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At first 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 faster. But with a few time, its potential 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 make without putting in much work. The money will flow in without too much being required of you. In some cases 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 require as much effort in the long run when youre making the money.
Exactly what qualifies as passive income is up for debate. Most lists which youll find online will include things like blogging, writing e-books, or creating your own course. Im not including those ideas in this informative article because, in my opinion, they all require too much effort to be considered as passive.
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Blogging will constantly require on-going work, either by yourself or by other people that youre paying. Selling ebooks or classes will require on-going customer service, and youll need a consistent traffic supply in order to continue to make sales. It's possible and there are people who've been able to get it done passively, but they compose a small percentage of people who really set out to do it.
Ive been blogging fulltime for 10 decades and Ive sold ebooks and courses in the past. Theyre great ways to earn money, I just dont consider these to be passive, in the majority of cases. .
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Just about 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 chances than what will be listed here.
Now lets take a look at some of the best ways to produce passive income. Some of them are investments that will require some money to begin with. Other folks wont require any money to begin. If you dont have the money click to read to invest now, consider starting with the methods that dont need any money, and then use 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 is a checking or savings account at a local bank which pays you a horrible 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 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 fast and simple, 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 see this here 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 websites long history 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 regardless of whether you want to reinvest each of the dividends on hold on to the stock for quite a long time, or use the income generated through the dividends.
For far more detail on the subject read Investing in Dividend Stocks in Investopedia. For 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) has become extremely popular in recent years. Creditors and lenders can be paired up through a website or market. Instead of going to a bank, the debtor receives a loan by an investor.
In some cases the borrower might not have the ability to qualify for a loan via a traditional bank. And in many cases the debtor gets a much better interest rate than they might receive from a bank. As an investor, you can earn a good return as well.