What are Freedom Checks? They are a concept introduced by Matt Badiali, a geologist that experienced success in the world of finance during the stock market crash after investing in energy stocks. Badiali has a master’s degree in earth science and has traveled the world, inspecting oil fields, coal mines, as well as other sources of fuel. The checks are dividends that result from investing in Master Limited Partnerships. In simple terms, a check is a capital gain from an investment.
Are Freedom Checks a scam? Freedom Checks are enabled by the federal law Statute 26-F, which allows more than 550 businesses in the energy sector to send monthly or quarterly checks to their investors. The legislation was passed back in 1987 by Congress .The process of investing in MLPs is similar to the standard stock options investment.
Who is eligible to participate? Anyone can take advantage of Freedom Checks, and can start investing in MLPs as little as $50 or $100. However, as with any investment, there are certain risks involved and thorough research is needed before venturing out and putting money in an MLP. Matt Badiali offers his Real Wealth Strategist newsletter as a guide to better understand how the program and MLPs operate, in order to make a more confident investment. Freedom Checks are not any riskier than other investment opportunities, however the potential reward can be much higher. Collecting the checks is in the same way one would collect any other investment returns – either the company will send the checks to your home or they can be deposited into an investment account by your broker.
What are Master Limited Partnerships? The firms called MLPs are entities in the natural gas and oil industries. They operate refineries, drill new wells, and transport fuel through pipelines. In order to qualify for the tax exemption that Statue 26-F offers, the companies must give 90c of every dollar in earnings to their investors. The federal income tax does not to either MLPs or their shareholders – investors pay a small tax on capital gains if they decide to sell their shares. The policy was promoted by President Nixon, as an incentive for investment in the energy sector.
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