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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 that it compounds and grows faster. However, with a few time, its possible to create enough passive income that you could quit your job or retire early.

Passive income can be a small 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 required of you. In some scenarios it might be long-term recurring income, and in some 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 long run when youre making the money.

Exactly 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 post because, in my own opinion, they all require an excessive amount of effort to be considered as passive.

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Blogging will always require on-going work, either by yourself or by others which youre paying.  Selling ebooks or courses will need on-going customer support, plus youll need a consistent traffic supply in order to continue to create sales. It is possible and there are people who have been in a position to get it done , but they compose a small percentage of people who really set out to get it done.

Ive been blogging fulltime for 10 years and Ive sold ebooks and classes in the past. Theyre great ways to make money, I just 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 others to run the business. Learn More That is true with both online and traditional businesses. That opens up even more possibilities than that which will be recorded here.

Now lets have a look 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. If you dont have the money to invest now, try starting with the methods that dont need any money, and then utilize that money you earn to invest. .

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Your first financial priority should be to develop an emergency fund that will cover all your living expenses for a few 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 that will earn a much 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 1.85% APY and CIT 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 trader, you can re-invest the dividends to purchase more shares of the stock, or take the dividends in cash. Reinvesting will let you own more shares, 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 whether or not you want to reinvest each the dividends on hold on to the stock for a long time, or use the income produced through the dividends.

For much more detail on the subject read Investing in Dividend Stocks at Investopedia. To get a list of those stocks, 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 lenders can be matched up through a site or marketplace. Instead of going to a bank, the borrower gets 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 as well.