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At first 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 faster. But with some time, its possible to make enough passive income you could quit your job or retire early.
Passive income can be a bit of a divisive topic. In general, passive income is any money you earn without putting in much effort. The money will flow in without too much being required of you. In some scenarios it might be long-term recurring income, and in some other cases it could be short lived or inconsistent.
In some circumstances youll need to put in some effort up front, but then it wont require just as much effort in the future 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 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 require on-going work, either by yourself or by others which youre paying. Selling ebooks or classes will require on-going customer service, and youll need a consistent traffic supply in order to continue to make sales. It is possible and there are people who've been in a position to do it , but they compose a small percentage of people who actually set out to do it.
Ive been blogging fulltime for 10 years and Ive sold ebooks and classes in the past. Theyre great ways to earn money, I just dont consider these to be passive, in the majority of cases. .
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Just about any business can be a source of passive income when youre paying other people to run the business. This is true with both online and traditional businesses. This opens up even more possibilities than what will be listed here.
Now lets have a look at some of the greatest ways to make passive income. A number of them are investments which will need 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 need any money, and then use that money that you earn to invest. .
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Your first financial priority must be to develop an emergency fund that can cover all your living expenses for a few months. But dont put this money is a checking account 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 much better return 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 1.85percent 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 to their shareholders. As a trader, you can re-invest the Website dividends to buy more shares of this stock, or take the dividends in cash. Reinvesting will let you own more stocks, 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. 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 whether or not you want to reinvest all the dividends on hold on to the stock for quite a long time, or make use of the income produced throughout the dividends.
For far more detail on the subject read Investing in Dividend Stocks in Investopedia. To get a list of these shares, visit this collection from Dividend.com and anchor this collection from DividendValueBuilder.com.
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Peer-to-peer lending (or P2P) is becoming extremely popular in recent decades. Creditors and lenders can be matched up via a website or marketplace. Instead of going to a bank, the debtor receives a loan from an investor.
In some situations the borrower might not be able to qualify for a loan via a traditional bank. And in many cases the debtor gets a better interest rate than they could get from a bank. As an investor, you can earn a good return too.