#2: What Is Passive Income?

Welcome to the Passive Income MD Podcast, where we talk about creating your ideal life through multiple streams of income. I'm your host, Peter Kim. If you enjoy hearing about this stuff, make sure to hit subscribe so I can bring it to you every week. Now let's get on with the show. Hey, everyone. Today we're going to be talking about the words passive income. There's really not a better way to kind of start this whole podcast. Besides introducing myself, I think it's important to talk about the words passive income. I mean, after all, this is the Passive Income MD podcast. You know, you might have your own definition of it. I have my own. There are plenty of people out there who have their own definitions of it. And I think there's a lot of misunderstanding when it comes to this term. So let's talk about it today and let's also talk about why it might be important to someone like you or to me who has a good paying job, which many people would look at and say, why do you even need to talk about passive income? Why do you even care about passive income when you have a good day job? But I think it's ultimately important and it's becoming more and more important as the days and the years go on, especially in our given fields because of the way the world is moving, the way the politics are going, the way the field of medicine is going. I think it's become ever increasingly important to learn about this and understand how to make it at the end of the day. So what does the term passive income mean? I mean, you hear about it all the time. The thing is, there are plenty of these gurus online, whether you see them on YouTube or maybe on an ad somewhere that really say that they have the secret to making millions in your sleep, they seem not trustworthy. And so really sometimes passive income gets a bad kind of connotation. The thing is, passive income in reality, in my mind, is actually something that's not easy to achieve. It's a pretty loosely defined term, but it takes time, it takes energy, it takes effort to create, but again, it can depend on who you're talking to. Now, I want to mention some of my favorite definitions of passive income, and then I'll tell you. My own Pat Flynn, who runs website smartpassiveincome.com he talks about passive income in this sense. It's all about working hard now so you can reap the benefits later. Meaning that you work hard and the benefits come later. Okay. There's another website called the Simple Dollar where I like to Kind of borrow from. In terms of the passive income definition, they talk about passive income streams where it's one where once you've done the initial investment, there's little or no upkeep to that investment required to maintain the income stream. Now I think those are a little bit different in terms of definitions, but I like both of those. Now Wikipedia has their own definition. It says that passive income is an income received on a regular basis with little effort required to maintain it. Now, I don't know which one of those you really relate to or kind of grab onto. Now it's a little bit different from some of those definitions that you might hear out again in the world. YouTube gurus, that sort of thing, where they say passive income make money in your sleep. Well, it's kind of like that. This is just a different ring to it, right? I mean, I believe each of those definitions are great and actually they're pretty accurate to a degree. But let me give you my own definition. I say that passive income is income that is not proportional to to the time you physically put into acquiring it. Now let me say that again. Passive income is income that is not proportional to the time you physically put into acquiring it. And what that really means is that time in does not equal money out. That's usually the way most of us kind of live. We have our day jobs, we have to put in our time, we clock in, we clock out. Or whether you have your own practice or not, you're putting in the time and you're expecting a certain amount of income afterwards. But really, if you're not putting in that time, you're not getting the income. But when it comes to passive income, you might put the time in first. Maybe you sometimes get a little bit of income. Maybe that's not really proportional to time you put in. But over time that income continues to grow with little effort to maintain it, or even decreasing amounts of effort over time. Now that sounds totally different from a get rich quick scheme, right, where you might hear passive income. And some people think passive income is a myth. There's no way you can make money without actually putting in any work. That's what I hear. Oftentimes people will say whenever I put those articles somewhere online, someone will say, ah, passive income is just a myth. There's no such thing. Yeah, I guess if that's your definition of it, where you don't have to put any work in. But I always think, again, it takes one of the three or combination of the following. Passive income takes either time, energy or effort in the beginning, you have to put one of the two or three of those things. In fact, you put all three into those things. Usually that kind of kickstarts it a little faster. But eventually the payoff is well worth the investment and that comes later. You know, we're going to talk about so many different ways that passive income is created. One of my favorite ways is through real estate. But by no means is it the only way, but it's my favorite way to do it. And I've seen so many physicians and other high income professionals utilize that vehicle to get where they want to be, to create that life of financial freedom. And I would venture to say that most of us would love having that a life of financial freedom where you don't have to worry on a monthly or daily basis where that income is coming from and how are you going to live your life. Ultimately, I believe all of this, everything that we're trying to do, when it comes to finances, when it comes to living your life, our careers and all that stuff, we're ultimately looking for the freedom to do what we want with our time. I mean, after all, isn't that the most precious resource, time? When you control your time, you control your life. And I think ultimately that's a big part of fulfillment or feeling satisfied. When you feel like you have the freedom or the control to, to do what you want with your time, energy and effort. There are things that you do in your life where you feel forced to do it. Then there's somebody else who might be doing that exact same thing, but they do it out of a choice and they absolutely love it. I always say that there's, that's the difference between a hobby oftentimes and a job. Sometimes somebody's hobby is a job for somebody else. But honestly, it's different. It's the way you approach it, it's your mindset. So it does matter whether it's a choice for you or not, whether it puts food on the table for you or not. And based on that, that will affect how you look at it. Now, when I look for methods of passive income to really sustain me, I'm looking for reliable streams again that pay out on a monthly, quarterly or yearly basis. I want to see cash flow that comes in. And my goal has been from the very beginning to really replace my clinical income. You know, I make X amount and over time I set a goal for myself that I wanted to create enough income on the side coming in, outside of my day job, outside of my day job being a physician, to really sustain my life. And once I had enough coming in from outside my clinical medicine, my job as an anesthesiologist became, quote, unquote optional. It totally changed my perspective on it. It really allowed it to be something that I could do for the joy and the passion. And that's what I want for everyone else as well. And that's why I have this blog, I have this podcast. I've seen so many physicians achieve this and nobody was talking about it. And that's why I wanted to shed a light on it. Not only highlight the things that I was doing, but I really wanted to highlight the other things that other physicians and other high income professionals were doing to achieve this, so that people will know it can be done. And over the course of this podcast, I'm gonna be bringing you the stories. If you have some of the stories, you are one of these stories. I feel free to reach out. I'd love to hear more about it and perhaps we can get you on the show. I'd love to talk about it. So at the end of the day, I consider passive income more of a tool than kind of like a scheme or simply a strategy. It's not really about quitting your day job so you can enjoy life. It's really about giving you the freedom to enjoy whatever your passions are. And I hope medicine continues to be a passion. I am assuming that you went into medicine because you were passionate about it, not just because you wanted a paycheck, because there are many things you could have done, especially with the ambition, the time and energy you put in to probably make a whole lot more money. So I don't think it was about that. I think there's a passion element to it and that's why you became a physician. I think that passive income allows you to really, really create that ideal life. You want that work life balance or that work life integration that people talk about that gives you that opportunity. So it's really a tool or a vehicle to, to get you where you want to be and live that extraordinary life. So we're going to be talking so much about passive income on this podcast. Thanks for being here and we'll see you next week. Thanks everyone. Enjoy the show. Let me know by dropping a review in the podcast app you're listening to us in. And if you haven't already, make sure to hit subscribe. Are you a part of our community yet? Join thousands of physicians who are also on this journey to creating their ideal lives. And through multiple streams of income, you can join us on our Facebook group Passive Income Docs, and you can always learn more at our website, passiveincomemd. Com. Thanks again for allowing me to be a part of your journey. See you next time.