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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 faster. However, with a few time, its possible to create enough passive income that 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 you make 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 cases it might 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.

What qualifies as passive income is up for debate. Most lists which youll find online will include things like blogging, writing e-books, or creating your own course. Im not including those thoughts in this post because, in my own 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 from others that youre paying.  Selling ebooks or classes will need on-going customer service, plus youll need a consistent traffic source in order to continue to make sales. It's possible and there are individuals who've been able to get it done , but they compose a small percentage of individuals who really set out to do it.

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

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Just about 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 possibilities than that which will be recorded here.

Now lets take a look at a few of the best ways to produce passive income. Some of these are investments which will need some money to start with. Others wont require any money to get started. If you dont have the money to invest now, try starting with the methods that dont need any money, and then use that money that you earn to invest. .

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Your first financial priority should be to build up an emergency fund that can cover all of your living expenses for a couple months. But dont put this money is a checking or savings account at a local bank which pays you a terrible 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 simple, and can be done online. .

Some companies consistently pay dividends to their shareholders. As a trader, you pop over to these guys can re-invest the dividends to buy more shares of this stock, or take the dividends in money. Reinvesting will allow you to 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 market in general.

Dividend stocks can be a great investment regardless of whether you want to reinvest all of the dividends on hold a fantastic read on to the 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 those shares, 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 years. Borrowers and lenders can be paired up through a website or marketplace. Instead of going to a bank, the borrower receives a loan from 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 cases the debtor gets a better interest rate than they could get from a bank. As an investor, you can earn a good return as well.