Hi {{first_name}},

Last week I was in Dallas for a ribbon cutting ceremony of a brand new $70M factory our Build Wealth investors helped make a reality. We took an idea and added capital to make it real. 

While I was there, one of our investors told me he read last week's issue of this newsletter, Part I of this series, end to end four times. Our model, the Capital Velocity Stack, transformed the way he sees his portfolio. 

“It’s all about the system you put in place, not just what assets you’re investing into.” 

In Part I, set up the play. This week, I'm throwing it down.

In Part I, I actually left something out. I did this on purpose. Because the Capital Velocity Stack on its own is a powerful system. But even if you build the system perfectly, there’s something working against you. And it can drain your wealth if you aren’t careful. 

First, let me take a step back. 

Every investor has a moment when the power of compounding just clicks. For me it was seeing a graph. Well, it was The Graph.

You’ve seen it before. The one that starts flat and then bends vertical somewhere around year 12. 

I remember staring at it decades ago. I felt my brain rewiring. I started thinking about the power of time. If I can just compound long enough, I’ll bend vertical too.

It took me years to learn that the graph is lying. The model assumes every dollar of gain stays in place.

It doesn’t take into account taxes. No $0.37 for every dollar of realized gain or income disappearing every year before it even gets a chance to compound.

Every compounding model assumes this. Even the one I showed you last week.

Last week’s issue showed how your private credit allocation could generate 11% annually on $1.2M. That is $132,000 per year flowing back into the system. 

Except you are not keeping $132,000. You are keeping $83,160 and $48,840 leaves. 

That is a compounding problem. And over 15 years, it adds up.

But there is an engine that eliminates that drag permanently.

That engine is what I am sharing with you this week. And after reading this issue, you’ll know:

Plus, just by being a reader to this newsletter, you’ll learn how to get access to the full financial model to build your own version. 

Let's get to work.

— Walker Deibel
WSJ & USA Today Bestselling Author of Buy Then Build
Founder, Build Wealth

P.S. Your last reminder, this is Part II of a two-part series. If you missed Part I, start there.The engine introduced in this issue builds directly on top of it, so you’ll benefit from the foundation.

To start, let’s take that $48,840 from the example above and look at what it actually costs.

Losing $49k in private credit income hurts. Losing $49,000 per year that COULD HAVE compounded at 15.3% inside the Capital Velocity Stack is unacceptable.

But run it forward. 

That annual tax drag isn’t only costing you $49k x 15 years. Instead, when compounded, that single year of tax drag costs you $2.38M in terminal value.

$2.38 million! Hey, that’s what this issue of WSW is worth, if you think about it. 😉

Over time, compounding amplifies the leaks in the system. The Stack is doing its job. But $0.37 of every dollar of private credit income is walking out the door before the flywheel ever captures it.

You need to eliminate the leak without disrupting the architecture. 

Enter: The Engine

The Tax Elimination Engine is the fuel to power the Capital Velocity Stack. 

Where does the fuel come from? Active income and gasoline. 

Here’s how it works.

Domestic oil and gas carries a write-off of up to 90% of deployed capital in the year you invest, applied against active income. That write-off is a permanent reduction in tax liability. These active income O&G funds exist because the government incentivizes domestic energy production. The mechanics are intangible drilling costs and depletion allowances, both built into the tax code.

If you deploy $160,000 into a qualifying O&G fund at a 90% write-off and a 37% marginal rate, you receive $53,280 in tax savings in Year 1. That’s a 33% immediate return on deployed capital. All before the wells produce a single distribution. 

Meanwhile, the wells begin producing. You generally receive return of capital over the first two to three years, and distributions continue over the life of the wells, typically reaching 2.5x your original investment.

Here’s some context. One of our own fund vehicles, BuildEnergy II, closed in November 2025. The K-1s came back this month. The actual write-off was 95%, five points above the conservative 90% we routinely model. As the wells produce, the capital returns. 

This is how the Tax Elimination Engine starts.

Now, Reframe It

Most investors who know about O&G write-offs think of them as tax shelters. Defensive. Something your CPA mentions in Q4 when the tax bill looks too high.

Inside the Capital Velocity Stack architecture, the O&G write-off is an offensive weapon. Every dollar of tax savings is a dollar that stays in the system and flows into the flywheel. 

Private credit generates income. Stocks build the line of credit capacity. Commercial real estate compounds at 18% IRR.

The tax code becomes a capital source. Once you see it, the entire relationship between your income and your architecture changes.

The Surplus Becomes A Flywheel

This is where starting the engine turbo charges the Capital Velocity Stack. 

The power from the Tax Elimination Engine generates surplus cash from distributions, building until Year 3 when it’s enough to cover the next year's investment. That surplus and the $53,280 in tax savings both flow into the Capital Velocity Stack’s stock portfolio. Each dollar in stocks creates $0.70 in new ABLOC capacity, deployed into CRE at 18% IRR. One dollar of tax savings passes through three layers of the architecture.

In addition, the ABLOC interest is deductible against the investment income your stack is already generating. Which means the tax drag on your private credit income is partially funding the real estate deployment. Every layer is doing more than one job.

The engine fuels the Stack. The Stack compounds the engine's surplus. 

Now, the Stack becomes a well-oiled machine. (Sorry, not sorry.)

Next, I’ll share the year it stops requiring new capital entirely.

The Tax Elimination Engine requires $160,000 per year in new capital for three years. That is a lot of capital but after Year 3, the Stack is going to run itself without the need for more.

Here is the return of capital schedule:

Each year, you deploy the same and receive a 90% write-off, which at 37% tax rate, returns $53,280 in tax savings. The difference is that in year two, you begin to receive returns from year 1. By year 3, you’re receiving return of capital from year 1 and 2. Each year, your cost to fund your $160k deployment goes down. By year 4, you contribute nothing new.

The total new capital ever committed to the Tax Elimination Engine is $288,000.

The only thing that changed is the fuel, or where the money comes from. Again, after Year 3 you don’t need to contribute capital, instead it comes from within the Stack.

The wells keep producing. The vintages keep overlapping. The prior years more than cover the next one.

Looking At The Combined Architecture

Net worth at Year 15: $21,285,081.

$2,788,000 in.
$21,285,081 out. 

(Read on for access to the model!)

This is what separates portfolio architecture from portfolio allocation. An allocator builds a diversified mix and hopes the math works over time. An architect builds a system where $2.8M of total input produces $21.3M of terminal value, with just three years of capital fuel.

By Year 15, the full architecture produces $21.3M while a silo’ed public and private mix is only at $13.1M. Aggressive stocks crest $10M, while the 60/40 portfolio is still chilling at $6.25M.

It’s the same starting capital and time horizon. The only variable is the architecture.

The Year 6 Point of Inevitability

For the first five years the system requires your attention. Capital is being deployed. The tax engine is ramping up. The Capital Velocity Stack layers are compounding but the architecture is still being fed.

Once Year 6 hits, there is a shift in the process.

The Stack layers now generate enough internal velocity on their own. The Engine is fully self-funding with surplus flowing back into stocks. At this point, the system no longer needs your fuel.

Zero out every contribution after Year 6. The model still clears $20M by Year 15.

An inflection point is when the momentum you’ve built starts to carry things forward on its own. Year 6 is your inflection point.

You’ve seen how the numbers can stack and the power of compounding inside this engine. Now it’s time to understand how the model is run. If you are prepared to look at your own investments through this engine, here are two questions worth asking against your own portfolio.

#1: Do you have active income exposed to a 37% marginal rate?

The Tax Elimination Engine runs on a specific fuel: active income taxed at ordinary rates. W-2 earnings, business income, consulting fees, carried interest taxed as ordinary income. If you are generating income that is currently exposed at 37%, the engine has a target.

Look at your last tax return. How much of your income was taxed at ordinary rates with no structural protection? Take that number above the 37% threshold. Multiply by $0.37. That is the annual amount leaving your system.

Say you earn $500,000 in active income and $350,000 of that sits above the 37% threshold. You are sending $129,500 to the IRS every year. A $160,000 engine deployment captures $53,280 of that back. Run it forward at 15.3% and the difference over 15 years is seven figures. That is the spread between having a Tax Elimination Engine and not having one, on one year's deployment.

#2: Is your surplus flowing back into the architecture or sitting idle?

You may already invest in oil and gas. You may already be capturing the write-off. But what happens to the surplus after the tax benefit lands.

The O&G deployments become an engine when the surplus, the cash flow beyond what is needed to fund the next year's deployment, routes back into the Stack. First into the stock portfolio, expanding ABLOC capacity. Then, deploying into CRE at 18% IRR.

If your O&G returns are landing in a checking account or a money market fund, you have the tax benefit but the flywheel stalls. The surplus needs a destination, and the Stack’s stock portfolio layer is it.

Audit the path. Where does your O&G surplus go after it arrives? If the answer is anywhere other than back into the architecture, the compounding effect described in this issue stops at the write-off.

The difference between a tax strategy and a tax engine is where the output goes after the write-off lands.

The last step is to view the math.

Every number in this issue came from the same model. You can see the Google Sheets model HERE. All of the work and the calculations are transparent and available to you.

But I want you to use the model yourself.

If you want to run the model on your own numbers, reply to this email with the word “MODEL” and we’ll send you the link you'll need to build your own version.

P.S. If you are looking at the Capital Stack Velocity architecture and wondering what a real CRE deal inside this system looks like, we are about a week away from opening our next raise. Three-year 2x return of capital. 26.5% IRR (above the 18% projected in the model). I am the second largest investor across our $40M Build Wealth portfolio, and this sponsor is one of the reasons why. They manage over $1.5M of my personal capital. Get notified when it opens. Sign up right away at our portal.

"To change something, build a new model that makes the existing model obsolete." 

— Buckminster Fuller

The conventional investing models say to diversify, rebalance, and wait. Allocate across asset classes. Minimize fees. Stay disciplined for 30 years+ and hope it works out. It is reasonable, but it’s also slow and leaky.

The Capital Velocity Stack paired with the Tax Elimination Engine is a different model. Every asset in your portfolio has a specific role. Every output feeds the next layer. The tax code becomes a capital source. And by Year 6, the system reaches a point of inevitability that no conventional portfolio can replicate.

As the investor in Dallas realized, “it’s all about the system you put in place, not just what assets you’re investing into.” 

Now, he gets to witness how the architecture compounds on its own. (Hi Greg!)

$2.5M to $21,285,081. Three years of new capital and the machine is running.

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This is not financial advice. Illustrative output of a reasoned thought experiment. Not a backtest, guarantee, or prospectus. Actual results vary based on market conditions, fund selection, timing, fees, taxes, and factors not modeled. Private credit, CRE, and leveraged strategies involve significant risk including loss of principal. Consult a qualified financial advisor.