Freedom Notes vs Bonds

Bonds are supposed to be the safe part of your portfolio. In 2022, the S&P dropped 19%. Bonds dropped at the same time. A 60/40 portfolio, the safe allocation, lost money on both sides simultaneously. That's the year a lot of investors started asking different questions. So why would someone choose Freedom Notes instead of bonds? Let me walk you through the real comparison, honestly, because I think this is very important to know and understand. First, let's make sure we're on the same page about what bonds are. When you buy a bond, you're lending money to a government, municipality, or corporation, and in exchange, they pay you interest on a fixed schedule and return your principal at the end of the term. FreedomNotes works on a similar basic principle. You lend capital to us, we pay you a fixed return, and at the end of the term, your principal comes back. The difference is who you're lending to, what backs the loan, and what you earn. Let's start with yield, meaning the return on your investment. A 10-year US Treasury bond has historically yielded somewhere in the range of 3 to 5%, depending on the interest rate environment. Corporate bonds, which are bonds issued by companies rather than the government, might yield higher, but they carry more risk tied to the company's financial health. FreedomNotes offer returns from 8% to 14%, depending on the tier and track. That yield differential is significant. And on a $100,000 investment over 5 years, the difference between 4% and 12% is tens of thousands of dollars in your pocket. And that income is why people look at private investments like ours alongside or instead of traditional bonds. Now the obvious question: Why does a higher yield exist? Higher yield exists because there's higher risk. US Treasury bonds are considered essentially risk-free because the government can print money to pay you back. FreedomNotes are not government-backed. They're backed by real assets, physical properties we own and operate, and by our track record. What I can tell you is what backs your investment. Real properties, operating companies, 18+ years of experience, 1,000+ transactions, and a track record where there's not a single point in time ever to date that we have not paid our investors exactly what was owed to them. Not through the financial crisis, not during COVID not through any of the major market cycles we've seen. The risk is real. The mitigation is also real. That's the honest version of this comparison. Second, inflation. And this is where bonds have a structural problem that real estate does not. When you buy a bond at a fixed rate, your purchasing power, meaning the actual value of what your dollars can buy, erodes over time if inflation runs higher than your yield. So if you locked in a 3% Treasury bond and inflation runs at 5%, you're effectively losing ground every year, earning 3% while prices rise 5%. Real estate-backed investments have a natural inflation hedge built into them. Property values and rents tend to rise with inflation, and our returns at 8% to 14% provide a meaningful cushion above most inflationary environments. During high inflation periods, this matters significantly. Third, the relationship. When you buy a Treasury bond, you don't have a contact. You do not know who's using your money or what they're doing with it. You get a coupon payment and that's the extent of the relationship. When you invest in FreedomNotes, you have two dedicated contacts at Freedom. You know the portfolio, you can ask questions and you can get real answers. Flip and I invest our own money alongside yours, which means our incentives and your incentives are exactly the same. For some investors, that relationship and transparency has real value. For others, it's not a priority, but it's a difference worth mentioning. So here's how I think about this comparison. Bonds, especially government bonds, are appropriate for capital you need to keep safe above all else, where predictability and capital preservation matter more than yield, and where you want maximum liquidity. FreedomNotes are appropriate for capital you wanna put to work at a meaningful return backed by real assets with a team you can talk to and full transparency into what we're doing. Most sophisticated investors hold both. They're not the same tool. The question is what role each plays in your overall portfolio. In one of our next videos, we get into the questions I get most often before someone invests: safety, liquidity, and what happens if you need your money back. I hope this video was helpful, and I hope we have the opportunity to work together. Head over to chatwithfreedom.com and let's start a conversation.