Matt Badiali is the financial analyst who helped to introduce “Freedom Checks” to the average investor on the streets. In 1987, Congress passed the law 26-F for the tax code as an incentive to get American corporations to go explore and produce natural resources here in the United States rather than rely on foreign countries for the resources, especially oil. The purpose of this law was to support the US economy, create more job opportunities, and depend less on foreign oil. This law allows companies to operate without paying a federal income tax. There are two criteria a company must meet to obtain this status. First, the company must get ninety percent of their profit by transporting, processing, storing or producing domestic resources, and then they must pay large distributions to investors of the company. Matt Badiali used the term “Freedom Checks” as the nickname for the huge distributions these companies pay.
This investment strategy is very similar to dividend investing. However, at tax time, an investor is stuck paying income taxes on their dividends unless it is in a special retirement account, An investor who receives “Freedom Checks” is not required to pay any income taxes at all. This results in a much higher rate of return than many other investments. Many of these companies are related to the oil and gas industry. Matt Badiali believes that the trend in the US to become energy independent will remain intact. This should mean that many of these companies in the US will become much more profitable over the years to come.
Higher profits are going to result in much higher share prices for these companies. This will also result in higher capital gains for the initial investment. For investors itching to start collecting “Freedom Checks”, the process is simple. They need to have a brokerage account and a small starting sum to invest. Then they need to invest in a good quality “Master Limited Partnership”, as these are the companies that distribute these checks. There are currently over five hundred companies that meet the requirements to be an MLP. The investor will have their “Freedom Checks” mailed to them or deposited directly into their brokerage account.