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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. However, with some time, its potential to create enough passive income that you could quit your job or retire .
Passive income can be a bit of a divisive topic. In general, passive income is any money you make without putting in much work. The money will flow in without too much being demanded of you. In some scenarios it might 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 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 thoughts in this informative article because, in my own 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 which youre paying. Selling ebooks or classes will require on-going customer support, and youll need a consistent traffic supply in order to continue to make sales. It is possible and there are individuals who've been in a position to do it passively, but they make up a small percentage of individuals who really set out to get it done.
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 more 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. That is true with both online and traditional businesses. This opens up even more chances than that which will be recorded here.
Now lets have a peek at a few of the greatest ways to produce passive income. Some of them are investments that will require some money to start with. Others wont need any money to begin. In case you dont have the money to invest now, consider starting with the approaches that dont require any money, and then use that money that you earn to invest. .
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Your first financial priority must be to develop an emergency fund that can cover all of your living expenses for a few 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 1.85% 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 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 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 market in general.
Dividend stocks can be a great investment regardless of whether you want to reinvest each the dividends on hold on to the stock for a long time, or use the income generated through the dividends.
For much more detail on the subject read Investing in Dividend Stocks at Investopedia. For a list of those shares, see this collection from Dividend.com and this collection from DividendValueBuilder.com.
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Peer-to-peer lending (or P2P) has become extremely popular in recent decades. Borrowers and lenders can be matched up via a site i thought about this or marketplace. Instead of going to a bank, the borrower receives a loan from an investor.
In some situations the borrower may not be able to be eligible for a loan via a traditional bank. And in many cases the debtor gets a better interest rate than they could receive from a bank. As an investor, you can earn a great return as well.