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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 that it compounds and grows faster. But with a few 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 you make without putting in much work. The money will flow in without too much being required of you. In some scenarios it might be long-term recurring income, and in some 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 just as much effort in the long run when youre making the money.

What qualifies as passive income is up for discussion. Most lists that youll find online will include things like blogging, writing e-books, or creating your own course. Im not including those thoughts 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 other people that youre paying.  Selling ebooks or classes will need on-going customer service, plus youll need a consistent traffic supply in order to continue to create sales. It's possible and there are people who have been able to get it done passively, but they make up a small percentage of individuals who actually set out to do it.

Ive been blogging full-time for 10 years and Ive sold ebooks and courses in the past. Theyre great ways to earn money, I simply 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. That is true with both online and traditional businesses. That opens up even more chances than that which will be recorded here.

Now lets take a look at a few of the best ways to produce passive income. A number of these are investments that will need some money to start with. Other folks wont need any money to get started. If you dont have the money to invest now, try starting with the approaches that dont need any money, read review and then utilize that money you earn to invest. .

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Your very first financial priority should be to build up an emergency fund that will cover all of your living expenses for a couple months. But dont put this money is a checking 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 much 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 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 buy more shares of the stock, or take the dividends in money. Reinvesting will let you 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. As a result of this, these investments tend to be considered less risky than the stock exchange in general.

Dividend stocks can be a great investment whether or not you want to reinvest each of the dividends on hold on to the stock for a long time, or use the income generated throughout the dividends.

For much more detail on the subject read Investing in Dividend Stocks in Investopedia. For a list of these shares, visit this 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. Borrowers and lenders can be matched up via a website or market. Instead of going to a bank, the borrower receives a loan from an investor.

In some situations the borrower might not have the ability to qualify for a loan via a traditional bank. And in many circumstances the debtor gets a better interest rate than they could get from a bank. As an investor, you can earn a great return as well.