Chit Chat Stocks — "Basic Capital's Founder Abdul Al-Asaad Tells Us His Plan To Disrupt The Existing 401k Market (Debt Funded Investment Accounts)"

Podcast: Chit Chat Stocks
Date: December 10, 2025
Hosts: Ryan Henderson, Brett Schafer
Guest: Abdul Al-Asaad (Founder & CEO, Basic Capital)

Episode Overview

This episode features Abdul Al-Asaad, founder of Basic Capital, discussing his company’s vision to disrupt the traditional 401k and IRA market by introducing a new model: “retirement mortgages” for investing. Basic Capital leverages long-term, non-recourse loans to finance diversified portfolios for individuals, aiming to address inherent inequities in wealth accumulation under the existing savings-based retirement system.

Key Discussion Points & Insights

1. Reimagining Wealth Building in America

• The “Savings Scam”: Abdul criticizes the traditional savings-based approach to wealth building, arguing that it disproportionately benefits the wealthy and is inherently undemocratic:
  • “Saving as a concept is literally an anti-democratic idea. The richer you are, the larger the percentage of your income you can save...” (04:27)
  • The wealth engine (US financial markets) leaves 50% of Americans “assetless,” with another 40% being “asset light.”
• Why Leverage Assets? Americans already use credit to finance cars, homes, and even daily spending—but not for acquiring financial assets.
  • “We finance everything in this country. Why not finance a diversified pool of assets like stocks and bonds, the S&P500?” (08:54)

2. Introducing the “Retirement Mortgage”

• Core Concept: Basic Capital provides long-term duration, non-recourse loans (e.g., 10, 15, soon 30 years) for diversified asset portfolios.
  • Individuals put in a down payment (e.g., $20k), Basic provides 4x leverage ($80k), and invests this through a personal LLC structure.
  • “You are not the borrower ... It is only collateralized by the assets that you’re going to invest in.” (12:21)
• How It Differs from Margin Loans:
  • “Instead of giving people margin financing, we give them long-term duration financing ... you are betting that over the duration, the value of the underlying assets is going to be higher.” (15:06)
  • No margin calls for intermediate volatility; risk assessed at maturity. Investors must think long-term.

3. Structure & Guardrails of Investment Accounts

• Asset Choice & Risk Controls:
  • Eligible assets are limited to income-generating products (public/private credit, high-yield bonds, some real estate) and a “convexity bucket” for equity exposure (S&P 500, QQQ, MSCI).
  • “Our plan is to give people long term financing to buy eligible assets. We ask you to allocate a minimum allocation to credit so you can generate enough income to pay off the financing cost.” (23:04)
  • No leverage for risky/trading strategies; not for speculative investors.
  • “Basic Capital is for the boring investor. It’s not for the day trader ... It’s for the person who wants to set it and forget it.” (26:01)
• Self-Funding Portfolios:
  • The primary mechanism is “positive carry”—credit spreads generated by the bond allocation more than pay the leverage cost.
  • “Imagine if you bought a house with a mortgage and then you rented out the house, and the rental income is bigger than the mortgage payment. It’s literally the exact same trade.” (24:36)

4. Risk & Downside Scenarios

• Potential for Losses:
  • Only a catastrophic credit event (e.g., 40%+ corporate default rates) could force the LLC into negative carry.
  • “You need basically 30 to 50% double B bankruptcy rate ... an event two orders of magnitude bigger than 08, never ... seen in history.” (42:23)
  • Main risks: liquidating at the bottom (behavioral), or underestimating the need for duration.
• Mitigating Behavioral Risks:
  • “If you invest in Basic Capital, you need to promise yourself, I'm not liquidating for 10 years ...” (43:38)
  • Regular dollar-cost averaging and long-term time horizons are essential for mitigating sequencing risk.

5. Target Customers & Go-to-Market

• Ideal User Profile:
  • “The ideal customer for Basic Capital is somebody who has at least 10-year horizon or more.” (32:05)
  • Young, middle-aged, and even older (70+) individuals, as modern longevity extends investment horizons.
  • Retail investors can use the app directly, but focus is on integrating with 401k providers for workplace plans: “We are really focusing our effort ... on the 401k space because that's how the average American builds wealth.” (34:19)
• Critique of the Legacy 401k Industry:
  • Describes current 401k providers as a “cartel” that locks workers into expensive, suboptimal funds.
  • “They charge you like 50 basis points for the target date fund, and then inside ... another expense ratio ... they're fat, they're bloated, they're lazy, and they hold you hostage ...” (35:05)

6. Basic Capital’s Business Model

• Revenue Streams:
  • Financing fee: “S+200” (e.g., S&P + 2%, currently about 6.5%).
  • 0.5% (50bps) servicing fee on total assets to cover LLC creation, reporting, filings, etc.
  • “Six and a half percent cost of capital. Is that expensive? I don't think so ... Consumer credit is 30%, 24% APR ... we're giving you five-to-one ... at the cost lower than ... a home.” (47:26)
• Operational Details & Criticism:
  • No longer charges a monthly subscription fee after initial critique, but keeps a relatively high minimum to ensure account viability and discourage “testing with $2.” (50:49)
  • Presently, scale challenges mean lending is not yet profitable; expects economies of scale as AUM grows.

7. Abdul’s Vision and Philosophy

• Long-term Ambition:
  • Wants to combine the “two best inventions of the 20th century”—the 30-year mortgage and the index fund—to democratize wealth-building.
  • “I really do believe most people are locked out of the system and it makes them sad, it makes them left out ... I want to give them more chips to play with ... more participation in the system...” (54:46)
• Personal Motivation:
  • Doing it for legacy, not just financial gain.
  • “If I was trying to make a quick buck, I would go start an AI company ... I really do believe that it takes money to make money ...” (54:46)

Notable Quotes & Memorable Moments

• “Saving as a concept is literally an anti-democratic idea.” – Abdul (04:27)
• “We finance everything in this country. Why not finance a diversified pool of assets like stocks and bonds, the S&P500?” – Abdul (08:54)
• “The genius of term financing is that it buys you time in the market.” – Abdul (16:43)
• “Imagine if you bought a house with a mortgage and then you rented out the house, and the rental income is bigger than the mortgage payment. It’s literally the exact same trade.” – Abdul (24:36)
• “The ideal customer is Long Term Horizon … Diversify. So the ideal customer is Long Term Horizon.” – Abdul (33:35)
• “The 401k space is basically ran by this cartel. It’s literally, literally ran by a cartel that holds the American worker hostage.” – Abdul (35:05)
• “If bankruptcies reach 40%, SPY is also going to be down 80%. So I don’t know where else you would go ... maybe gold, maybe bitcoin ...” – Abdul (44:28)
• “I really, really, really do believe ... my dream is to go down in history as somebody who coupled these two ideas together [mortgage and index fund].” – Abdul (54:46)
• “I want to give them more chips to play with. And I don’t want them to go out, you know, doing negative PV trades...” – Abdul (55:18)
• “Bring us ideas. We have our idea on how to solve wealth inequality. So whenever somebody's criticizing us, I like to ask, well, what's your solution? What's your proposal?” – Abdul (56:56)

Timestamps for Important Segments

• Abdul’s Introduction & Founding Story: 01:22–03:09
• Critique of Savings-Based Wealth Building: 03:09–05:39
• Basic Capital Core Model and Why Leverage: 06:27–10:40
• How the "Retirement Mortgage" Works: 10:40–13:38
• Margin vs. Term Financing Clarification: 13:57–16:43
• Asset Choices, Guardrails, and Income Requirements: 21:54–26:01
• Target Customer and Legacy 401k Industry Critique: 31:27–36:31
• Risk Scenarios & Downside Protections: 40:13–45:15
• Basic Capital Business Model & Fee Structure: 46:49–49:50
• Abdul’s Vision of the Ideal Retirement Portfolio: 53:16–54:46
• Call for Feedback and Conclusion: 56:01–56:56

Flow and Tone

The tone is frank, contrarian, passionate, with detailed analogies (“it’s literally the exact same trade...”) and a willingness to tackle misconceptions directly (“people freak out ... but people are already [taking leverage]”). The conversation combines technical acumen (credit spreads and risk modeling) with social critique (wealth inequality, institutional bloat) and a populist desire to democratize asset ownership.

Further Resources

• Website: basiccapital.com
• App: Available for iOS and Android
• Twitter: Abdul welcomes feedback and constructive trolling on Twitter.
• 401k Integration: Employers and HR reps can reach out to offer Basic Capital’s 401k options to employees.

Summary prepared for listeners seeking a substantive understanding of Basic Capital’s “retirement mortgage” innovation and its potential impact on the future of retirement investing in America.