Basic Capital

Part 1

From zero to $100K, the new way

No one likes to hear that, “It takes money to make money,” but the old adage has never rang more true—because the sooner you get to $100,000, the faster you’ll get to that next $100,000 and beyond.

From barely affording rent in your twenties to jealously scrolling friends’ travel photos on Instagram, it’s easy to think about all those moments in life when we could have used a trust fund. But as much as we may wish we had that nepo-baby security to rely on (and boy, do we ever), we also know that at the end of the day, wishing won’t get us anywhere productive.

What we do know is that Charlie Munger’s $100K theory can take us far (like, really, really far)—so much so, that the financial titan’s infamous words actually inspired many of the principles that Basic Capital was founded on:

Find a way to get your hands on $100,000. The first $100,000 is a bitch, but you gotta do it.

Charlie Munger, Vice chairman of Berkshire Hathaway
A black and white photograph of two men in business suits seated at a table, taken likely in the 1970s. On the left is a man wearing thick-rimmed glasses and a striped tie. On the right is a man wearing a polka dot tie and striped shirt. Both men are smiling slightly and have their hands clasped on the table. There are framed items hanging on the wall behind them.
Mr. Munger, right, and Mr. Buffett in the mid- to late‑1970s. “He was the architect and I was the general contractor,” Mr. Buffett said of their relationship. via Buffalo News

So while we may not currently be in a place financially to spontaneously soak up the sun on the beach, we do have access to tools that can get us there faster than the average brokerage account can.

Why is $100k such a magic number?

While saving is an important tactic for wealth generation no matter your income or tax bracket, to get to a place where your investments are truly working hard for you, you need a substantial sum that can build off itself.

While some modern analysts argue that $100K in today’s market isn’t what it once was when Munger gave his initial advice in the 1990s, many still believe it to be the magic number where the snowball effect really comes into play.

What is the snowball effect in investing?

The snowball effect in wealth building is based on the popular image of a snowball rolling down a snowy hill. Push that small snowball down the hill and the further it travels, the faster and bigger it grows.

It’s not that dissimilar to how your money works when invested in the market.

The snowball at the top of the hill begins its journey slowly, and doesn’t gain real momentum until it’s well on its way downward. Your investments act very much the same way—investing a few dollars here and there is all well and good, but when you’re able to put substantial capital toward your investments, so that it can take advantage of the stock market’s annual return, you earn more money, much faster, thanks to compound interest. That means, the sooner you get to $100,000, the faster you’ll get to that next $100,000 and beyond.

Supercharging the snowball effect

Going back to our trust-fund babies from earlier in the post (or rather, their parents and grandparents), the ultra-wealthy have been using the system for decades to build wealth at indiscriminate rates. The rich get richer, as they say.

On a smaller scale, recent generations relied on home ownership as a pathway to wealth building or retirement—but with skyrocketing prices, unpredictable interest rates, crazy competition, and limited inventory, home ownership isn’t as accessible as it once was.

So, where do you start your financial journey when everything feels so out of reach?

Going back to Charlie Munger’s original advice, the Berkshire Hathaway vice chairman was adamant that investors do anything and everything (within a legal means, of course!) to get to that $100K mark as quickly as possible, “I don’t care what you have to do. If it means walking everywhere and not eating anything that wasn’t purchased with a coupon, find a way to get your hands on $100,000.”

Make Basic Capital a part of your snowball strategy

Spoiler alert: We’re not the first financial company to understand the power of compounding interest and its effect on wealth building. But we are the first company that gives you a viable, legal, and accessible way to get your hands on that initial $100K to start building wealth.

With our first-of-its kind business model, we’re carving out a new way to save for retirement, so you can grow your snowball savings even faster. If you’re interested in learning more about how Basic Capital works, join our waitlist.

Because even if you’re unable to benefit from an inheritance now, we want to help you set up that trust fund for the next generation.

Join the 1,500+ strong waitlist