Personal finance can be a challenge for many dentists. Passive Income MD knows a thing or two about accumulating wealth, and his tips for physicians can help you, too. Continue below for some passive income inspiration.
The average debt for recent dental school graudates surpasses $200,000.
Dentists are great at a lot of things, but according to reports, one of those things is getting into debt. Taking the time to look into passive income strategies is worthwhile for paying off that debt and then some. If you’re unsure of how to increase your net worth while managing your own practice and patient load, Passive Income MD has a few suggestions that could help.
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 is 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.
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.
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.
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 invention as a fantastic means of attaining a passive income.
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.
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.