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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 quicker. However, with some time, its potential to make enough passive income that you could quit your job or retire early.

Passive income can be a bit of a divisive topic. In general, passive income is any money that 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 other cases it could be short lived or inconsistent.

In some circumstances 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.

Exactly what qualifies as passive income is up for discussion. 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, they all require too much effort to be considered as passive.

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Blogging will always require on-going work, either by yourself or by other people that youre paying.  Selling ebooks or classes will require on-going customer service, plus youll need a consistent traffic supply in order to continue to make sales. It's possible and there are individuals who have been able to get it done passively, but they make up a small percentage of individuals who really set out to do it.

Ive been blogging fulltime for ten years and Ive sold ebooks and classes in the past. Theyre great ways to make 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 others to run the business. That is true with both online and traditional businesses. This opens up even more chances than what 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 that will require some money to begin 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 you make to invest. .

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Your very first financial priority should be to develop an emergency fund that can cover all your living expenses for a couple months. But dont put this money is a checking account dig this 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 you could try here account with an online bank which will earn a lot greater 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 1.85% 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 trader, you can re-invest the dividends to buy more shares of the stock, or take the dividends in money. Reinvesting will let you own more shares, 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 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 this stock for a long time, or make use of the income generated through the dividends.

For far more detail on the subject read Investing in Dividend Stocks in Investopedia. For a list of those shares, see this collection out of Dividend.com and this collection from DividendValueBuilder.com.

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Peer-to-peer lending (or P2P) is becoming extremely popular in recent years. Creditors and lenders can be matched up through a site or market. Instead of going to a bank, the borrower gets a loan by an investor.

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