Hi {{first_name}},

I have a bad habit.

Someone asks me a great question, and I disappear into it for days.

A few weeks ago, the question was this: 

If you had $2.5M sitting in a conventional portfolio, what's the most reliable path to reach $10M in ten years?

I had to map this out. 

My goal: build a roadmap using assets that already exist. 

I started modeling it.Tweaking it over and over, determined to keep rebuilding it until I could prove the math either worked or it didn’t. (I’m a bit obsessive.) 

From this work, I created a new system that accelerates the velocity of a portfolio: the Capital Velocity Stack. 

Why does this goal require a system? 

The key is the word reliable. 

No doubt, you can pick the right deals that will get you there. But institutional investors, who've built real, lasting wealth use a system to coordinate their investments. They understand that deal access alone only gets you so far. 

Equally important is the architecture, the system of coordination across assets, that long-term will equal more than the sum of its parts. 

Most people focus entirely on access. It makes sense! We all spend considerable time picking the right deals. Access matters enormously because without it, your potential is limited. But access only creates initial potential. Architecting the Capital Velocity Stack unlocks it. 

In this issue, you’ll learn:

This is a major departure from how we normally think of investing. It’s not the old-fashioned ‘invest, diversify, contribute, and wait’. Instead, it’s a framework that keeps your portfolio in motion.

Get ready: This is part I of a two-part series. Today I’m sharing part I. Architecting ‘the system’. Next week, I will be sharing a part II, which will cover turning on ‘the engine’, or the power, that makes the system unstoppable. I’ll put my foot on the accelerator and share with you what it takes.

First, let’s build,

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

Most investors who have their eye on private markets already have the building blocks available to them to architect their own Capital Velocity Stack. Do you have private credit or dividend income of some kind? Or a liquid stock portfolio? Maybe some real estate exposure? Those are key legos right there.

In most portfolios, each asset class or sleeve operates independently. Liquidity exists but isn’t used the way it could be. Opportunities come and go when capital happens to be available.

The assets may be great but they aren’t connected.

Think of investing as three levels. 

Level 1: Access. Is this a good investment? Should I buy it now? Time is spent evaluating individual opportunities, one decision at a time.

Level 2: Allocation. Am I diversified? Are my assets too correlated? How are my risk-adjusted returns? This is where most financial education ends. Your advisor likely lives here. 

Level 3: Architecture. Few teach this. Architecture asks something different: what is each asset uniquely designed to do, and how can capital flow between them to create a system that outputs more than the positions operating in isolation? At this level, a portfolio begins to behave less like a collection of positions and more like a system.

The Unique Advantage of Each Asset Class

Every asset class has one thing it does better than anything else. Level 3 investors identify that advantage and deploy accordingly. 

Here's how it breaks down.

Private credit: The income. Private credit's native advantage is contractual yield. Collateralized. Predictable. The same cash flow arrives quarter after quarter regardless of what markets are doing. Its job in the stack: generate deployable capital that loads every layer downstream. And if you have pause due to the recent narrative shift, dive into our private credit breakdown. 

Real assets: The compounding. This is cash-flowing real estate and energy infrastructure that exist to compound. Advantages include: 

Their job is to deploy capital and grow it at rates public markets rarely sustain.

Public equities: The liquid collateral. Stocks have an important role to play in private investing. Their unique advantage: Public equities offer one the best ways to raise cash without triggering a taxable event (or liquidating assets). 

Instead of treating your stock portfolio as your primary compounding sleeve, begin to think of it as an enabler. Your stock portfolio now provides the liquidity that funds the compounding real asset layer that does the actual heavy lifting.

Important to note: this particular stack requires a preservation-focused public sleeve, built to weather downturns. It’s not cash, but it’s been pressure tested against drawdown scenarios. 

Why no Private Equity? PE has a legitimate place in sophisticated portfolios, but it rarely fits inside leveraged structures. Higher variance, less predictable distributions, binary outcomes at the deal level. Volatility in a leveraged position compounds against you. The architecture excludes it deliberately because the wrong asset in the wrong role can undermine the system, and PE requires diversification to work consistently. If you are attracted to PE we would encourage stacking those investments on top of the Capital Velocity Stack with new invested dollars from labor income.

How they stack together

Portfolios are most commonly built in compartments. Capital goes into a stock portfolio. Capital goes into a real estate deal. Capital goes into a credit fund. Every asset is an island. This is the default state. 

With a more intentional structure, the connections begin to form:

Over time, multiple streams of capital are moving at once:

A collateralized private credit fund earning 11% yield feeds a conservatively managed stock portfolio growing at 7%, which — powers an Asset-Based Line of Credit (ABLOC) at 5.5% debt service. That, the liquidity is deployed into real assets compounding at 18%.The spread between the borrow rate and the deployment rate is 12.5 points. That spread is the stack working.

With portfolio architecture you build connections deliberately. Giving each asset a role and a destination for what it produces. So that income has somewhere to go, liquidity has a job to do, and compounding happens in layers rather than in isolated pockets. The result is continuous movement of capital through the system.

The architecture is easier to understand when you run it on actual numbers. 

The numbers in this example are illustrative. They're the output of a reasoned thought experiment, not a backtest or a fund prospectus. The point is what happens to compounding when capital is architected rather than just allocated. 

Imagine starting capital of $2.5M across public and private holdings. 

This is a position many Build Wealth members arrive with. Solid assets with no inner workings between them. No internal velocity.

Let’s start by cutting the holdings in half. Put $1.2M in private credit and $1.3M in a conservatively managed stock portfolio.

Now, let’s build.

Layer 1:  The Income

$1.2M in collateralized private credit at 11%. Generating $132,000 per year in contractual, predictable income or $33,000 per quarter, (eh hem, arriving regardless of what markets do). Its only job is to fund every subsequent layer.

Layer 2: The Enabler

The $1.3M stock portfolio builds ABLOC capacity. At 70% loan-to-value, the starting line of credit is $910,000, deployed into CRE over the first three years at roughly $303,000 per year. 

The $132,000 annual income from Layer 1 flows into the stock portfolio. Growing at 7% and steadily expanding, unlocking additional $92,400 in ABLOC per year as the portfolio grows. (But this is just the first order number, we’ll explain below).

You can borrow against these equities at a 5.5% interest-only rate. But the IRR on real assets can be 18%. The spread is 12.5% on that use of cash. Here, the architecture pays you to borrow, all while the underlying stock portfolio keeps growing and generating more capacity.

Layer 3: The Compounder

CRE syndications and funds at 18% blended IRR. The assumptions for this model are zero cash flow on all CRE for years 1-3, then a 5% cash-on-cash distribution starting in year 4, then an exit in year 5-6. All CoC distributions reinvested into Layer 2. Two funding streams running simultaneously: the initial $910,000 ramp deployed over three years, and the ongoing $92,400 per year from growing ABLOC capacity.

We read all the books. We hired the best firms. We were taught to deploy capital in a single wave and wait. Running two streams at once means compounding starts on the first dollar while the second stream is still building. 

Every dollar that enters this layer compounds at 18% until year 10. Nothing idles.

Comparing the 10 Year Output  

The foundation starts with $92,400 of new ABLOC capacity each year, directly from Private Credit income alone.

But that's the first-order number. The PC income doesn't leave the stock portfolio. It sits there compounding at 7%, so each year's $132K contribution keeps growing and unlocking more capacity on top of the next year's fresh $132K. 

By Year 10, the cumulative PC income sitting inside the stock portfolio has grown to $1.82M, representing $1.28M of ABLOC capacity that traces entirely back to the private credit layer.

Then there's the second-order effect. That $92,400 of ABLOC funds CRE. The CRE returns 2.26x over five years. The $116K of profit flows back to stocks. Which unlocks another $81K of ABLOC. Which funds more CRE.

Are you getting it?

That's the whole argument for why private credit is "the engine" and not just a yield play. It's not about the 11% income. It's about the $92,400/yr of ABLOC capacity that income creates, and the CRE that ABLOC capacity funds, and the exits that flow back and expand the next round. Every dollar of PC income runs through the flywheel roughly 2.5x over one full cycle.

The result?

More than double the returns of your grandfather’s 60/40 portfolio over 10 years.

Underlying assumptions on the chart are as follows:

Capital Velocity Stack

Public & Private mix

Aggressive equities

60/40 Portfolio

After 10 years the gap is staggering. 111% higher than a 60/40; 53% higher than an aggressive stock portfolio; and 40% higher than a common public/private investor portfolio.

The gap between these came from the architecture. Every dollar had more than one job, and every connection between layers was intentional.

Capital returning, redeploying, and compounding with almost no idle time between cycles. The architecture is the alpha.

Now, one thing the model doesn’t show is there is something working against every dollar in this stack that the numbers above don't capture.

It’s funny models like this never stop to calculate what it's actually costing them over a decade. 

To keep this issue focused on learning how the system is built, we will save this problem, and its solution, for Part II coming next week.

A note on the allocation split: The 48/52 ratio between private credit and stocks is illustrative, not prescriptive. The minimum private credit allocation for this system to be self-sustaining — where PC income covers ABLOC interest without requiring stock liquidation — is approximately 26% of starting capital. Below that floor, debt service exceeds cash income and the architecture begins consuming itself in the early years before CRE starts distributing. The 48% shown here provides meaningful headroom above that floor, a non-correlated income stream that survives equity drawdowns, and enough surplus cash flow to fuel the flywheel materially. The right split for any individual investor depends on their interest coverage comfort, their existing stock and credit positions, and how aggressively they want to load the CRE layer. The architecture is the principle. The percentages are the planning conversation.

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.

The Capital Velocity Stack is a way of systemizing what you as an investor already own that allows for:

The underlying assets become connected.

Over time, that difference in structure can lead to a meaningful difference in outcomes because the system they operate within keeps capital moving.

Architecting your own system means running through four questions. 

Work through them against your current portfolio and you'll know within minutes which roles are filled, which are vacant, and where velocity is draining away.

#1: Do you have an income engine?

Contractual, predictable cash flow arriving on a regular schedule, independent of what markets do, what the Fed decides, whether the economy cooperates. Contractual yield that arrives whether or not anything else in the portfolio is working.

If the answer is no, this is the first move. Every other layer in the stack requires fuel. Without an income layer, there is nothing to load. If you have interest, our credit fund, BuildFlow, is a low LTV, collateralized by a real estate portfolio that delivered 12.3% cash-on-cash returns to investors last quarter. If you have interest in exploring, please check out the deal room here. 

If the answer is yes, ask the follow-up: where is that income going? Landing in a checking account means the yield is halting, not feeding, further compounding. 

#2: Do you have a collateral asset you are able to borrow against?

A conservative $1.3M stock portfolio sitting unlevered is growing at 7% and doing nothing else. That same portfolio powering an ABLOC at 5.5%, deployed into assets compounding at 18%, is doing three jobs simultaneously. The asset is identical. The architecture around it is not.

If you have a liquid portfolio and you are not borrowing against it, you have a dormant enabler. The capacity is there. The connection hasn't been built.

#3: Do you have a compounding asset layer that is receiving capital from the system?

Real assets like cash-flowing real estate and energy infrastructure that you feed through regular capital injections and reinvest via distributions.

The math is worth sitting with: $100,000 compounding at 7% over ten years becomes $197,000. At 18%, it becomes $523,000. That $326,000 gap on a single position is what this layer produces. The architecture can deliver it. The stock market alone cannot.

#4: Is every dollar doing more than one job?

In a well-architected portfolio, every asset has a primary role and feeds something else. The income layer generates and fuels. The collateral asset enables and grows. The compounder multiplies and reinvests.

A dollar doing only one thing — growing slowly, sitting patiently — is where velocity is being lost. Compounding in slow motion while the architecture that could use it sits unbuilt.

The four questions tell you which problem you have. A missing layer. A dormant connection. Capital without a destination. Any one of them is solvable. All four together is a portfolio working considerably harder than the outcome it's producing.

Architecture reassembles. It takes the assets you already hold and gives them better jobs than the ones they're currently performing. Leveraging their highest and best use.

"You do not rise to the level of your goals. You fall to the level of your systems." — James Clear

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