The term “passive income” gets thrown around a lot these days. Every online guru claims to have the secret to making millions in your sleep. But the fact is, “passive income” is not always easy to achieve and is actually a pretty loosely-defined term. It can be different depending on who you ask and at what time of day.
For example, a quick internet search turns up the following definitions:
“Passive income is an income received on a regular basis, with little effort required to maintain it.”
“It’s all about working hard now so you can reap the benefits later.”
– Pat Flynn, Smartpassiveincome.com
“A passive income stream is one where, once you’ve done the initial investment, there’s little or no upkeep to that investment required to maintain the income stream.”
– The Simple Dollar
While I believe each of these definitions has a place, let me begin by giving you my own definition.
For me, passive income is income that is not proportional to the time you physically put into acquiring it. In other words, “time in” does not equal “money out.” Put even more simply, you eventually get more than you put in.
“Income that is not proportional to the time you physically put into acquiring it.”
With all the different forms of passive income, this definition serves as a way to measure whether a certain method is worth my time. When in doubt, I simply put it up against this last statement to see if it fits the criteria.
Now, I’m a realist. I realize nothing in this world is handed to you. I know that creating streams of passive income is neither easy nor immediate. None of this is a “get-rich-quick scheme” (unfortunately). It takes time, smarts, and guts, but the payoff is well worth the investment.
How do I know this? Because I’ve met people who’ve achieved this. Strangely, however, almost none of those people were medical doctors. As a physician seeking the best methods of passive income, this is a gap I’m actively attempting to bridge for myself and others. Ultimately, it’s all about the freedom to do what you want with your time.
When I seek these methods of passive income, I’m looking for reliable streams that pay out on a monthly, quarterly, or yearly basis. That way I can begin to replace part of my own income immediately. . (To see what some of these ideas are, see my blog post on 10 Perfect Passive Income Ideas for Physicians.)
You see, I am on the path to a very gradual retirement. I’m not looking at a date thirty years from now and saying, “Boy, can’t wait to get there and begin enjoying my life!” Quite the contrary–I’ve committed a good amount of time to medicine, and I’d like to continue my practice as a doctor. But I also want to have more flexibility in life. I want to be able to spend more time with my family and have time to pursue other interests.
Ultimately, passive income is best described as a tool rather than a scheme. It isn’t about quitting your day job so you can enjoy life, it’s about giving you the freedom to enjoy your first passion – medicine – more fully. It can provide a work/life balance that most physicians in this day in age only dream of.
So let me hear it from you. Are you interested in passive income? Do you have your own definition for it? Feel free to share.