Are freedom checks bogus? That is the question on many a mind. Ever since Matt Badiali started releasing his freedom check videos the internet has been rife with searches pertaining to the investment. What is a freedom check? Who is Matt Badiali? Are they a SCAM? It is true that the video presenting Badiali with a fat check made out to some lucky investor is on the sketchy side, but that does not mean the investment itself is suspicious. In fact, freedom checks are real investments, as legit as the purchase of regularly traded stock.
A freedom check is actually a stake in a natural resource company. This is a business where 90% of its operation is tied up in the production and processing of natural resources like gas and oil. Such companies can take advantage of certain tax breaks afforded to their specific market. To do so they have to use MLPs, or master limited partnerships. An MLP company drums up capital by selling stakes to would-be investors. The investors purchase a percentage of the company, and in return the company gets working capital. These stakes bear no controlling interest of any kind, and basically serve no purpose other than allowing someone to invest. So, from an investment standpoint, the task is pretty easy. You buy the stake and just sit back. The company is the one that does the work.
This does not mean that investors do not serve a purpose. They do. The only way these businesses can take advantage of the tax break is by following a statute requiring them to dispense 90% of their profits to investors first. This leaves a small amount left to be taxed and gives investors a nice monthly to quarterly payout.
So, a freedom check is a monthly to quarterly return of capital payment these companies make to investors. No scam present. Freedom Checks are legitimate investments from a legitimate investment source. Badiali is a master investor and geologist with a firm understanding of the market. If he is the real deal, then freedom checks are the real deal.