When people first hear about Basic Capital, their skepticism often boils down to one question: why would anyone offer money to regular people to invest in the stock market instead of investing that money themselves?

Those are valid questions, so let’s dive in.

Why don't financing providers invest the financing directly in the stock market themselves

The main reason is that financing providers, whether it’s Basic Capital or a financing partner, typically seek a very different risk-return profile, time horizon, and type of risk compared to individual investors.

Consider housing as an example: If housing is such a good investment, why don’t banks just use their own capital to buy homes instead of offering mortgages? The answer lies in their business model. Banks aren’t designed to own and manage real estate—they’re built to generate interest income by lending depositors’ funds to finance projects like home purchases, business expansions, and other investments.

In the case of home financing, both the bank and the homeowner are technically involved in the same transaction—purchasing a home—but their roles and economic outcomes are quite different. The bank earns predictable, fixed monthly payments in interest and principal, while the homeowner takes on the risk and potential reward of homeownership, including any appreciation in the property’s value.

Basic Capital operates similarly by connecting financing providers, who want predictable cash flows, with clients like you, who are focused on long-term investments and willing to assume the risks and potential rewards.

The importance of high quality collateral

Unlike a mortgage, Basic Capital financing comes with limited liability protection. This means you’re not personally on the hook to repay the debt. In the worst case, your losses are capped at what you contribute. But why would a financing provider agree to this when you, the beneficiary, aren’t offering a personal guarantee?

When extending financing, lenders evaluate one of two factors—or sometimes both: your creditworthiness or the quality of the collateral. Since you’re not personally liable, your creditworthiness doesn’t matter. Instead, the lender focuses entirely on the quality of the collateral held by your limited liability company.

At Basic Capital, your funds are invested in a diversified portfolio of high-quality stocks and bonds. The bond portion generates reliable monthly yields that exceed your cost of capital. This steady cash flow, combined with the quality of the underlying assets, provides lenders with the confidence to extend financing—even without a personal guarantee.

In short, our financing partners provide financing to our clients rather than investing directly in the market because they prioritize predictable and secure payment streams over the uncertainty of stock market returns. They are comfortable offering this financing on a limited liability basis because your Basic Capital is invested in high-quality, cash-flowing collateral that provides consistent returns.