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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 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 small divisive topic. In general, passive income is any money that you earn without putting in much effort. 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 circumstances 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 such as blogging, writing e-books, or creating your own course. Im not including those thoughts in this post because, in my opinion, all of them require an excessive amount of effort to be considered as passive.

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Blogging will constantly need on-going work, either by yourself or by other people which youre paying.  Selling ebooks or classes will need on-going customer support, and youll need a consistent traffic supply in order to continue to make sales. It is possible and there are people who have been able to get it done passively, but they make up a small percentage of people who actually set out to do it.

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

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Nearly 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. That opens up even more possibilities than what will be recorded 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 begin with. Other folks wont require any money to begin. In case you dont have the money to invest now, consider starting with the approaches that dont need any money, and then utilize that money you earn to invest. .

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Your very first financial priority should be to build up an emergency fund that can cover all your living expenses for a couple months. But dont put find out this money would be a checking account 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 that will earn a lot greater return for you.

My wife 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 fast 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 the stock, or take the dividends in money. Reinvesting will allow you to own more shares, 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 terrific investment whether or not you want to reinvest all the dividends on hold on to the stock for quite a long time, or use the income generated through the dividends.

For much more detail on the subject read Investing in Dividend Stocks in Investopedia. For a list of these shares, 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 through a website or market. Instead of going to a bank, the borrower receives a loan from an investor.

In some situations the borrower may not be able to qualify for a loan via a traditional bank. And in many cases the borrower gets a better interest rate than they could get from a bank. As an investor, you can earn a good return as well.