Wednesday, June 23, 2010

Doctors generating passive income

What if you could sit back, relax, and generate passive income by doing nothing? That sounds too good to be true, doesn't it? If you're a successful investor, then you've probably generated a significant amount of passive income by allowing others to take your investment and multiply it through their hard effort.

Another way you can generate passive income is through royalties. Here's how Wikipedia defines royalties:
Royalties (sometimes, running royalties, or private sector taxes) are usage-based payments made by one party (the "licensee") to another (the "licensor") for ongoing use of an asset, sometimes an intellectual property (IP) right.
One way doctors often collect royalties is by authoring books. If you write a great book and millions of people buy your book, then you'll be generating passive income. It's a great way to earn supplemental income while you continue working as a physician. Another example is by collecting revenues generated through advertisements on your website. If you can create a website that generates a significant volume of traffic, then you'll have the means to sell advertising space and generate income. At first, it might be active income since you'll probably be working pretty hard to maintain and build your website. However, you could reach a point where you could allow someone else to maintain the site. Or, some websites will sustain themselves as people visit from search engines.

This type of passive income could also become a source of spending money once you retire. After all, who wants to work when you retire? If you start a blog now and maintain it periodically, perhaps you'll have something valuable that you can pass on to your kids. Maybe you'll leave behind a legacy that's more important than the income you'll be generating.

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