Passive income is a great way to plan for the future and retire earlier then one might have hoped for. Below is a list of ideas on how you can create passive income for yourself.

P2P Lending

P2P Lending or Peer or Peer Lending is a great way place to put disposable income you might have and lead it to others for a nice return. The two sites that come to mind for me when I think about this are Lending Club and Prosper. These are great programs but depending on where you live and your laws per state you may or may not be able to take part.

P2P Lending is where you put some of your money into the system and delicate it out to others looking for loans for smaller type projects such as paying off high debt, home improvements, sheds or any number of things. They then pay you back in the form of a monthly payment based on a interest rate. This rate depends on their credit score so a higher risk bad credit report person has a higher chance of not paying and declaring bankruptcy thus they pay a higher percent then someone with a good credit. On average though with a well diversified portfolio you could see rates at about 3%-5% or a bit higher.

REIT Stock or high Dividend Stocks

Dividend stocks are always nice, every 3 months or quarter you get a check on stocks you own. This check is a percentage paid out to all share holders. It is a great incentive for holding stock in a company and some pay out as high as 10% (These would be your REIT stocks which have a higher fluctation in stock prices.

For example if you where to buy stock in the company ConocoPhillips (COP) at the price of $43 per share as of me writing this right now. You would get a payout of 2.47% or 0.26 per share each year or 6 and a half cents per share per quarter (Unless the company raises or lowers their dividend payout)

Dividend stocks such as this help reduce the losses you could suffer and help create a more balanced portfolio

Cash Back

This one I am going to split into two sub categories of pay of your debts but get cash back.

If you have any type of debt be it credit card, student loan, home loan or car loan I would say pay those off as quickly as possible. You almost will never see a higher return on the percent you are paying for these loans and it is a great way to get yourself above water.

Many credit card companies and even savings accounts offer incentives such as APY (Annual Percentage Yield) or sign up bonuses. Some credit cards even offer cash back of up to 5% I always look on http://Bankrate.com or http://nerdwallet.com to find great deals for such programs and put my money into areas where it works for me the most. Important things to look out for are yearly fees, transaction fees or any other type of hidden fees these will quickly eat away your gain and even put you into negative territory!

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