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Initially you may only be making a tiny amount of money passively, and you might even want to re-invest that money so it compounds and grows faster. But with some time, its potential to make enough passive income you could quit your job or retire early.
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 like blogging, writing e-books, or creating your own course. Im not including those ideas 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 others which youre paying. Selling ebooks or courses will require on-going customer support, and youll need a consistent traffic source in order to continue to create sales. It is possible and there are individuals who have been in a position to get it done , but they compose a small percentage of individuals who actually set out to get it done.
Ive been blogging full-time for 10 years and Ive sold ebooks and courses in the past. Theyre great ways to make money, I just 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 if youre paying others to run the business. This is true with both online and traditional businesses. That opens up even more chances than what will be recorded here.
Now lets have a peek at some of the best ways to make passive income. A number of these are investments that will need some money to start with. Other folks wont require any money to get started. In case you dont have the money to invest now, try starting with the methods that dont need any money, and then utilize that money you earn to invest. .
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Your very 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 is a checking account 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 which will earn a lot better return for you.
My wife 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 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 this stock, or take the dividends in cash. Reinvesting will allow you to 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. As a result of this, these investments tend to be considered less risky right here than the stock exchange in general.
Dividend stocks can be a terrific investment regardless of whether you want to reinvest each of the dividends on hold on to this stock for quite a long time, or use the income produced through the dividends.
For much more detail on the topic read Investing in Dividend Stocks in Investopedia. To get a list of those shares, visit 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 years. Creditors and lenders can be paired up through a website or market. Instead of official website going to a bank, the debtor receives a loan by an investor.
In some situations the borrower may not have the ability to qualify for a loan through a traditional bank. And in many cases the borrower gets a better interest rate than they might get from a bank. As an investor, you can earn a good return as well.