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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 possible to create enough passive income that you could quit your job or retire early.
In some cases youll need to put in some effort up front, but then it wont need as much effort in the future when youre making the money.
What qualifies as passive income is up for discussion. Most lists that youll find online will include things such as blogging, writing e-books, or creating your own course. Im not including those ideas in this informative article because, in my own opinion, all of them 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 other people that youre paying. Selling ebooks or classes will need on-going customer service, plus youll need a consistent traffic supply in order to continue to make sales. It's possible and there are individuals who have been in a position to do it passively, but they compose a small percentage of people who actually set out to do it.
Ive been blogging fulltime for ten 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 most cases. .
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Nearly 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 chances than that which will be listed here.
Now lets take a look at some of the best ways to make passive income. Some of these 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, consider starting with the approaches that dont need any money, and then utilize that money you make to invest. .
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Your first financial priority must be to build up an emergency fund that can cover all of 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 terrible interest rate. You can open a high yield savings account or money market account with an online bank that will link earn a much 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 1.85% APY and CIT hop over to here savings accounts are earning 1.55% APY. Thats 22x the national average! Opening an account with CIT is quick 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 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 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 the dividends on hold on to this stock for a long time, or make use of the income produced throughout the dividends.
For much more detail on the topic read Investing in Dividend Stocks at Investopedia. To get a list of these 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. Borrowers and published here 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 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 good return too.