6 passive income streams help a 32-year-old doctor and entrepreneur make an extra $250,000 per year (2024)

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• Shaan Patel is the CEO and cofounder of Prep Expert, which sells digital SAT and ACT prep courses.
• He makes passive income through licensing his digital courses, monetized YouTube content, and book royalties.
• Patel says many people overlook passive income from high-yield savings accounts.

After raising his SAT score from average to perfect, Shaan Patel's life changed completely. He was offered a total of $500,000 in college scholarships from top universities and graduated debt-free.

Using $3,000 in extra scholarship money while he was in college, Patel started a business called Prep Expert that teaches other high school students how to raise their SAT and ACT scores. Originally, he wanted to branch out into 20 different cities in the US. Because of the pandemic, Patel pivoted his business strategy to include digital courses that students could use at their own pace.

Patel tapped into a lucrative source of passive income that earns $150,000 per year, according to records reviewed by Insider. Aside from digital courses, he has six other passive income streams that help him earn an extra $250,000 on top of his physician's salary.

1. Digital courses

Patel invested 10 years into perfecting his digital courses, and it paid off. "It's really nice to wake up every day and see people enroll in your courses," he tells Insider. "It's not completely passive because I do run the company, run management, and create strategy, but many of the courses are completely video automated."

Besides offering the courses directly on Prep Expert's website, Patel also receives licensing fees from other online platforms who use his digital courses.

2. High-yield savings accounts

Most traditional savings accounts have interest rates of up to 0.16% annually, but high-yield saving accounts pay up to 3% or more in interest (although note that this rate fluctuates). If you keep $10,000 in a regular savings account with an interest rate of 0.16%, for example, you'll get $16 at the end of the year. With a high-yield savings account that has a 3% interest rate, you'll end up with an extra $300 at the end of the year.

Patel says, "It seems small, but if someone says out of nowhere, 'Hey, here's $100 for groceries!' you'd probably take it. But if someone suggests that you open a high-yield savings account, people think it's too much work. It's easy money, and it's safe."

3. Book royalties

Patel has written more than 10 books covering topics like entrepreneurship, standardized testing prep, and even a children's book coauthored with his mentor, Mark Cuban. In the past, he needed a major publisher to print and distribute his book, but self-publishing helped him make passive income from his books.

"Amazon has made it super easy to self-publish your books, and they reward authors an amazing royalty," he says. When Patel published his first book through McGraw Hill, his royalty was around 10% of net sales, he says. He continues, "It was really, really low. I was making pennies, when they were selling the book for $20." Amazon gives authors up to 70% on Kindle books, meaning he could earn up to $7 for selling a $10 book.

4. YouTube ad revenue

Patel monetized his channel and collects ad revenue from YouTube. "I make some of the most boring videos in the world," he says. "They're SAT and ACT prep videos, but still they get thousands of views and some of them have over a million views."

All he needed to do was check a small icon that allows ads when he uploads his videos. Once he earned 1,000 subscribers and 4,000 hours of watch time, he qualified for his videos to be monetized on YouTube.

5. Dividend stocks

Patel did the math and realized that his investments earn $12/hour "even when I'm sleeping." He invests in dividend stocks, a low-risk, predictable stream of investment income that pays a piece of the profits from the company you're investing in. Patel says he looks for high dividend stocks that pay anywhere from 2-7% in annual dividends.

When there's a recession and the stocks aren't doing so well, he says, dividend stocks still perform well and continue to provide solid return on investment.

6. Alternative investments

Patel is an accredited investor, a different kind of investor with special status to invest in unregulated securities such as hedge funds, art, supply-chain financing, short-term notes, and more. These are investments outside of the stock market that yield high interest rates in a short amount of time.

Patel uses a platform called YieldStreet, where he generates anywhere from 4-18%. "It's a little bit riskier, but I've even had returns as high as 12% paid back in alternative investments."