Saying No Thanks to Free Money?

Those wacky Brits! An experiment was recently conducted in London. A fellow wearing a sandwich board that said "If you ask me for a 5[-pound] note you can have one" was, well, giving out 5-pound notes to those who asked for them. The surprising (to some) findings? Out of about 1,800 people who walked by him, only 28 asked for the free money.

It's not as ridiculous as it seems, though. It probably looked like a trick of some sort to most people. The guy was probably presumed to be a nutcase, or perhaps about to try to sell them something. After all, we're presented with marketing teases all the time.

The free money you leave behind
The sad thing is that most of us leave free money on the table, in one way or another. And it's usually much more than five pounds. For example:

If your employer offers to make matching contributions to your 401(k) plan, do you take full advantage of that? A 50% match on a $5,000 annual contribution is a full $2,500 -- absolutely free. Over 10 years, that's $25,000! Invested and growing at 10% per year, that's more than $245,000 after 25 years. You read that right -- nearly a quarter of a million dollars of free money.

More money left behind
There are other ways to get free money. As paradoxical as it may seem, credit cards offer free money, in the form of cash back on your purchases. I've collected more than a thousand dollars that way, over the past few years, from my Fool credit card and other cards.

Buying a home is another way to (sort of) collect some free money. It doesn't always work out well -- especially in this market. But over the long run, it can help you build wealth. Instead of paying ever-higher rent for a roof over your head, you'll be building equity in a property that's likely to appreciate in value over time.

Then there are dividend-paying stocks. This one isn't exactly free money, because you do have to invest in the company to reap the dividend. But compared with non-dividend-paying companies like Apple (Nasdaq: AAPL  ) and Google (Nasdaq: GOOG  ) , companies like those below give you an extra payout:

Stock

Annual Dividends on $10,000 Investment

Pfizer (NYSE: PFE  )

$723

Altria (NYSE: MO  )

$550

Dow Chemical (NYSE: DOW  )

$459

General Electric (NYSE: GE  )

$449

Source: Yahoo Finance.

And more!
You want more free money? I've got it:

  • Interest at your bank. You might be earning 0.75% interest on your bank account when another bank is offering you 2.5%. If you've got $6,000 in your bank account, that's an annual difference of $105. Park that money in a CD earning 3.75% for a year, and you'll collect $180 more than you would in your bank account. Whenever interest rates rise, you'll be able to collect even more free money.
  • Learn more about IRAs, because they too can offer you free money. If you've got $5,000 invested in Cisco Systems in your Roth IRA and it grows to $50,000 over 20 years, you'll be able to withdraw it in retirement, tax-free. In a traditional IRA, you'd be paying your normal income tax rate on withdrawals, which could top 30%, or $13,500.
  • Then there are tax credits, available to many people. Did you adopt a child recently? You may be able to get thousands of the dollars you spent on that back, via a tax credit. There are credits tied to dependents, and credits tied to education, and more. Learn all about them in our Tax Center.
  • And finally, there's simply smart shopping. Look for coupons, discounts, and the best price. 

Longtime Fool contributor Selena Maranjian owns shares of General Electric. Pfizer and Dow Chemical are Motley Fool Income Investor recommendations. Pfizer is an Inside Value selection, Google is a Rule Breakers pick, and Apple is a Stock Advisor recommendation. Try our investing newsletters free for 30 days. The Motley Fool is Fools writing for Fools.


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  • Report this Comment On September 14, 2008, at 1:53 PM, brev2 wrote:

    Want even more free money? Try cash back shopping at a site like www.BizReveal.com

    When you shop on cash back websites you get money back in the form of cash back rebates on prices from popular stores. With a site like BizReveal.com that has a comparison shopping engine, you can compare prices on products and see the best prices from online stores with and without cash back.

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