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Initially you may only be making a small amount of money passively, and you might even want to re-invest that money so it compounds and grows faster. However, with some time, its potential to create enough passive income you could quit your job or retire early.

Passive income can be a small 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 demanded of you. In some cases it might be long-term recurring income, and in other instances 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 that 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 own opinion, they all require too much effort to be considered as passive.

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Blogging will constantly require 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 make sales. It's possible and there are individuals who have been in a position to get it done passively, but they compose a small percentage of people who really set out to get it done.

Ive been blogging full-time for 10 years 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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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. That opens up even more chances than what will be recorded here.

Now lets take a peek at some of the best ways to make passive income. Some of them are investments that will require some money to begin 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 money, and then use that money that you make to invest. .

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Your very first financial priority should be to develop an emergency fund that can cover all of your living expenses for a couple months. But dont put this money is a checking or savings account at a local bank that 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 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 Home Page 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 trader, you can re-invest the dividends to buy more shares of this stock, or take the dividends in money. Reinvesting will allow you to own more shares, which leads 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 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 all of the dividends on hold on to the stock for a long time, or make use of the income generated throughout the dividends.

For much more detail on the subject read Investing that site 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) is becoming extremely popular in recent years. Creditors and lenders can be paired up via a site or marketplace. Instead of going to a bank, the borrower gets a loan from an investor.

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