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Initially you may only be making a small amount of money passively, and you may even want to re-invest that money so it compounds and grows quicker. However, with a few time, its potential to create 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 you make without putting in much work. The money will flow in without too much being demanded of you. In some scenarios it might be long-term recurring income, and in other cases it might be short lived or inconsistent.
In some circumstances youll need to put in some effort up front, but then it wont need just as much effort in the future when youre making the money.
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, they all require an excessive amount of effort to be considered as passive.
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Blogging will always need on-going work, either by yourself or from other people which youre paying. Selling ebooks or courses will need on-going customer support, plus youll need a consistent traffic supply in order to continue to create 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 actually set out to do it.
Ive been blogging full-time for ten years and Ive sold ebooks and courses in the past. Theyre great ways to make 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. That opens up even more possibilities than that which will be listed here.
Now lets take a peek at some of the best ways to produce passive income. Some of these are investments that will require some money to start with. Other folks wont require any money to begin. In case you dont have the money to invest now, try starting with the approaches that dont need any money, and then utilize that money you earn to invest. .
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Your first financial priority should be to develop an emergency fund that will cover all your living expenses for a couple months. But dont put this money would be 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 that will earn a lot greater return why not check here for you.
My spouse and I maintain 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 fast and easy, and can be done online. .
Some companies consistently pay dividends for their shareholders. As a shareholder, you can re-invest the dividends to purchase 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 history 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 whether or not you want to reinvest all of the dividends on hold on to this stock for quite a long time, or use the income generated throughout the dividends.
For much more detail on the subject read Investing in Dividend Stocks in 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) is becoming extremely popular in recent decades. Borrowers and lenders can be matched up through a website or marketplace. Instead of going to a bank, the debtor gets a loan by an investor.
In some cases the borrower may not have the ability to qualify for a loan through a traditional bank. And in many circumstances the debtor gets a better interest rate than they might receive from a bank. As an investor, you can earn a good return too.