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At first you may only be making a small amount of money passively, and you may even want to re-invest that money so that it compounds and grows faster. But 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 effort. The money will flow in without too much being demanded of you. In some cases it could be long-term recurring income, and in other instances it could be short lived or inconsistent.
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 debate. Most lists which youll find online will include things such as blogging, writing e-books, or creating your own course. Im not including those thoughts in this informative article because, in my own opinion, all of them require too much effort to be considered as passive.
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Blogging will always need on-going work, either by yourself or by other people that youre paying. Selling ebooks or courses will require on-going customer support, and youll need a consistent traffic source in order to continue to make sales. It is possible and there are individuals who have been able to get it done , but they make up a small percentage of people who actually set out to do it.
Ive been blogging full-time for 10 decades and Ive sold ebooks and courses in the past. Theyre great ways to make 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 when youre paying others to run the business. That is true with both online and traditional businesses. That opens up even more chances than that which will be listed here.
Now lets have a peek at a few of the greatest ways to make passive income. Some of them are investments which try here will require some money to start with. Others wont need any money to begin. If you dont have the money to invest now, consider starting with the approaches that dont require any money, and then use that money you make 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 couple months. But dont put this money would be a checking account or savings account at a local bank which pays you a terrible interest rate. You can open a high yield savings account or money market account with an online bank which will earn a much better 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 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 stock, or take the dividends in money. Reinvesting will let you own more stocks, 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 exchange in general.
Dividend stocks can be a terrific investment whether or not you want to reinvest each the dividends on hold on to this stock for quite a long time, or make use of the income produced throughout the dividends.
For far 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. Creditors and lenders can be matched up via a site or marketplace. Instead of going to a bank, the borrower receives a loan from an investor.
In some cases the borrower may not be able to qualify for a loan via a traditional bank. And in many circumstances the borrower gets a much better interest rate than they might get from a bank. As an investor, you can earn a great return as well.