A brand-new tool, designed to help you get on your
feet with investing
W hat if.....
Salaries aren’t wealth, and wealth isn’t easy to build- it requires
People could owning assets that appreciates and compounds in value over time.
finance their Many people start their saving journey with nothing, and with most of
retirement? their money going towards expenses. Even those who start with a
little something often wish they had more.
Financing is a powerful tool for affordable ownership of assets.
People use financing to buy major assets like homes and cars and
pay for them over time.
The S&P 500 has earned a positive return for every 20-year period since its inception. However, normal
investors still can’t finance financial assets like stocks or bonds, so our investing capacity is limited to
what we can put aside every month.
Basic Capital gives you money in a retirement account now, without having to fund it all right away. We
let you pay over time instead, through financing.
Basic Capital
enables you to start investing with the
Traditional Saving for Retirement same amount you would have otherwise Building Wealth with Basic Capital
finished with Regular monthly savings that accumulates and grows in Same amount of monthly savings but instead used to pay down
traditional retirement savings account interest and principal
When you have more to invest up front, your investment Lifetime Investors in Basic Capital can end up
grows — through compounding — in a way ongoing with 3x their life-time savings at retirement,
contributions simply can’t beat. thanks to a larger initial investment base.
Basic Capital How does Basic Capital Work?
Ease and flexibility in your investment
1 Decide how much & how often you want to contribute
You can either make a single lump-sum contribution (i.e.
$2,000) to get a $10,000 Basic Capital, or contribute as you go (i.e $200/mo), and we supplement $800 as you contribute. Or you can even do both.
Some investors choose to roll over a portion of an
existing 401(k) or IRA as a lump sum contribution, and then continue to make monthly contributions from their checking account.
2 Sign the paperwork.
We answer your questions and help you choose a
compliant plan that fits your needs.
Once we have an action plan, we set up, manage, and
handle all the paperwork, plan maintenance, and filings for you.
3 Sit back and let your account grow.
There’s nothing else to do after your account has been set up! You can always access your account via our online portal to see investment details and progress.
Basic Capital Designed with you in mind Features of Basic Capital 1 Full, legal protection from downside
LLC Container. To minimize liability, Basic Capital will set up an LLC to borrow the capital that purchases assets. You will be the owner of the LLC, which both holds the assets and serves as the loan collateral. The LLC will be managed by Basic Capital. This structure protects you from any potential downside, and also gives the lender assurance that the loan proceeds are invested in a prudent way. The effective borrower is the LLC, so the investment will not impact your credit score, and the limited liability structure keeps you and your other assets safe from creditors.
You contribute a lump-sum We procure financing for Basic Capital sets up and Our lending partner amount, monthly your investment account manages the LLC. We act requires that the LLC use contribution, or both to the that is proportionate to the as the "property manager" the financed funds to LLC, which is wholly owned contribution, for your investment purchase investments by you and managed by account. linked to the S&P 500 Basic Capital. broad-market index only.
Basic Capital 2 We only borrow as you go: laddering one step at a time Every time you make a monthly contribution, we supplement your contribution with financing from our partners. Think of your contribution as a “down-payment” and the financing we provide as proportionate to the contribution, similar to a house with 20% down-payment. So if you contribute $200, we supplement your account with $800 from our lending partners. Laddering the financing with your contribution keeps it safe and manageable, so your account is never over-extended. If you miss a monthly payment, we won’t take on any additional debt for that month. We only borrow as you contribute to keep the financing manageable.
3 Interest pre-paid from every contribution
Every time you make a monthly contribution, we set aside an interest reserve so that there is no ongoing obligation. That way if any life emergencies happen, you can focus on directing your resources there. We then pause the borrowing and use the interest reserve to service the outstanding balance.
We shop for the best loan terms for our users across all available vendors, providing the same fixed interest rate to everyone during a specified period of time. Since borrowing is on a limited liability basis, your individual credit quality is not a factor in interest rate determination. Currently, the fixed-rate borrowing cost is 5%.
4 We pay back the loan in increments as the gains start to come in
As you approach retirement, we start using a portion of the gains to pay back the loan in increments. Just like we phased the financing in, we phase the financing out.
The mortgage for your retirement
01 Contribution Period: Contribute a
1 monthly payment to secure financing proportionate to your contribution
02 Interest Reserve: We set aside part
of your contribution in case you can’t make a future payment
4 03 Financing: We borrow as you go so 3 you are never over-financed
04 Phase-out: Loans are paid down
2 with time as gains start to come in Year 1 2 3 4 5 6 8 10 12 14 16 18 20 22 24 26 28 30
Basic Capital 5 Stabilized S&P 500 ETF Similar to how lenders require home buyers to purchase home insurance, they also require the LLC to insure the purchased investments. Basic Capital purchases Exchange Traded Funds (ETFs) linked to the S&P 500 from A-rated financial institutions. Embedded in these ETFs is insurance on the investments via a “floor,” or limit on losses. In exchange for this protection, the investments have a cap on any gains of 16%. This insurance unlocks the financing from our lenders, as well as protects your investment from excessive losses. Although there is a 16% cap, your gains will be earned on a much larger base amount thanks to the financing. To put things in perspective: a 16% return on $24,000 is $3,840, which is an 80% return on your total out-of-pocket $4,800 contribution. Since the loan relies on simple interest, but your account experiences compounding returns, the net growth on your account is optimized — this is the mathematical elegance behind Basic Capital.
6 ACCESSING YOUR BASIC Capital
Similar to purchasing a home, once the investment is made, it’s hard to access the original amount. Hence, Basic Capital has a minimum 3-year lock-up period. During this lock-up period, you will be unable to access the money you contributed to the fund, or the accumulated gains. Lenders require this lockup period because they they want to make sure there is enough equity built up before upi start withdrawing Basic Capital is designed to be a long-term investment, so we recommend contributing only what you can allocate towards a long-term goal, such as retirement.
7 Cancelation policy: If you decide Basic Capital isn’t a good fit for you, you can simply let us know and we will handle the off-boarding for you. In that case, we will start selling the investments and pay back the lender first. The remaining funds can be rolled-over into another tax-advantaged account or paid directly to you.
8 Three ways to grow even more
Contribute a larger amount on a monthly basis. For example, $400 per month will secure $1600 of financing instead of $800 with a $200 monthly contributio
Contribute the same amount for a longer deployment period. For example, $200 per month for four years ($10,000 in total) will secure a $40,000 investment base (laddered over the four- year period)
Make a big initial down-payment and supplement it with monthly contributions as you go.
Basic Capital 9 Recommended contribution We recommend contributing only what you can reasonably allocate towards your long-term retirement goal. Basic Capital is designed so that contributions are flexible and not mandatory. That being said, Basic Capital is not designed to be a liquid investment vehicle. You will be limited by retirement plan rules in what they can withdraw, as well as by the loan interest that needs to be paid back. What you get out at retirement depends on how much you have put in and the performance of the stock market. The amount needed to retire varies from person to person. The recommended savings to have at retirement age is $1.3mm. The graph below shows the recommended savings balance to reach $1mm at retirement age. Let's say, for example, you are 30 years old, and you would like to start investing with a compounding base of $100,000, which requires a $20,000 downpayment. Your options include: Making this $20,000 down payment in one lump sum contribution upfron Making a smaller up-front payment coupled with monthly contributions over time for the rest. As an example, you might contribute $5,000 upfront, coupled with $200 monthly contributions for 5 years Making monthly contributions over time for a long period of time. As an example, you might contribute $200 monthly for 10 years, and after those 10 years your investment base may be larger than the total contributions to date given the financing and compounding. Please note that past performance of the stock market is not indicative of future returns. The rate of growth of your Basic Capital depends on how the stock market performs in the future. Basic Capital enables you to supercharge your long-term investing, but like most financial products, we cannot guarantee stock market performance.
