Having more than one type of income stream — in particular, a source of passive income — can provide protection in a difficult market and might even help ease the productivity pressures from your job.
“It’s always nice to have multiple sources of income, so you’re not dependent on one thing,” says Nisha Mehta, a North Carolina radiologist and the founder of the online community Physician Side Gigs (www.physiciansidegigs.com). “Over the last few years, the importance of that has become even more relevant to physicians.”
Some potential sources of passive income are described below, but it’s important to note that none of these are truly “passive.” They all require at least some work at the outset, as well as an initial investment, and they may involve the risk of loss. In general, it takes time for passive income sources to generate significant income, so it may be years before these investments truly start to pay off.
That said, as a doctor, you’re used to trading your time for money. The goal of passive income is to find revenue sources that require less of your time while producing regular income. Establishing one or more streams of passive income can provide significant financial flexibility for physicians, whether you’ve recently launched your career and are building your financial foundation, or you’ve got your sights on retirement. Passive income might even allow you to retire early or reduce your hours.
“I’m a big fan of not having all of your [income] eggs in one basket,” Mehta says. “Having a second or third source of income can allow you to take a step back if you’re feeling burnt out. You can say, ‘I’m going to cut back a half a day and give myself a break, and I can afford to take that income hit because of passive income.’ “
Scammers like to prey on physicians, so make sure you do your due diligence before investing money in passive income opportunities. If you have a financial planner, talk to them about your plan to build passive income, and work with them to determine how the plan fits in with the rest of your earnings situation and your short- and long-term money goals.
Physicians should carefully consider all potential investments in order to understand associated risks and the amount of time the venture might require. Last year, more than a quarter of physicians invested in a stock or company that turned out badly, and another 11% made a real estate investment that did not work out.
There’s no reason to rush into such projects, Mehta adds.
Last year, primary care physicians earned, on average, $243,000, and specialists brought home an average …….
