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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 potential to make enough passive income that you could quit your job or retire early.
In some circumstances youll need to put in some effort up front, but then it wont need just 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 ideas in this post because, in my opinion, they all 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 by others that youre paying. Selling ebooks or courses 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've been in a position to get it done , but they make up a small percentage of people who actually set out to get it done.
Ive been blogging fulltime for 10 decades and Ive sold ebooks and classes in the past. Theyre great ways to earn money, I just dont consider these 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. That is true with both online and traditional businesses. That opens up even more possibilities than what will be listed here.
Now lets take a look at some of the best ways to produce passive income. Some of these are investments that will require some money to begin with. Others wont require any money to get started. If you dont have the money to invest now, consider starting with the methods that dont require any money, and then utilize that money that you earn to invest. .
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Your this content very first financial priority must be to develop an emergency fund that will cover all of your living expenses for a couple months. But dont put this money would be a checking 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 lot greater you can find out more 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 1.85percent APY and CIT savings accounts are earning 1.55% APY. Thats 22x the national average! Opening an account with CIT is quick and easy, 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 cash. Reinvesting will allow you to 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 great investment whether or not you want to reinvest each of the dividends on hold on to the stock for 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 at Investopedia. For a list of these shares, 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 matched up through a website or market. Instead of going to a bank, the debtor gets a loan from an investor.
In some cases the borrower might not have the ability to be eligible for a loan through 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.