About this video

• Video Title: Every Type of Income Ranked from Worst to Best
• Channel: Alux.com
• Speakers: [None specified in transcript]
• Duration: 15:36

Overview

This video ranks various income streams from worst to best, categorizing them into tiers (F, D, C, B, A, S). It explains the characteristics, pros, and cons of each tier, emphasizing the importance of leverage, ownership, and assets for building wealth. The video aims to provide viewers with a roadmap to understand their current financial standing and how to progress towards higher income tiers.

Key takeaways

• F Tier (Hourly Wages & Gig Work): This is the lowest tier, where income is directly tied to time spent working, with no benefits, leverage, or scalability. It's described as survival money where the income stops the moment work stops.
• D Tier (Salary): While offering more predictability and benefits than hourly wages, salary is still a form of trading time for money with limited income growth potential and a fixed ceiling determined by promotions and annual raises.
• C Tier (Freelancing & Contracting): This tier offers more control over pay rates and work, providing an opportunity to earn more per hour than salaried employees. It's seen as a transitional phase that allows for saving and investing but still relies on trading time for money.
• B Tier (Small Business Owners & Commission-Based Earners): This tier offers higher income potential and leverage through systems, delegation, or performance-based earnings. However, it comes with higher risks, such as business failure or income volatility.
• A Tier (Asset Income): In this tier, money works for you through ownership of assets like rental properties or dividend stocks. Income is generated passively, allowing for wealth building and freedom, but requires significant capital to enter.
• S Tier (Billionaire Tier): The highest tier, achieved through building massively influential companies or through long-term, disciplined reinvestment of capital. Income is generated from equity in large corporations and capital gains, often with strategies like borrowing against assets tax-free.
• Wealth vs. Income: The video emphasizes that true wealth building relies on leverage, ownership, and assets, rather than solely on trading time for money, which characterizes the lower income tiers.

Salary (D tier) offers more predictability because income is fixed each month, and it often comes with benefits like health insurance, paid vacations, and retirement contributions, which are typically absent in hourly wages (F tier). Hourly wages are directly tied to the hours worked, meaning income can fluctuate significantly based on hours available or missed work due to illness or other reasons.

The two main paths to reaching S tier income are:

1. Building a massive, globally impactful company: This involves creating a business or ecosystem that billions of people rely on daily, leading to extremely high equity value (e.g., Apple, Microsoft, Google).
2. Long-term, disciplined reinvestment of capital: This path involves steadily acquiring assets like real estate, stocks, and royalties over decades and consistently reinvesting profits and gains, allowing the snowball effect to build immense wealth.