There are some myths about passive income that are worth exploring
1. Passive income is completely passive: This is relative passivity, meaning that for every investment, there is a phase of learning, acquiring knowledge, vetting, and possibly researching that is not passive. After the initial phase of set up, most passive sources of income may require some monitoring or checking in. However, what makes an investment passive is the absence of that one-to-one ratio of input to output that would normally exist in a more active income source.
2. Making passive income is lazy: If you are a physician, you are probably not lazy. Yes, we have a high standard of expectation for ourselves, but anyone that is able to withstand the rigors of medical training, residency, and fellowship is not lazy in my books. Burnout can present in various ways, including apathy. Let’s not confuse that as lazy because, if we do, that would qualify as gaslighting and self-splaining. As someone that teaches physicians how to have money, here is my opinion: In order to make money ethically, there has to be exchange in value. One person gives value, the other gives money as a thank you. Value can be physical as seen in clinical work. Value can also be monetary. For example, I could give $100,000 to a start-up company that needs that money to execute their brilliant idea, and, in return for my investment, they could give me a 15% return per year. Is that lazy? Without this, their brilliant idea may not see daylight. Value exchange is the key. Giving value comes in different ways.
3. Finding ideas for passive income is hard: Many of us are invested in the stock market, most commonly through retirement accounts. This would qualify as passive income. Typically, we have simply elected that the growth in our investment or dividends be reinvested as we are choosing to use this money long term. In other words, if you have a retirement account, you already have passive income. The question now is how you can find additional passive ways to invest.
What are the benefits to passive income as a gastroenterologist?
1. Changing landscape of medicine: Over the last few decades, we have seen a growing shift in the landscape of medicine. There has been an increase in administrations surpassing the increase in physicians. There seem to be more and more growing bodies that are wedging between physicians and patients. This has led to increasing dissatisfaction for patients and physicians alike. In order to respond to these changes and create lasting changes, there is a need for a change in the leadership. It is fair to say that when you have a more diversified source of income, there is less pressure on a single source of income to provide “food and shelter” for your family. Physician leaders that are liberated have to have a sense of financial liberation.
2. Not putting eggs in one basket: At the beginning of the COVID-19 pandemic, there was significant fear of the unknown. Elective procedures were canceled, leading to financial strain for physicians. Gastroenterologists were not spared. When your income source is diverse, it provides more peace of mind.
3. Mental resourcefulness: This is an understated benefit of passive income and diversified income. As physicians, we went through a lot of hard work to get to where we are today. An average incoming medical student has had extensive demonstration of activity, volunteerism, and problem solving. Yet, as attending physicians, because of the burden of everyday clinical responsibilities and endless paperwork, as well as the platform and “warehouse” and “administrative-type involvement” in medicine, the average physician isn’t creating avenues to expend their cognitive abilities in a way that is diverse outside of the clinical setting. Having passive income opportunities creates a gym for mental resourcefulness that increases work satisfaction and may positively impact burnout.
4. Relationship building: As physicians, we tend to stick with our own. After working 60-80 hours per week, it is no surprise that most of your social network may end up being those that you work with. Passive income opportunities expose physicians to networking and social opportunities that may be critical for relationship building. This may improve mental wellness and overall sense of well-being.
5. Longevity in medicine: As more physicians elect to be employed by larger organizations outside of academics, sabbaticals are becoming less and less available. Having passive sources of income may permit a physician who would otherwise not be able to suffer loss of income the opportunity to take a leave of absence in the short term that may provide long-term longevity in medicine, while promoting wellness.
6. Wealth building: Wealth has had a negative reputation in the world. We seem to equate wealth as bad and being the source of evil. We forget that money is simply a tool that takes the shape of the container you place it in. If you are good, money becomes a tool for more good. Having passive income can help accelerate the journey to wealth building. This can be a great resource as physicians can support unique lifesaving, community-building, and environment-protecting initiatives, as well as support political candidates who will have a positive effect on patient care and the future of medicine.
I hope you are convinced that, Gastroenterologists have to do their due diligence to ensure that their finances are future proof to the best of their abilities.
Dr. Alli-Akintade, a gastroenterologist with Kaiser Permanente South Sacramento (Calif.) Medical Center, is founder of The MoneyFitMD and creator of The MoneyFitMD podcast (www.moneyfitmd.com).
