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

Passive income can be a bit of a divisive topic. In general, passive income is any money 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 instances it might be short lived or inconsistent.

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

What qualifies as passive income is up for discussion. Most lists which youll find online will include things like blogging, writing e-books, or creating your own course. Im not including those ideas in this informative article because, in my opinion, they all require an excessive amount of effort to be considered as passive.

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Blogging will always require on-going work, either by yourself or by other people that youre paying.  Selling ebooks or courses 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 have been in a position to do it passively, but they compose a small percentage of individuals who really set out to do it.

Ive been blogging fulltime for 10 years and Ive sold ebooks and courses in the past. Theyre great ways to make money, I simply dont consider them to be passive, in the majority of 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. This is true with both online and traditional businesses. This opens up even more possibilities than what will be recorded here.

Now lets have a look at a few of the best ways to produce passive income. Some of these are investments which will need some money to begin with. Others wont need any money to get started. If you dont have the money to invest now, consider starting with the approaches that dont need any money, and then utilize that money you make to invest. .

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Your first financial priority must be to build up 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 that pays you a terrible interest rate. You can open a high yield savings account or money market account with an online bank that will earn a much better 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 simple, and can be done online. .

Some companies consistently pay dividends to their shareholders. As a shareholder, you can re-invest the dividends to buy more shares of this inventory, or take the dividends in money. Reinvesting will allow you to own more stocks, which contributes 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 history 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 quite a long time, or make use of the income produced throughout the dividends.

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

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Peer-to-peer lending (or P2P) is becoming extremely popular in recent decades. Creditors and lenders can be matched up via a website or market. Instead of going to a bank, the borrower receives a their website loan from an investor.

In some situations the borrower might not have the ability to qualify for a loan via a traditional bank. And in many circumstances the borrower gets a much better interest rate than they might receive from a bank. As an investor, you can earn a great return as well.