Passive Income – The Holy Grail

Imagine having to work for a short period of time and with a few simple arrangements and then for the rest of your life just being able to enjoy yourself and make all your dreams come true. This is what those who present the possibility of passive income promise.

If you have a job that you don't like, money that is only enough for rent and food and see people around you posting pictures from their dream vacations on Facebook - then the proposal that can provide passive income is probably very attractive.

Too good to be true

If we start somewhere, I think everyone agrees with me that if everyone has accepted the offer to invest in something that provides a lifelong passive income, then this should not be able to work - someone must work and create all the profits and resources that are supposed to guarantee the passive income.

Of course, articles and stories about people in the financial industry, IT business and entertainment industries who have made a lot of money help to create the image that you can become enormously rich in a short period of time, and seemingly without much effort. Since the financial crisis of 2008-2009, economic development has also been almost unprecedented in modern history, where the world has until now experienced tremendous economic growth, and it seemed that the party would never end.

Exploiting people who are in a vulnerable situation

All scammers try to find a victim who is in a vulnerable and weak situation. This is known in the fraud industry as a "Soft Target". In an increasingly complex world with less social contact and stricter requirements to perform and be profitable, a relatively large group of "soft targets" has been created that fraudsters can target. The end goal is always money, but the method can vary from alluding to love, smart investing or alternative investments such as cryptocurrency.

In addition to targeting people who are vulnerable in some way, the standard method is to put the victim in a stressful situation where you have to make quick decisions. When a person gets stressed, the usual logic doesn't work, and you don't think in the same way as normal.

Is there passive income at all

I have seen a few examples where a person with a relatively large capital manages to make an investment, and contracts, that have paid a steady dividend for a long time. In these situations, it has been more fortunate circumstances – although the individual will never admit it – that have allowed the investment to yield a steady return for a long time.

But these examples are at least as rare as winning the lottery.

In what is called Multi-Level Marketing – MLM – the opportunity is often presented to build up a network of people over a short and intensive period of time who generate a commission from which you can then receive an income for a long time.

However, everyone experienced in MLM knows that if you do not constantly work with this network that you have built up, and build on the network, the income, the commission, will come to a standstill within a relatively short time. There will never be any passive income.

How do I know if the offer I'm receiving is a scam?

I get this question almost daily from both prospective investors and those who report on frauds and the financial industry. I have a rather short, and simple, answer to this. If anyone knows which numbers will win the lottery next week. Why would this person then try to sell this information to others so they can win next week's lottery.

The natural thing would have been to play the lottery yourself – and take the entire prize for yourself. If the person didn't have any money to play with, it would have been easy to be able to borrow if you could present that you knew in advance which numbers would win.

So - there is no logic in offering an investment that can provide a passive income to a large number of investors, and charging for it, when it would most likely be much more profitable and keeping the investment opportunity for yourself. With this simple "test", you don't need to familiarize yourself with any technical arrangements or educate yourself on how a specific market looks and works. So, it's not really a question of it being an offer that is too good to be true, but a question of probably no one wanting to share something that they could have used themselves.

Lars Olofsson

Lawyer from Sweden, and an expert on cyber crime