If you’ve ever wondered, “how to make a 100k a year” or “how to make $50k in passive income,” you’re not alone.
The allure of earning money while you sleep is a powerful motivator, especially for online business owners and membership site operators.
But is passive income truly passive? Let’s dive into the reality behind this enticing financial goal.
How to Make $50k in Passive Income?
You can make $50k in passive income in ways that range from opening savings accounts, making stock investments, to getting royalties from stuff you create or opening a low maintenance business. We think the last option is best, and will discuss your online business options below.
Years ago we would have said that affiliate marketing is the king of the passive income strategies, but with Google cracking down on affiliate websites, it’s no longer a smart approach to building passive income. Google HATES affiliate marketing websites, so goes out of its way to derail their growth by penalizing them or demoting their content in the SERPs.
So today, if you want to earn passive income online, a much better option is building a successful membership website. Actually, we think this option is about as good as it gets so we’ll have much more on that below. But first, let’s look at some other options…
The Reality of Passive Income
The big secret to passive income is that it’s never entirely passive. Unless you’re a trust fund baby, you’ll always have to do some work. Sorry. The notion of effortlessly earning money without any ongoing effort is largely a myth.
True, there are ways to generate income that require minimal day-to-day management, but they still demand an initial investment of time, effort, and often money.
Savings Accounts and Government Bonds
The closest thing to true passive income is opening a high-yield savings account or investing in government bonds.
These options require no ongoing effort after the initial account setup. However, the returns are relatively modest, and it’s unlikely you’ll reach your $50k passive income goal through these means alone, unless you start with a couple million.
Dividend Stocks
Investing in dividend stocks is another avenue that offers a semblance of passive income.
While you can earn regular dividends from your investments, it requires significant research to identify the right companies. Additionally, you’ll need to continually monitor your investments to ensure they remain profitable. Again, you need to be an expert to expect to do well… and you need a lot of capital in the first place to invest.
And, as the old joke goes, what’s the fastest way to end up with a couple million? Start with a couple hundred million in the market and work backwards. You really do need to be an expert here because most people just lose money over time.
Real Estate
Real estate is often touted as a lucrative passive income stream.
Rental properties can generate a steady cash flow, but they require property management, maintenance, and sometimes dealing with tenants. Alternatively, investing in Real Estate Investment Trusts (REITs) can offer exposure without the hassle of direct property management, but like stocks, they require careful selection and monitoring. Expert stuff.
And then, supposing you do have the capital to buy a house or two today, there’s ongoing maintenance work, worrying about squatters, taxes & regulations… all for a very tiny yield on your investment… today less than you can get on a government bond.
Online Businesses
Online businesses offer one of the most flexible and scalable ways to earn passive income. Here’s how:
E-commerce
Dropshipping and print-on-demand services allow you to sell products without holding inventory. While setting up and marketing your store requires effort, the daily operations can be largely automated. But there’s a catch… if it is easy for you to do, it’ll be easy for others to do and soon any profitable niche will be crowded and you’ll end up making no money.
To do well online, you need to build assets… particularly a high traffic website and a brand. Think economies of scale. After that, you stand a chance of out competing your rivals.
Digital Products and Courses
Creating and selling digital products or online courses can provide a steady income stream. Once the product is created, it requires little to no maintenance, allowing you to earn money continuously. But, you better have a high traffic site and brand before you dive in… because the world is a competitive place and other people want to eat your lunch.
Royalties
If you have a creative streak, consider earning royalties from e-books, music, or photography. Publishing an e-book, licensing your music, or selling stock photos can provide ongoing income with minimal effort once the initial work is done.
As someone who spent 6 months writing a book which was then published by a major financial publisher, I can tell you that your return on investment is simply not worth it if you are trying to set up passive income. I would say this goes for any artistic endeavor, as well.
If you want to go the low quality book route, you can probably create a few quickly using ChatGPT, and a Fiverr gig for a cover… but don’t expect good reviews or a large income stream. There are better paths to significant passive income that you should take.
Online Membership Sites For Passive Income
One of the most compelling ways to generate passive income is through online membership sites.
Membership sites are businesses that offer exclusive content, courses, or communities that people are willing to pay a recurring fee to access. You’ll have to do work to set the business up, of course, but your day to day workload after the business is humming will be very low. Initial efforts include curating high-quality content, setting up the platform, and marketing to attract members.
Once established, the site can bring in a steady income stream with minimal ongoing upkeep, as long as you continue to add value, maintain member satisfaction, and keep up with your marketing. Ongoing work involves providing consistent value that keeps members engaged and subscribed… but this can amount to just a couple of hours per day.
Like stock investing, this is expert stuff. You need to get good at marketing, hiring, and structuring business processes… but it’s very doable.
Building a Membership Website for Passive Income
A membership website can serve as an excellent source of passive income, if you can create those twin assets mentioned earlier: a high traffic site & good brand. If you think you can pull that off, here’s what you need to do to put together a high quality semi-passive income site:
- Identify Your Niche: Focus on a specific topic or industry where you have expertise and where there’s evident demand for exclusive content or a service.
- Create Valuable Content: Develop high-quality content that members can’t easily find elsewhere. This could include articles, videos, podcasts, etc. This content will draw people in and help sell you as an expert to them.
- Set Up Membership Tiers: Offer different levels of access at various price points to cater to a broader audience. There are specific strategies for this, and we recommend reading through some of our case studies for how successful membership site founders have structured things… like Jacob Wolinsky:
- Automate Member Management: Use membership site platforms like MemberPress, Kajabi, or Teachable to automate member sign-ups, payments, and content delivery.
- Engage Your Community: Foster a community by engaging with your members through forums, live Q&A sessions, and exclusive events. A strong community can reduce churn rates and increase member retention.
- Market Your Site: Use SEO, social media marketing, and email campaigns to attract new members. Building a strong online presence is crucial for growth.
The Key Takeaway
Achieving $50k in passive income is attainable, particularly through the creation and management of online memberships. While it does require an initial investment of time, effort, and sometimes capital, the rewards can be substantial. When you leverage your expertise and interests to build a membership site, you’re setting up a sustainable income stream that requires minimal ongoing involvement.
Online memberships offer a flexible and scalable way to generate passive income. Whether you’re providing exclusive content, courses, or community access, there’s potential for significant earnings. Start small, remain consistent, and watch your membership base and passive income grow.
Ready to begin your journey? Dive into the world of online memberships and discover how to reach your $50k passive income goal.
Read next: What Can I Do To Make 100k A Year?
