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

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

In some cases youll need to put in some effort up front, but then it wont need as much effort in the future when youre making the money.

Exactly what qualifies as passive income is up for debate. Most lists that youll find online will include things like blogging, writing e-books, or creating your own course. Im not including those ideas in this post because, in my opinion, they all require too much effort to be considered as passive.

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Blogging will always require on-going work, either by yourself or from others that youre paying.  Selling ebooks or classes will require on-going customer service, plus youll need a consistent traffic supply in order to continue to create sales. It's possible and there are people who have been able to get it done , but they compose a small percentage of people who actually set out to get it done.

Ive been blogging fulltime for ten decades and Ive sold ebooks and courses in the past. Theyre great ways to make money, I simply dont consider these to be passive, in most cases. .

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Just about 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 have a peek at a few of the best ways to produce passive income. A number of these are investments which will need some money to start with. Others wont need any money to get started. In case you dont have the money to invest now, consider starting with the methods that dont require any money, and then use that money that you earn to invest. .

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Your very first financial priority should be to develop an emergency fund that will cover all of your living expenses for a couple months. But dont put helpful hints this money would be a checking account or savings account at a local bank that 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 much greater return for you.

My spouse and I keep 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 quick and easy, and can be done online. .

Some companies consistently pay dividends to their shareholders. As a trader, you can re-invest the dividends to purchase more shares of this stock, or take the dividends in money. Reinvesting will allow you to own more stocks, which leads to more 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. As a result of this, these investments tend to be considered less risky than the stock here market in general.

Dividend stocks can be a great investment regardless of whether you want to reinvest each the dividends on hold on to this stock for quite a long time, or make use of the income generated throughout the dividends.

For much more detail on the subject read Investing in Dividend Stocks at Investopedia. To get a list of those stocks, see this collection out of 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. Borrowers and lenders can be paired up via a website or market. Instead of going to a bank, the debtor gets a loan by an investor.

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