[@alux] Every Type of Income Ranked from Worst to Best

Link: https://youtu.be/IvnQpxkgzjs

Short Summary

This video ranks income streams from worst (F Tier: hourly wages/gig work) to best (S Tier: equity in massive companies/capital gains), emphasizing that wealth is built through leverage, ownership, and assets. It highlights the limitations of trading time for money and encourages viewers to climb the tiers by investing in assets that generate passive income.

Key Quotes

Okay, here are 4 direct quotes from the transcript that I found to be particularly valuable insights:

1. "If your income depends on showing up every single hour, you don't own your time. Your time owns you." (Regarding F Tier - Hourly Wages)
2. "The salary model locks you into trading time for money with no upside. No matter how much value you create for the company, your income stays fixed." (Regarding D Tier - Salary)
3. "Freelancing is better than a salary because you control the ceiling. But until you build leverage, you're still tied to your own effort..." (Regarding C Tier - Freelancing)
4. "A tier is where money finally works for you." (Regarding A Tier - Asset Income)

Detailed Summary

Here's a detailed summary of the YouTube video transcript, broken down into bullet points:

Key Topics:

• Ranking of income streams from worst to best.
• Explanation of different "tiers" of income and wealth building.
• Strategies for climbing the income ladder.

Tier Breakdown and Arguments:

• F Tier: Hourly Wages and Gig Work (Worst)

  • Income is directly tied to physical presence; no work, no pay.
  • Considered "survival money."
  • Prevalent in retail, food service, delivery, warehouses, construction.
  • Low wages, often near minimum wage.
  • Lack of benefits (paid vacation, retirement, health insurance).
  • Gig economy exacerbates the problem with unpredictable demand, lack of worker protections, and algorithm-driven pay cuts.
  • No leverage, ownership, or scalability.
  • Time is owned, not controlled.
  • Inflation erodes purchasing power.
  • Income tied to stamina and health.
  • System designed to keep workers trapped.

• D Tier: Salary (9-to-5)

  • Seemingly safer than hourly work due to predictable income and benefits.
  • Includes teachers, nurses, accountants, engineers, office managers, corporate staff.
  • Provides stability and allows for some planning.
  • Paychecks grow slowly (average 3% annual raises) while expenses increase faster.
  • Promotions are slow and incremental.
  • Locks individuals into trading time for money with limited upside.
  • Value creation doesn't necessarily translate to increased income.
  • Described as a "treadmill."
  • Limited scalability and income capped by role/industry.
  • Income goes to zero if the job is lost.

• C Tier: Freelancing and Contracting

  • First tier where individuals have control over pay rate, clients, and workload.
  • Still time-for-money, but with more control.
  • Growing rapidly (39% of the US workforce in 2023).
  • Potential to earn more per hour than salaried employees.
  • Lack of corporate benefits and support.
  • Responsible for taxes and administration.
  • Ability to promote oneself and increase income without HR approval.
  • Diversification through multiple clients.
  • Still limited by available time.
  • Transitional tier: allows for saving and investing.
  • Can lead to financial freedom if used to fund investments or businesses.

• B Tier: Small Business Owners and Commission-Based Earners

  • Ceiling lifts; potential for significantly higher income.
  • Higher risk involved.
  • Small businesses face high failure rates (20% in first year, 50% within 5 years).
  • Commission-based earners face unstable income (feast or famine).
  • Small business leverages the labor of others (team, outsourcing, automation).
  • Business owners responsible for everything (payroll, marketing, taxes).
  • Commission-based income directly tied to performance.
  • Market volatility impacts commission earners.
  • Being better at the job directly translates to more money.
  • High potential for success or failure.
  • Wealth comes from reinvesting profits or commissions into assets.

• A Tier: Asset Income

  • Money works harder than the individual.
  • Income from ownership, not direct labor.
  • Examples: rental real estate, dividend-paying stocks.
  • Real estate generates monthly cash flow and appreciates in value.
  • Dividends offer steady income.
  • Requires significant capital to enter.
  • Real estate requires managing properties and tenants.
  • Dividend stocks require substantial investment for meaningful income.
  • Power of compounding: reinvest dividends, grow equity.
  • Provides freedom to focus on other ventures.
  • Most people reach A tier by climbing from lower tiers.

• S Tier: Billionaire Tier (Top Tier)

  • Game is different from A tier; much larger scale.
  • Two paths:
    • Build a globally impactful company (e.g., Apple, Microsoft).
    • Consistent, long-term reinvestment of assets (real estate, stocks, royalties).
  • Equity in massive companies and capital gains on big investments.
  • "Buy, Borrow, Die" strategy: borrow against growing assets to fund lifestyle tax-free.

Overall Argument:

• Wealth is about leverage, ownership, and assets, not simply trading time for money.
• Most people remain in the lower tiers because they are trained to think in terms of hours and paychecks.
• Climbing the tiers requires a shift in mindset and strategic action.

Alux App Promotion:

• The video includes a promotion for the Alux app, which offers coaching sessions and expert-led courses to help users build businesses or embrace freelancing to level up their income.