Summary of "Every Type of Income Ranked from Worst to Best"

Summary of “Every Type of Income Ranked from Worst to Best”

This video ranks major income streams from worst (F tier) to best (S tier), focusing on the nature of income, scalability, leverage, and wealth-building potential.

Income Tiers and Key Finance Insights

F Tier: Hourly Wages & Gig Work

Income tied directly to time worked; no leverage or scalability.
Common in retail, food service, delivery, warehouses, construction.
Typically minimum wage, no benefits (healthcare, retirement).
Income disappears if you stop working; vulnerable to health, demand, and inflation.
Gig economy worsens unpredictability with algorithm-driven pay cuts.

Key takeaway: Zero ownership, zero leverage, survival money only.

D Tier: Salaried Employment (9-to-5)

Fixed monthly income with benefits (healthcare, retirement).
About 62% of US workers; includes teachers, nurses, engineers, office staff.
Raises average ~3% annually, barely matching inflation.
Income capped regardless of value created; limited upside.
Job loss leads to zero income.

Key takeaway: Slightly better than hourly but still trading time for money; treadmill with no scalability.

C Tier: Freelancing & Contracting

Control over rates, clients, and workload.
64 million freelancers in the US (~39% workforce).
Often earn more per hour than salaried workers (sometimes 2-3x).
No benefits, no guaranteed pipeline; responsible for taxes/admin.
Income capped by available hours but offers diversification (multiple clients).
Transitional tier enabling savings and investment.
Millionaires often start here before scaling or investing.

Key takeaway: Control and higher income potential but still tied to personal effort.

B Tier: Small Business Owners & Commission-Based Earners

Income not directly tied to hours; potential for large upside.
33 million small businesses in US, employing nearly half the private workforce.
High failure rates: 20% in first year, 50% in 5 years.
Leverage through hiring, outsourcing, automation.
Commission earners (sales, brokers, real estate agents) have unlimited upside but volatile income.
Risk is higher; income depends on performance and market conditions.

Key takeaway: First tier where skill and effort can multiply income; wealth building possible but risky.

A Tier: Asset Income (Rental Real Estate & Dividend Stocks)

Income from ownership, not labor.
Over 70% of US millionaires own real estate.
Rental properties provide monthly cash flow plus appreciation.
Dividend stocks: $1.6 trillion paid globally in 2023; typical yield ~4%.
Requires significant capital to generate meaningful income (e.g., $10,000 at 4% = $400/year).
Income streams can compound and grow without daily input.
Most reach this tier by reinvesting profits from lower tiers.

Key takeaway: Real freedom begins here; money works for you, but high capital entry barrier.

S Tier: Billionaire Tier (Massive Equity & Capital Gains)

Two main paths:
1. Build or own equity in ecosystem-scale companies (e.g., Apple, Microsoft, Google, Amazon, Nvidia, OpenAI).
2. Ultrawealthy families reinvesting over decades in real estate, stocks, royalties.
Wealth grows via capital gains and equity appreciation.
Strategy: rarely sell assets; borrow against them tax-free (“buy, borrow, die” strategy).
Requires long-term discipline and massive scale.

Key takeaway: True wealth from ownership of large-scale assets and capital gains, not labor or small business.

Methodology / Framework for Ranking Income Streams

Evaluate based on leverage, scalability, ownership, and risk.
Income tied directly to time = lower tier.
Income from ownership and capital = higher tier.
Consider stability, growth potential, benefits, and downside risks.
Recognize the role of capital and reinvestment in moving up tiers.

Key Numbers & Stats

1 in 3 US workers paid hourly.
62% salaried workers in US.
64 million freelancers in US (39% workforce).
33 million US small businesses; 20% fail first year, 50% in 5 years.
$1.6 trillion dividends paid globally in 2023.
70%+ US millionaires own real estate.
Typical dividend yield example: 4% on $10,000 = $400/year.

Recommendations & Cautions

Hourly and salaried income are limited by time and offer no scalability.
Freelancing offers control but requires self-marketing and has no safety net.
Small businesses and commissions offer high upside but come with high risk and volatility.
Asset income requires capital but offers compounding and passive growth.
Long-term wealth requires moving beyond labor-based income into asset ownership.
The “buy, borrow, die” strategy is highlighted as a tax-efficient wealth preservation method.

Disclosures

The video promotes the Alux app for coaching and courses on business and freelancing.
Not explicit financial advice; viewers encouraged to consider their own situation.
Emphasis on mindset shift from hours-to-money to leverage and ownership.

Presenters / Sources

Presented by Alux (a personal finance and lifestyle brand).
References to companies: Apple, Microsoft, Google, Amazon, Nvidia, OpenAI.
Mention of US labor statistics and dividend market data (2023).

Overall, the video provides a structured hierarchy of income types emphasizing the importance of leverage, ownership, and capital in building lasting wealth, encouraging viewers to progress from labor-based income to asset-based income for financial freedom.