Airstream Funding: Creative Idea #1

If you read my last post, you know I've decided the only way to make the Airstream® dream a reality is to get creative with financing it. So here's the first idea. I should give credit where credit is due. The inspiration for this idea came from Abraham Simpson.

Create a tontine.

A tontine is an investment plan for raising capital, devised in the 17th century and relatively widespread in the 18th and 19th. It combines features of a group annuity and a lottery. Each subscriber pays an agreed sum into the fund, and thereafter receives an annuity. As members die, their shares devolve to the other participants, and so the value of each annuity increases. On the death of the last member, the scheme is wound up. In a variant, which has provided the plot device for most fictional versions, on the death of the penultimate member the capital passes to the last survivor. --from Wikipedia.

Here's how my tontine idea might work: I find 50 or so people looking for an investment opportunity. Each "investor" puts in $1,000 and they own one of fifty shares. I "lease" the Airstream from the tontine for $200 a month. 

          $200 / 50(investors)=$4 x 12(months)=$48. A 4.80% annual yield.

But who wants to make an investment that takes 20 plus years to break even? That's where the lottery fun comes in. Upon the death of each member of the tontine, their share divides among the remaining members.

So following the death of the first ten members:

          $200 / 40(investors)=$5 x 12(months)=$60. A 6.00% APY.

When half the members are gone the annual yield becomes 8.00%. And so on. Basically we go to a funeral then recalculate our earnings.

Upon my death, assuming I'm not the last to die, the Airstream is sold. The proceeds are invested in an interest-bearing account agreed upon by the remaining members. Members continue to take their annual piece of the earnings pie at the end of each year. Obviously the pieces of the earnings pie get bigger with each and every death.

Upon the death of the last remaining member, the balance in the account will be given to a previously-agreed-upon charity like Compassion International. Why would the proceeds not go to the last remaining member or his designee? Well, historically, tontines are known to result in a few coincidental, untimely deaths--perhaps people vying for that coveted last-to-die position?

One of the huge upsides of the plan is all the old pharts in the group will want to take better care of themselves since their return improves as they survive the deaths of other members. 

Obvious question: Isn't a travel trailer a lousy investment.

Not so obvious answer: If we're talking SOBs (Some Other Brand); yes, that would be true. But we're talking Airstream. They hold their value extremely well and in fact, once they reach "vintage" status at 20 years old, they actually begin to increase in value. Of course all that only matters if I'm not the last to die.

Let me know if you're interested. You have to be my age or older to play. ;-)