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Initially you may only be making a tiny amount of money passively, and you may 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.
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.
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 thoughts 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 require on-going work, either by yourself or from 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 make sales. It's possible and there are individuals who have been able to do it passively, but they compose a small percentage of people who actually set out to get it done.
Ive been blogging fulltime for ten decades and Ive sold ebooks and classes in the past. Theyre great ways to make 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 if youre paying others to run the business. This is true with both online and traditional businesses. This opens up even more possibilities than what will be recorded here.
Now lets take a peek at some of the greatest ways to produce passive income. Some of these are investments which will require some money to start with. Other folks wont require any money to get started. In case you dont have the money to invest now, consider starting with the methods that dont require any money, and then use that money you make 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 few months. But dont put this money is a checking or savings account at a local bank that 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 much better 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 1.85% 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 for their shareholders. As a trader, you can re-invest the dividends to buy more shares of the stock, 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 check out this site 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 terrific investment whether or not 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 produced through the dividends.
For much more detail on the topic read Investing in Dividend Stocks in Investopedia. For a list of these shares, visit this collection from Dividend.com and this collection from DividendValueBuilder.com.
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Peer-to-peer lending (or P2P) is becoming extremely popular in recent years. Borrowers and lenders can be paired up through a site or market. Instead of going to a bank, the borrower receives a loan from an investor.
In some cases the borrower may not be able to be eligible for a loan via a traditional bank. And in many cases the debtor gets a better interest rate than they might receive from a bank. As an investor, you can earn a good return too.