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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 some time, its potential to create enough passive income that you could quit your job or retire .

Passive income can be a bit of a 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 demanded of you. In some scenarios it could be long-term recurring income, and in other cases it might 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 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 ideas 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 require on-going work, either by yourself or from others which youre paying.  Selling ebooks or classes 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 people who have been in a position to get it done passively, but they make up a small percentage of individuals who really set out to do it.

Ive been blogging full-time for 10 years and Ive sold ebooks and classes in the past. Theyre great ways to earn money, I simply 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 other people to run the business. This is true with both online and traditional businesses. That opens up even more chances than that which will be recorded here.

Now lets have a look at some of the best ways to make passive income. A number of these are investments which will require some money to begin with. Others wont need any money to begin. 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 earn to invest. .

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Your first financial priority should 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 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 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 easy, and can be done online. .

Some companies consistently pay dividends to their shareholders. As a trader, you can re-invest the dividends to purchase more shares of the inventory, 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 see this page companies with a long history of success. As a result of this, these investments tend to be considered less risky than the stock market in general.

Dividend stocks can be a great investment regardless of whether you want to reinvest each of the dividends on hold on to the stock for quite a long check out this site time, or make use of the income generated throughout the dividends.

For much more detail on the topic read Investing in Dividend Stocks in Investopedia. To get a list of those shares, see this collection out of Dividend.com and 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 paired up via a site or marketplace. Instead of going to a bank, the debtor gets a loan from an investor.

In some cases the borrower might not be able to be eligible for a loan via a traditional bank. And in many circumstances the debtor gets a better interest rate than they could get from a bank. As an investor, you can earn a good return too.