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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 possible to create enough passive income you could quit your job or retire .
Passive income can be a small divisive topic. In general, passive income is any money that you make without putting in much work. The money will flow in without too much being required of you. In some cases it could be long-term recurring income, and in some other instances it might be short lived or inconsistent.
In some cases youll need to put in some effort up front, but then it wont require as much effort in the long run when youre making the money.
What qualifies as passive income is up for discussion. 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 opinion, they all require an excessive amount of effort to be considered as passive.
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Blogging will constantly need on-going work, either by yourself or from others that youre paying. Selling ebooks or classes will need on-going customer service, and youll need a consistent traffic supply in order to continue to make sales. It's possible and there are individuals who've been in a position to get it done , but they make up a small percentage of individuals who actually set out to do it.
Ive been blogging fulltime for 10 decades and Ive sold ebooks and classes in the past. Theyre great ways to earn money, I simply dont consider them to be passive, in the majority of cases. .
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Just about any business can be a source of passive income if 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 recorded here.
Now lets take a look at some of the greatest ways to make passive income. Some of them are investments which will require some money to start with. Other folks wont need any money to begin. If you dont have the money to invest now, consider starting with the methods that dont require any money, and then utilize that money you earn to invest. .
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Your first financial priority should be to build up an emergency fund that will cover all of your living expenses for a few months. But dont put this money would be 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 which will earn a much greater 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 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 buy more shares of this stock, or take the dividends in money. Reinvesting will let you own more shares, which leads to more 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 the stock for quite a long time, or use the income generated throughout the dividends.
For far more detail on the topic read Investing in Dividend Stocks in Investopedia. To get a list of these stocks, visit 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. Borrowers and lenders can be matched up via a website or marketplace. Instead of going to a bank, the debtor gets a loan from an investor.
In some situations the borrower might not have the ability to be eligible for anonymous a loan through a traditional bank. And in many circumstances the borrower gets a better interest rate than they might get from a bank. As an investor, you can earn a great return too.