Summary

The article discusses the evolution of pyramid schemes into more subtle forms, often disguised as opportunities for generating passive income through content creation.

Abstract

The traditional pyramid scheme has been rebranded in the modern era, with the allure of passive income replacing the direct sale of products. The author reflects on their own pursuit of passive income through blogging and the realization that it requires significant time and effort, contrary to the promise of earning money with minimal work. The article suggests that true passive income is limited to investments and property rentals, and cautions readers about the misleading nature of "passive income" schemes that demand substantial time and may lead to frustration and demotivation. Instead, the author advocates for focusing on current enjoyment and fulfillment in one's work and hobbies rather than chasing an elusive future of effortless income.

Opinions

The author acknowledges the irony of learning about passive income through content that encourages creating more content.
Passive income is portrayed as a spectrum, with true passive income being limited to investments like those through Vanguard or property rentals.
The author criticizes the messaging around passive income for pressuring individuals to overextend themselves in pursuit of a promise that often leads to dissatisfaction.
There is a skepticism towards the idea of passive income as a modern-day pyramid scheme, where time and effort are traded for the opportunity to earn.
The author resolves to focus on present satisfaction from work and hobbies, such as writing, without the expectation of future passive income.
A recommendation is made to pursue activities one loves, like writing or video creation, without being motivated solely by the prospect of passive income.

The pyramid scheme has changed and we’ve all fallen for it

Pyramid schemes are so often parodied that it’s hard to believe we could be suckered in by it, but today’s pyramid scheme is subtle.

If you don’t know about pyramid schemes, the idea is simple enough: The person at the top of the pyramid recruits a number of people to sell something (normally a product or some training). First they have to pay for the product before they can sell it, and once they start selling, a portion of every sale goes to the person above them. They recruit a number of people who recruit more people and it goes on like that.

The product is irrelevant, you’re being sold the opportunity to make money. It’s a no brainer — I just need to convince ten other people to give me their hard earned money and then I can start reaping the reward without having to lift a finger.

Pay attention to that last part. Where else have you heard about making money without having to do anything? I don’t know about you, but my life is constantly bombarded with articles and videos about passive income.

Passive income is money which comes in to your bank account without you needing to expend much time or energy to earn it.

I’ve been fixated on passive income for a few years now. If I don’t have to work 9–5 then I could finally get around to doing all the things I want to do. Maybe I could get that six pack I’ve always wanted…

If I’m honest with you, it’s one of the main reasons I started writing a blog. If you have a look at any of those articles on passive income, the majority of them will have examples which are basically content creation. The two most common methods being blog posts and YouTube videos.

So we’re reading blog posts and watching videos which are telling us that to produce passive income, we need to write blog posts and make videos. That seems familiar, doesn’t it?

It also turns out that I can’t just write one blog post and sit back waiting for my millions to come in. I’ve earned $1.85 on my first blog post so far. I won’t be handing in my notice any time soon…

If you want to make money on Medium or YouTube, you need to be contributing on a very regular basis in order to stand out from the crowd and stay on top.

Like all the pyramid schemes from the past, we’re being sold the opportunity — “Follow these 5 simple steps to make more money than you could imagine”.

The good thing is that you don’t have to shell out any of your hard earned cash first. However, you’re still making a trade. You’re trading your time to watch these videos and read these articles, and that’s how they get paid. You’re also paying a higher price if you’re anything like me, as your mind will be focused on it, and you’ll probably spend a bunch of time trying some of these things.

Money versus effort

Passive income does exist, but it exists on a scale. If you want to do almost literally nothing and make money, your only real option is to invest. I use a platform called Vanguard and have made significantly better returns than the $1.85 for my blog post (with a lot less effort).

If you’ve managed to save up enough that you can buy a property to rent out, that’s probably the next best thing. It’s a little bit more work, but the returns are more predictable. We’re in the process of purchasing our first buy to let, so I’ll let you know how it goes.

Beyond that, any “passive income” idea that you’ll see recommended online is going to take time and effort and sometimes money. Weigh up the cost before you get fixated on it.

A better way

Passive income may not always fall under the strict definition of a pyramid scheme, but I’d argue that a lot of the messaging about it can be harmful to you and to me. It puts pressure on us to try to do more and work harder, often in an area where we have no skills or talents. This can lead us to become frustrated and demotivated in the little free time we have. All for the promise of more free time in the future to live our life.

Why not live your life now instead?

I’m going to try to avoid any mention of passive income from now on. I’m going to think clearly about my motivation behind the things that I do and make sure that I’m doing them for today’s me, not some future lazy me who doesn’t want to work any more. I’m going to be content in my job, because actually, my job is great! I do something I enjoy and get paid well to do it. I think I’m also going to continue writing, because I enjoy it.

If you love to write, then write about what you love. If you love to make videos, then that could be a great option for you too, but don’t do something that you don’t enjoy purely in the hope that it might lead to “passive income”.

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