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Initially you may only be making a tiny amount of money passively, and you may even want to re-invest that money so it compounds and grows quicker. However, with a few time, its potential to make 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 you make without putting in much effort. The money will flow in without too much being required of you. In some cases it could be long-term recurring income, and in some other instances it could be short lived or inconsistent.

In some circumstances youll need to put in some effort up front, but then it wont require as much effort in the future when youre making the money.

Exactly what qualifies as passive income is up for debate. Most lists that youll find online will include things such as blogging, writing e-books, or creating your own course. Im not including those thoughts in this post because, in my opinion, all of them require an excessive amount of effort to be considered as passive.

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Blogging will constantly need on-going work, either by yourself or by other people that youre paying.  Selling ebooks or courses will need on-going customer support, plus youll need a consistent traffic source in order to continue to create sales. It's possible and there are people who have been able to get it done passively, but they compose a small percentage of individuals 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 just dont consider these to be more passive, in the majority of cases. .

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Nearly any business can be a source of passive income when 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 have a look at a few of the best ways to make passive income. A number of these are investments which will need some money to start with. Others wont require any money to begin. If you dont have the money to invest now, consider starting with the methods 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 develop an emergency fund that can 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 terrible interest rate. You can open a high yield savings account or money market account with an online bank that will earn a much better return for you.

My wife 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 easy, 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 stock, or take the dividends in cash. Reinvesting will allow you to own more stocks, which contributes 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. Because of this, these investments tend to be considered less risky than the stock exchange in general.

Dividend stocks can be a great investment whether or not you want to reinvest each the dividends on hold on to the stock for a long time, or make use of the income generated through the dividends.

For much more detail on the topic read Investing in Dividend Stocks in Investopedia. To get a list of these stocks, visit 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 website or market. Instead of going to a bank, the debtor receives a loan by read what he said an investor.

In some cases the borrower may not be able to be eligible for a loan through a traditional bank. And in many circumstances the debtor gets a better interest rate than they might receive from a bank. As here an investor, you can earn a good return too.