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Initially you may only be making a small amount of money passively, and you might even want to re-invest that money so that it compounds and grows quicker. But with a few time, its potential to create enough passive income that you could quit your job or retire early.

Passive income can be a small divisive topic. In general, passive income is any money you earn without putting in much effort. The money will flow in without too much being demanded of you. In some cases it could be long-term recurring income, and in other cases it could be short lived or inconsistent.

In some circumstances youll need to put in some effort up front, but then it wont require just as much effort in the long run when youre making the money.

Exactly what qualifies as passive income is up for debate. Most lists that youll find online will include things such as blogging, writing e-books, or creating your own course. Im not including those thoughts in this informative article because, in my own opinion, all of them require an excessive amount of effort to be considered as passive.

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Blogging will constantly require on-going work, either by yourself or by others that youre paying.  Selling ebooks or classes will require on-going customer support, plus youll need a consistent traffic supply in order to continue to make sales. It's possible and there are people who've been in a position to do it , but they compose a small percentage of people who really set out to do it.

Ive been blogging full-time for ten years and Ive sold ebooks and classes in the past. Theyre great ways to make money, I just dont consider these to be passive, in most cases. .

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Nearly any business can be a source of passive income if youre paying other people to run the business. That is true with both online and traditional businesses. That opens up even more chances than what will be listed here.

Now lets take a look at some of the best ways to make passive income. Some of them are investments which will need some money to start with. Others wont need any money to begin. If you dont have the money to invest now, consider starting with the methods that dont need any money, and then use that money you earn to invest. .

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Your first financial priority must be to develop an emergency fund that will cover all your living expenses for a few months. But dont put this money is a checking or savings account at a local bank which pays you a horrible interest rate. You can open a high yield savings account or money market account with an online bank which will earn a lot better return for you.

My spouse and I maintain our emergency fund in a money market account with CIT Bank. At the moment (October 2018) CIT money market accounts are earning 1.85percent APY and CIT savings accounts are earning 1.55% APY. Thats 22x the national average! Opening an account with CIT is fast and simple, and can be done online. .

Some companies consistently pay dividends for their shareholders. As a trader, you can re-invest the dividends to purchase more shares of this inventory, or take the dividends in money. Reinvesting will let you own more stocks, which leads to greater dividends in the future (ideally).

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The companies that consistently pay dividends tend to be large companies with a long track record of success. Because of this, these investments tend to be considered less risky than the stock exchange in general.

Dividend stocks can be a great investment regardless of whether you want to reinvest all the dividends on hold on to the stock for a long time, or use the income produced through link the dividends.

For far more detail on the topic read Investing in Dividend Stocks in Investopedia. To get a list of these stocks, visit this collection from Dividend.com and this collection from DividendValueBuilder.com.

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Peer-to-peer lending (or P2P) has become extremely popular in recent decades. Creditors and lenders can be paired up through a website or market. Instead of going to a bank, the debtor gets a loan from an investor.

In some cases the borrower may not have the ability to be eligible for a loan through a traditional bank. And in many cases the debtor gets a better interest rate than they could receive from a bank. As an investor, you can earn a good return as well.