There are tons of ways a nurse practitioner can build passive income streams:

Rental real estate.

Businesses that work FOR YOU.

Dividend producing stocks and funds.

Business investments and partnerships.

And much more!

But I want to cover a great, safe, AND tax-free passive income stream any nurse practitioner can invest in: municipal bonds!

Municipal bonds are similar to bonds issued by the federal government but instead are issued by cities, counties, school districts, and more local/regional institutions. These are EXEMPT from federal income taxes but may be subject to state taxes depending on the type of municipal fund, but generally speaking: the income is considered TAX FREE! That’s right!

Investing in municipal bonds is relatively simple and there are 2 predominant ways to do so:

1. Buy the bonds separately through a brokerage account.
2. Buy municipal bond funds that just pay you a monthly dividend.

I would advise against option 1 as it can be complicated and will increase the overall risk of the investment. Plus, you need to hold the bond for a period of time (call the maturity) to cash out.

Instead, I would advise on option 2. This is just like any other index fund or ETF, but instead of investing in various stocks, the fund invests in municipal bonds! You can buy and sell these funds as you want and as long as you hold onto them month to month, they generally pay out a MONTHLY dividend (that is tax free!).

I invest heavily in municipal bond funds as it is a great passive income (generally a 3-4% return) and it lowers my taxable income. A win-win!

There are lots of different funds you can invest in, but these are my favorite:

NXP (my favorite)

MUB

SUB

VTEB

All of the above funds have slightly different strategies, so ensure you read up on each one and consult with your financial advisor to see what fits your specific needs, but if you are going to pick one, pick NXP!