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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 it compounds and grows quicker. But with some time, its possible 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 need just as much effort in the long run when youre making the money.
Exactly 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 own opinion, all of them require too much effort to be considered as passive.
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Blogging will always require on-going work, either by yourself or by other people which youre paying. Selling ebooks or courses will require on-going customer support, plus youll need a consistent traffic source in order to continue to create sales. It's possible and there are individuals who have been able to do it 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 make money, I simply dont consider them to be more 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. 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 peek at a few of the best ways to make passive income. Some of them are investments which will need some money to start with. Other folks wont need any money to get started. In case you see dont have the money to invest now, try starting with the methods that dont need any money, and then use that money you earn 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 couple months. But dont put this money would be a checking or savings account at a local bank that pays you a horrible interest rate. You can open a high yield savings account or money market account with an online bank which will earn a lot greater return for you.
My wife and I maintain our emergency fund in a money market account with CIT Bank. At the moment (October 2018) CIT money market accounts more info here 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 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 stock, or take the dividends in cash. 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 history of success. As a result 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 each the dividends on hold on to the stock for a long time, or make use of the income produced throughout the dividends.
For much more detail on the topic read Investing in Dividend Stocks in Investopedia. To get a list of these stocks, 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 via a site or market. Instead of going to a bank, the debtor gets a loan from an investor.
In some cases the borrower might not have the ability to be eligible for a loan through a traditional bank. And in many circumstances the borrower gets a better interest rate than they might receive from a bank. As an investor, you can earn a great return too.