unless the app is simple. When we finally got the quote for a coder to write what we wanted (and after doing lots of mock ups ourselves and getting a demo for investors) the estimate was about 750k just to really get started.

    It’s a shame because the idea is still awesome, but making the idea a reality is very hard without the IT piece. Some doctors may have coding experience but my guess is not too many.

    • 750k??? Is that a typo? That seems ridiculously excessive. No doubt most of us would have to hire a coder or team to get something like that off the ground. Were you able to get investors on board?

      • We pitched to an angel investor group. They were very excited about the idea but wanted to know who amongst us (doctor, accountant, salesman) was doing the coding. When they heard we were outsourcing it, the wind went out of their sails immediately. They did want to meet with us again once we brought a coder on board but that person proved elusive to find. Coders in our area are looking for the steady paycheck, not willing to gamble on a startup.

        It depends on your app and the size of the idea (amount of money that needs to be raised). This idea would have involved a lot of sensitive data storage, auto file imports, etc so it would have been involved.

        750k was really only enough to launch. We would have needed much more to fully fund.

        I have no doubt that simple apps could be successful for a lot less but the scope would have to be very limited. It’s a tough way to generate income imo.

  4. I was hoping the passive income would come from possessing the credentials of an MD. not from being a clever investor of which there are millions, nor from being creative, which MD’s have no time to do effectively.

LEAVE A REPLY