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At first you may only be making a tiny amount of money passively, and you may even want to re-invest that money so that it compounds and grows faster. However, with a few time, its possible to create enough passive income 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 earn without putting in much work. The money will flow in without too much being demanded of you. In some cases it might be long-term recurring income, and in some other cases it might 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 debate. 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 too much effort to be considered as passive.

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Blogging will constantly require on-going work, either by yourself or by others which youre paying.  Selling ebooks or classes will need on-going customer support, and youll need a consistent traffic source in order to continue to make sales. It is possible and there are people who have been able to do it passively, but they make up a small percentage of people who actually set out to do it.

Ive been blogging full-time for 10 years and Ive sold ebooks and courses 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 that which will be listed here.

Now lets take a peek at some of the best ways to produce passive income. Some of them are investments that will require some money to start with. Other folks wont need any money to begin. In case you dont have the money to invest now, try starting with the approaches that dont require any money, and then utilize that money you earn to invest. .

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Your very first financial priority should be to build up an emergency fund that will cover all your living expenses for a few months. But dont put this money would be 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 much greater return for you.

My spouse 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 their website 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 purchase more shares of this inventory, or take the dividends in cash. Reinvesting will let you own more stocks, 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 track record 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 this stock for a long 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 stocks, see 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 decades. Borrowers and lenders can be paired up via a site or market. Instead of going to a bank, the borrower gets a loan from an investor.

In some cases the borrower may not have the ability to be eligible for a loan through a traditional bank. And in many cases the debtor gets a much better interest rate than they could receive from a bank. As an investor, you can earn a good return as well.