Ask Stacy: Should I Invest in ‘Freedom Checks’?

Welcome to “Ask Stacy,” a short video feature answering money questions submitted by readers and viewers. You can learn how to send in a question of your own below.

If you’re not typically a video watcher, give it a try. These videos are short and painless, and you’ll learn something valuable. But if you can’t deal with video, no problem: Just scroll down this page for the full transcript of the video, as well as some reader resources.

Today’s question is about a heavily advertised investment program called “Freedom Checks.” On its website, the first thing you’ll see is this line:

See How to Collect $24,075 … $66,570 … and even $160,923 beginning today!

Next, there’s a video showing pictures of people from all the over the country who are cashing their “freedom checks” for tens of thousands of dollars.

Should we bite? You probably already know the answer. But in this video, I not only explain the story behind “freedom checks,” but also offer a little advice you can use whenever confronted with any tempting opportunity.

For more information on this topic, check out “10 Golden Rules to Avoid Getting Scammed” and “10 Types of People Who Fall for Scams, Schemes and Cons.” You can also go to the search at the top of this page, put in the words “scam” or “rip-off” and find plenty of information on just about everything relating to this topic.

Got a question of your own to ask? Scroll down past the transcript.

Don’t want to watch? Here’s what I said in the video

Hello, everyone, and welcome to your money Q&A question of the day. I’m your host, Stacy Johnson, and this answer is brought to you by MoneyTalksNews.com, serving up the best personal finance news and advice since 1991.

Our question of the day comes from Carrie:

I heard something about Freedom Checks on the radio. Is that some kind of hoax?

I’d heard of “Freedom Checks” before as well. If you go to their website — which I don’t advise — you’ll find plenty of explanation points. It explains how you can get your own Freedom Checks, then throws around numbers. “See how to collect $24,075, $66,570, and $160,923 beginning today!”

Before we continue, let me explain something: There are two kinds of scams in the world. One is when somebody says something completely false. In other words, they lie to steal your money. The other kind is what I believe this claim to be: over-hyping something that’s technically true to make it sound more compelling than it actually is.

What these guys are ultimately trying to do is sell you advice on something called master limited partnerships, or MLPs, which are a kind of stock that tends to pay high dividends. There’s no secret; they’ve been around for a long time.

As for the claims of giant checks: Sure, you can get a “Freedom Check” for $24,075. But what you’re not hearing in the pitch is that in order to get that check, you’ll have to invest $300,000 into stocks paying 8 percent dividends.

Bottom line: While “Freedom Checks” are technically possible, you’re not getting the whole story in the pitch. This is an example of someone taking an old idea, wrapping it in new packaging, then using a lot of explanation points and implying something secret, new and exciting has been discovered.

Here’s a good rule of thumb. When you see exclamation points, be cautious. In fact, the more exclamation points you see, the less tempted you should be. There are a lot of people shouting about how they’re going to make you all kinds of money. Don’t believe them. Use your head. If I had a secret way to make monster money, what do you think I’d do: Shut up, keep it secret, and make myself rich? Or, pay for a bunch of advertising to sell it to you?

Whenever confronted with any investment pitch, always do an online search. Go to your favorite search engine and put in the words, “complaints [name of product]” or “reviews [name of product].” Then decide. You’ll find things with lots of exclamation points are rarely worth your time and certainly not worth your money.

That’s all we’ve got for today. Lets end with our quote of the day. This one comes from one of my favorite guys, Warren Buffett, the legendary investor, and it’s appropriate to today’s topic.

“Rule number one, never lose money. Rule number two, never forget rule number one.”

Have a super-profitable day, and meet me here next time!

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About me

I founded Money Talks News in 1991. I’m a CPA, and have also earned licenses in stocks, commodities, options principal, mutual funds, life insurance, securities supervisor and real estate.

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