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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 that it compounds and grows quicker. However, with some time, its possible to create enough passive income 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 work. The money will flow in without too much being required of you. In some scenarios 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 just as much effort in the long run when youre making the money.

What qualifies as passive income is up for debate. Most lists that 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 own opinion, all of them require too much effort to be considered as passive.

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

Ive been blogging fulltime for 10 years and Ive sold ebooks and classes in the past. Theyre great ways to earn money, I just dont consider them to be passive, in most cases. .

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Just about any business can be a source of passive income when youre paying others to run the business. This is true with both online and traditional businesses. This opens up even more chances than that which will be listed 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. Others wont require any money to begin. If you dont have the money to invest now, consider starting with the methods that dont require any money, and then utilize that money you make to invest. .

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Your first financial priority should 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 horrible interest rate. You can open a high yield savings account or money market account with an online bank that will earn a much greater 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 1.85% 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 for their shareholders. As a shareholder, you can re-invest the dividends to purchase more shares of the inventory, or take the dividends in cash. Reinvesting will allow you to own more shares, 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 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 terrific investment whether or not you want to reinvest all the dividends on hold on to this stock for a long time, or make use of the income generated look these up throughout the dividends.

For much more detail on the topic read Investing in Dividend Stocks in Investopedia. For a list of these shares, see this my response 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 years. Creditors and lenders can be paired up via a website or marketplace. Instead of going to a bank, the debtor gets a loan from an investor.

In some cases the borrower may not be able to qualify for a loan via a traditional bank. And in many circumstances the borrower gets a better interest rate than they could receive from a bank. As an investor, you can earn a great return as well.