Home Orthodontics Passive Income for Dentists – Will It Really Give You Financial Freedom?

Passive Income for Dentists – Will It Really Give You Financial Freedom?

by adminjay

I’m often asked about passive income for dentists as it relates to retirement plans for the future. Many assume that it is regular income generated from investments that automatically offers financial freedom.

You may receive a small amount of interest from a CD savings account or a U.S. Treasury Bill, but you will need to take action to have passive income during your retirement. Most people just hand their hard-earned money over to a financial advisor and go about their daily activities.

This is an interesting paradox as most small business owners create a business to “be their own boss.” They work diligently to grow their business, but then they abdicate control over their hard-earned income to someone else for retirement planning. After all, this is “what everyone else does.”

However, if you want the best results for your investment dollars, you cannot relinquish your responsibilities to someone else. It’s easy to surrender this process to a money manager or financial advisor who will manage your funds for you. But remember, no one will look after your money like you will!

Most financial advisors learn about certain investments and stop there. They only know what they know. They may offer the same 401(k)s, index funds, and stock market opportunities to all their clients just to keep things simple, stick to their company policies, and do what’s familiar to them. They are also susceptible to the incentives of commissions/fees for the various financial products that they offer.

Inflation, higher interest rates, volatile markets—it’s all new to them. They don’t know how to pivot. They’ll continue to recommend what has worked in their own recent experience: investing in the volatile, unpredictable, and uncontrollable financial markets. They don’t understand the implications of the major secular market shifts that are taking place right now.

A rapid rebound such as we experienced with the COVID recession cannot be counted on, manipulated as it was by stimulus and artificially low interest rates. With today’s current market correction and volatility, there is no way that a passive income for dentists based on an index-fund-investment-type strategy is going to produce the same returns it would have historically.

During a period of prolonged stagnation, this type of investment will set you back and significantly increase the time you need to reach your goals.

Specifically, if your well-earned retirement money is in a 401(k), you can’t withdraw it until age 59.5. You are at the whim of the Wall Street roller coaster and can only hope that the retirement money you need for the rest of your life will be there when that time comes. If not, you’ll need to keep working just to maintain your lifestyle… whether your health permits it or not.

Your money is best served with you in control of it. This way, you determine which investments will produce predictable and sustainable cash flow for your financial future.

You should know that this takes a certain amount of time, due diligence, and research on your part. Even if you have alternative investments (like real estate) or some type of business partnership where you receive owner distributions, there is work involved.

You will still need to oversee the processes, people, and profits. With DIY rental properties, you’ll spend time negotiating, acquiring properties, doing renovations and repairs, dealing with tenants, and handling other responsibilities… in addition to your regular office hours. This is the side to “DIY” active investing you don’t see on the popular home/investment television shows that make it look fairly easy.

The truth about passive income for dentists…

So, how do you really create passive income in the shortest period of time with the least amount of work possible?

The key point is to consider your time involvement in any ROI (return on investment) calculation. Most forget this aspect. Instead of creating more freedom, they buy themselves another job at a much lower hourly trade than the very specialty in which they trained. It’s a “plain-sight magician trick” that we play on ourselves. I know. I’ve done it!

Passive income is when you utilize your time to get the highest value return possible. 

When I was young and fresh out of dental school, I had the time and energy to actively manage individual properties. Today, I instead invest through strategic collaboration with proven operators who have expertise in acquisition, management, and access to the right opportunities. This allows me to be the orchestrator of the funding of the deal without surrendering my time to the active management and execution.

Yes, I do give up some of my profits for their assistance, but it is well worth it because I buy back my time and sanity.

But even still, my involvement is not truly “passive.” I am responsible for my own due diligence and for overseeing the details of my portfolio to ensure security of principal and better, more efficient returns.

That is the price of autonomy.

With all passive income, you must trade some of your time. The key is to trade as little of your time for as much income as possible, and this varies depending on your specific circumstances.

For example, I purchased my first rental home when I was in college to help pay for school and have a place to live. Back then, I had plenty of time to learn and make mistakes. When you’re younger, you have more time to research, develop your skills, and increase your time value, or the amount of money your time is worth in a career or profession.

When you’re older, your time value is worth more doing the profession you were trained to do. Or at a certain point, enjoying the privilege of buying back time to do what matters most to you. At that point, you probably don’t want a second job managing your money or investments.

Wherever you are in life pursuing “passive income,” you need to be on the forefront of directing your capital in the right investments. The key is to use your time wisely through strategic collaboration, relationship building, networking, and learning specific skills.

Can you learn how to create passive income?

Many medical and business professionals approach me knowing that the stock market is not the answer for their long-term retirement goals. They understand and believe that real estate should have a place in any sophisticated investor’s portfolio, but they don’t know what to do next. Well, the first step is to learn the business of your money, and how to manage your money so that it works for you.

You’ve already proven that you have what it takes to be a practicing professional by making it through school, passing the tests and boards, and getting your licenses. Now you just need to apply these learning skills to your investments. The sooner you educate yourself at the front end, the sooner you’ll take control of your financial future.

It’s lonely at the top and lonely on the journey to the top.

Next, I suggest finding a supportive network of like-minded individuals who are interested in your success, have extensive investment experience outside of Wall Street, and want to learn more, too.

People who have achieved what you seek (freedom). A tribe that is contrarian and goes against the grain of societal herd mentality. On a regular basis, you are probably inundated with negative opinions and associates telling you to stick with the status quo because otherwise, it’s too time-consuming and complicated. But with the right community and knowledge, you can actually save time and money with alternative investments and have fun in the process.

It’s your decision.

Take the time to learn how to invest and manage your own money, buy back time and truly have passive income in the future, or keep your fingers crossed that the financial world professionals can create what you want. Sit idly by and wait to see how much you have left after someone else manages your hard-earned nest egg.

The choice is yours. What path will you choose?


When his young daughter was hospitalized with leukemia, Dr. David Phelps, DDS, was able to turn to his alternative investments, step away from his dental practice, and be by her side. From this experience, he created Freedom Founders in 2012. This community helps dentists and other professionals take control of their retirement investments to produce passive cash flow, security, and live life on their terms.

To contact Dr. Phelps, visit www.freedomfounders.com.

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