The Risk That Goes into Freedom Checks

If you’re in the investment industry, have watched television, or listened to talk radio, you’ve likely heard about or seen the commercials for freedom checks.” In the commercials, Matt Badiali, the man who brought the idea of “freedom checks’ to the public light, is holding a check guaranteeing that everyone who requests it will receive a share of $34.6 billion dollars. While they sound like some kind of government program or scam, they actually aren’t. However, it isn’t quite as easy as the commercials make it seem.

“Freedom Checks” is actually an investment opportunity. These investments are made in master limited partnerships (MLPs). Investors who invest in MLPs receive the various tax advantages of a limited partnership but, also receive the benefits of a publicly traded company. Investing in master limited partnerships has two main benefits. First, it is a requirement that 90 percent of an MLPs’ profits are passed to the investors. Second, there are a number of tax laws that do not apply to freedom checks. For example, the investor doesn’t pay taxes on capital gains, allowing more money to be made and kept.

Like with most investments, there is some risk involved with this investment opportunity. However, those risks aren’t necessarily higher than other investments. One such risk is that, according to Matt Badiali, there are over 565 MLPs companies. Seems like at that number a person’s odds for making a profit would be high. However, in Badiali’s opinion, only five of those MLPs are worth investing in. Another disadvantage of freedom checks is that the profits an investor makes is solely determined by the amount invested. On average, investors are seeing a return rate in the range of 5 to 9 percent. What this means is if a $10 investment is made, at the end of the year the profit would be less than $1. Therefore, the only way to make a lot of money, is to invest a lot of money. Whether or not this is a worthwhile investment opportunity is determined by how much capital an investor has to put into it.

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