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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. But with some time, its potential to make enough passive income that 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 that you earn without putting in much work. The money will flow in without too much being demanded of you. In some scenarios it could be long-term recurring income, and in other cases it could be short lived or inconsistent.

In some cases 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.

What qualifies as passive income is up for debate. Most lists that youll find online will include things like blogging, writing e-books, or creating your own course. Im not including those thoughts in this informative article because, in my opinion, they all require too much 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 support, plus youll need a consistent traffic source in order to continue to create sales. It is possible and there are individuals who have been able to get it done passively, but they compose a small percentage of individuals who actually set out to do it.

Ive been blogging fulltime for ten decades and Ive sold ebooks and courses in the past. Theyre great ways to earn money, I just dont consider them to be passive, in most cases. .

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Nearly 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. This opens up even more chances than what will be listed here.

Now lets take a look at some of the best ways to produce passive income. Some of them are investments that will need some money to start with. Others wont need any money to get started. In case you dont have the money to invest now, consider starting with the approaches that dont need any look at here money, and then use that money you make to invest. .

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Your first financial priority should be to build up an emergency fund that can 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 that pays you a terrible 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 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 for their shareholders. As a shareholder, you can re-invest the dividends to buy more shares of this stock, or take the dividends in cash. Reinvesting will allow you to 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. Because of this, these investments tend to be considered less risky than the stock market in general.

Dividend stocks can be a terrific investment regardless of whether you want to reinvest all the dividends on hold on to the stock for 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 at Investopedia. To get a list of those stocks, 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. Creditors and lenders can be matched up via a website 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 through a traditional click this 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 great return as well.