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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 that it compounds and grows quicker. However, with a few time, its potential to create enough passive income that you could quit your job or retire early.
In some circumstances youll need to put in some effort up front, but then it wont require just as much effort in the long run when youre making the money.
Exactly what qualifies as passive income is up for debate. Most lists which youll find online will include things such as blogging, writing e-books, or creating your own course. Im not including those ideas in this post because, in my own opinion, all of them 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 others that youre paying. Selling ebooks or classes will need on-going customer service, 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 get it done , but they compose 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 classes in the past. Theyre great ways to earn money, I just dont consider them to be passive, in most cases. .
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Just about any business can be a source of passive income when youre paying others to run the business. That is true with both online and traditional businesses. That opens up even more possibilities than what will be listed here.
Now lets have a look at a few of the best ways to make passive income. A number of these are investments that will require some money to start with. Other folks wont require any money to begin. If you dont have the money to invest now, consider starting with the methods that dont need any money, and then utilize that money that you earn to invest. .
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Your very first financial priority must be to build up an emergency fund that will cover all of your living expenses for a couple months. But dont put this money is 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 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 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 purchase more shares of this stock, or take the dividends in cash. Reinvesting will allow you to own more shares, which contributes 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 exchange in general.
Dividend stocks can be a terrific investment regardless of whether you want to reinvest all of the dividends on hold on to the stock for quite a long time, or make use of the income generated through the dividends.
For far more detail on the topic read Investing in Dividend Stocks in Investopedia. For a list of these stocks, see 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 decades. Creditors and lenders can be matched up through a site or marketplace. Instead of going to a bank, the borrower receives a loan by an investor.
In some cases the borrower may not have the ability to qualify for a loan via a traditional bank. And my review here in many cases the borrower gets a much better interest rate than they could receive from a bank. As an investor, you can earn a great return as well.