Assets Ranked by What Actually Makes You Money

Key Concepts:

• Asset Tier Ranking (F to S)
• Wealth Building vs. Wealth Destruction
• Liquidity and Volatility
• Cash Flow Generation
• Diversification
• Leverage and Scalability
• Risk vs. Return

F Tier Assets: Financial Traps

• Main Point: F-tier assets are financial traps disguised as investments, destroying wealth over time.
• Examples:
  • Lotteries and Gambling: Americans spend over $100 billion annually on lottery tickets. The odds of winning are roughly 1 in 300 million. The average adult throws away more than $1,000 annually chasing these jackpots.
  • Luxury Consumer Goods: Cars, watches, jewelry, designer fashion, and new phones bought on debt are liabilities, not assets. A new sports car might lose half its value in the first 5 years.
  • Collectibles without Expertise: Fads like Beanie Babies or NFTs lack liquidity and industry knowledge, leading to worthlessness.
• Key Argument: F-tier assets confuse consumption with investment, driven by emotion rather than financial sense.
• Outcome: A $100,000 investment vanishes in lotteries, depreciates rapidly in luxury goods, or remains illiquid in speculative collectibles.

D Tier Assets: Weak, But Not Hopeless

• Main Point: D-tier assets can work, but the odds are stacked against you due to volatility, illiquidity, or dependence on luck.
• Examples:
  • Commodities (Gold and Silver): Gold's long-term annualized return over the past 50 years is around 7 to 8%, less than stocks and only slightly above inflation. They don't generate cash flow.
  • Single Rental Properties: Vacancy risks, property taxes, maintenance costs, and rising interest rates can lead to negative cash flow. Census Bureau data shows that mom and pop landlords who just own one property, they often face the highest default and vacancy risks.
• Key Argument: D-tier assets are fragile, dependent on timing the market and avoiding bad luck.
• Outcome: A $100,000 investment stagnates or bleeds slowly rather than growing consistently.

C Tier Assets: Average, But Not Exciting

• Main Point: C-tier assets keep up with inflation but rarely accelerate financial independence.
• Examples:
  • Bonds (US Treasury Bonds): 10-year treasuries have returned about 4 to 5% annually over the past 30 years, compared to over 10% for the S&P 500.
  • REITs (Real Estate Investment Trusts): Sensitive to interest rate cycles; the FTSC NARI all equity rates index lost over 25% in 2022.
  • Collectibles with Expertise (Art, Vintage Cars, Rare Watches): Deoid's 2023 art and finance report found that ultra- high netw worth individuals now allocate about 5% of their portfolios to art. Liquidity is a major issue; selling can take months or years.
• Key Argument: C-tier assets are diversification tools, smoothing out risk but not driving wealth creation.
• Outcome: A $100,000 investment provides stability but limited growth.

B Tier Assets: Solid, But Not the Best

• Main Point: B-tier assets offer reliable wealth building through steady compounding, accessibility, and proven track records.
• Examples:
  • Index Funds (S&P 500): Have returned about 10% annually since inception. A $10,000 investment in 1980 would be worth over $900,000 today.
  • Dividend Paying Stocks: Companies like Johnson & Johnson, Coca-Cola, and Proctor & Gamble have raised dividends for decades. The S&P 500 dividend aristocrats, firms that have increased payouts for 25 plus years, have historically outperformed the market with lower volatility.
  • Real Estate Portfolios at Scale: Owning 5 to 10 properties spreads out risk. About 70% of rental properties are owned by individuals, but only landlords with multiple units tend to see real stability.
• Key Argument: B-tier assets are repeatable and don't rely on luck, but lack the upside, leverage, and scalability of higher tiers.
• Outcome: A $100,000 investment could compound into $1 million in 30-35 years in index funds, pay $3-5,000 annually in dividend stocks, or be leveraged into multiple rental units.

A Tier Assets: Powerful, But Demanding

• Main Point: A-tier assets have the potential to generate serious wealth but require significant capital, skill, or patience.
• Examples:
  • Private Equity and Venture Capital: Historically, private equity funds have returned between 12 to 15% annually. A Bay & Company 2023 report confirmed that top tier private equity funds still outperform even after fees. Minimum investment is usually $250,000 with money locked away for 7-10 years.
  • Franchises: Top franchises like Chick-fil-A, McDonald's, or Domino's can generate six figures in profit per location. Operators average $80,000 to $100,000 in annual profit, according to Franchise Business Review. Opening one can cost $500,000 to over $1 million.
  • Commercial Real Estate: US commercial real estate averaged about 9% annual returns over the past 25 years, according to CBRE. A modest multifamily property might cost $1 to 5 million.
• Key Argument: A-tier assets are proven wealth machines that demand serious buy-in and are scalable systems that produce strong returns.
• Outcome: $100,000 is barely enough to get in the door, potentially buying a minority stake in a small private equity deal, serving as a down payment for a modest commercial property, or covering franchise fees but not the buildout.

S Tier Assets: Wealth Machines

• Main Point: S-tier assets combine growth, leverage, and scalability, surpassing lower-tier assets.
• Examples:
  • Owning Your Own Business: Over 70% of millionaires are entrepreneurs, according to the US Census Bureau. A profitable business pays you twice: through cash flow and when sold for a multiple of earnings.
  • Equity in High-Growth Companies: Early investors in companies like Tesla, Amazon, or Nvidia can see life-changing returns. A $10,000 investment in Amazon's 1997 IPO would be worth over $1.6 million today.
  • Scalable Digital Assets: The creator economy was valued at over $100 billion in 2022, with top creators earning millions annually.
• Key Argument: S-tier assets leverage money, technology, or people, scaling beyond individual effort.
• Outcome: S-tier assets multiply wealth far beyond individual effort.

Conclusion:

Smart investing involves putting money into steady, proven assets that compound over time. Consistency, patience, and avoiding financial traps are crucial for building wealth. While complex strategies exist, they are not necessary for most people to achieve financial success.