Doctors typically earn big wages but it comes with plenty of blood, sweat and tears. How can you make money without pouring in more time that you don’t have? By generating passive income.
Passive income is cashflow which you don’t have to actively participate in, and takes minimal effort to generate and maintain. It’s basically putting your money into areas and processes that do all the work for you. Most people will generally invest their money in different sectors like property or shares, but you can also capitalise on your own knowledge, skills and ideas.
Here’s just some of the different ways doctors can generate passive income.
How doctors can earn passive income
Investing in real estate is one of the most popular and reliable avenues of generating passive income for doctors, mainly due to its lower volatility, access to rental income and potential for capital growth. There have particularly been strong 2021 market predictions in Australia, complimented with the record low interest rates and a relaxation in lending laws.
Doctors have the option to invest in residential or commercial property. Residential real estate is currently thriving in regional areas and locations with infrastructure projects underway or planned, while supermarkets, storage warehouses, industrial spaces, data centres and convenience outlets are promising commercial property sectors.
Shares are another great investment option, but may be prone to fluctuations and volatility depending on the investment strategy. For doctors, the best strategy would be to invest in what you know, whether it be medical-based sectors, health tech or pharmaceuticals. As a medical professional, you’ll have first access to knowledge of the booming health trends and you can jump on board early on in the cycle. Due to the global pandemic, many health-related companies are thriving and present great wealth-building opportunities.
Angel investing, or investing in early-stage companies, could be a great way to generate passive income while supporting a start-up or innovation you believe in. Start-ups will often seek out angel investors for funding rather than securing a loan.
The pros are doctors have great exposure to the needs of the medical industry, and will be able to identify whether a company is offering a promising product or service. If the company is successful, you’ll also gain great returns, an advantage over the general public when shares can be bought or a hefty lump sum payout if the company successfully exits.
However, you should only proceed if you have the risk tolerance – angel investing is a high risk, high return activity. While health care start-ups have a great track record, there’s also the possibility of you losing thousands if the business goes up in smoke.
Again, the best way to evaluate a company and make investing decisions is to stick with what you know and get qualified advice.
Commercialise your technology, inventions and ideas. As a doctor, you will know firsthand the problems in medicine and needs of clients. The health industry is also an area that is constantly evolving and open to new ideas of improvement.
So, if you have a genius idea that will be of great benefit to the industry, go ahead and create it! It may be a service, a product or even an app. You may be able to do it yourself, or reach out to connections in your network.
There are many ways that this can convert to passive income – through royalties, share dividends or selling your idea or company to another organisation.
Capitalise on your knowledge and skills through creating content. Today, we have access to an endless stream of content avenues – from the traditional texts to online and audio platforms.
With your knowledge, you could write a book. Or if you can’t commit the time and resources to the publishing process, the alternative is self-publishing an ebook.
If you have a passion for education, you could create an online course, become a guest lecturer or create study guides for medical students.
You could even share your knowledge through blogs, Youtube or podcasts, which are rapidly growing and present great ongoing advertising and affiliate marketing opportunities.
There are plenty of options to choose from, it just depends on where your specialties and interests lie!
Through medical connections, you might have access to in-demand health products needed by colleagues or patients that you can sell through your networks or practice. You could import / export these products through your own practice, or set up an online store and market through social media platforms. This additional revenue stream could become quite lucrative if you find a product that fits a gap in the market.
Set your strategy
Just because you’re not constantly involved in your passive income, doesn’t mean you don’t need to take time to develop a strategy. This will be based on how many hours (if any) you’ll need to dedicate to get set up for passive income, what the ongoing time commitment it is, and how much you revenue you can expect to generate over a certain period of time.
A long term focus is also important, because most passive income streams build over time, so you’ll need to be clear about your strategy and stick to it.
While these are many appealing passive income options, how do you know where to start and what’s right for you? Reach out to an expert medical accountant who can recommend the best pathway for you based on your circumstance and needs.
Contact DocWealth, specialists in accounting, financial planning, investment and finance, investment and business for medical professionals. We operate in Adelaide, Sydney, Melbourne and throughout Australia. Managing partner Kym Nitschke is available for a free initial discussion about your situation. Call us on (08) 8379 9950 or send me an email.
– Kym Nitschke
The information contained on this web site is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.
Taxation, legal and other matters referred to on this website are of a general nature only and are based on DocWealth’s interpretation of laws existing at the time and should not be relied upon in place of appropriate professional advice. Those laws may change from time to time.
DocWealth specialises in accounting, tax and financial advice for superannuation. Contact us now for a no obligations discussion about your needs.