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Initially you may only be making a tiny amount of money passively, and you might even want to re-invest that money so it compounds and grows faster. But with some time, its potential to create 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 required of you. In some scenarios it could be long-term recurring income, and in some other instances it might be short lived or inconsistent.

In some circumstances youll need to put in some effort up front, but then it wont require 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 thoughts in this informative article because, in my opinion, all of them require too much effort to be considered as passive.

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

Ive been blogging fulltime for 10 decades and Ive sold ebooks and courses in the past. Theyre great ways to earn money, I simply dont consider them to be more passive, in most cases. .

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

Now lets have a look at a few of the greatest ways to produce passive income. Some of them are investments which will need some money to begin with. Others wont require any money to begin. If 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 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 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 1.85% 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. check my reference .

Some companies consistently pay dividends for their shareholders. As a shareholder, you can re-invest the dividends to buy more shares of this inventory, or take the dividends in cash. Reinvesting will let you own more shares, 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 market in general.

Dividend stocks can be a terrific 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 through the dividends.

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

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Peer-to-peer lending (or P2P) is becoming extremely popular in recent years. Creditors and lenders can be paired up via a site or marketplace. Instead of going to a bank, the debtor gets a loan from an investor.

In some situations the borrower might not be able to be eligible for a loan through a traditional bank. And in many circumstances the debtor gets a better interest rate than they might get from a bank. As an investor, you can earn a good return too.