Highlights in this issue:

*** The trick to making R30,000 off your unwanted goods…
*** This is every person’s dream – to earn tax-free money…
*** Do this before Eskom’s increase is approved and you'll cut your electricity bill in half…

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From the pen of Karin Iten…

Dear Investment Academy Reader,

With 2010 less than three weeks in, you’re probably wondering how to make it your year of “big money”. Let’s face it, we all want to be a little richer, retire a little sooner and buy those luxury items that make your mouth water. And the truth is, making yourself 30% richer by this time next year isn’t that difficult.

In fact, you can get started with six steps. Here’s how…

Step #1: Make up to R30,000 by selling your non-essentials
In a report by the Centre of Economic and Business Research, experts found that on average most households sit on at least R30,000 worth of unused, unwanted items. Think about it… how often do you use that bread maker your wife just had to have? Or what about that high pressure hose you convinced yourself would be the “ultimate” Christmas gift? Or those kids’ toys you haven’t had the heart to throw out?

The rule is this: If you haven’t used it in 12 months, get rid of it. But, here’s the cruncher, don’t just give them away, make some money from them. Here’s how: Offload unwanted goods by putting them up for auction on www.bidorbuy.co.za or going directly to Cash Converters to swop your unwanted items for money.

Once you’ve converted the goods to cash, invest your new found capital into solid investment vehicles you’ll be well on your way to increasing that figure.

Step #2: Slash your non-essential spending by 75%...
If you’re serious about getting richer, you need to reduce your non-essential spending. Now I don’t want to tell you the obvious – but the truth is, if there’s a “big ticket” item you can’t go without, take the time to do your research.

You also need to try and ensure you’re not paying interest on the item you buy. So negotiate. Many companies offer “three month no interest” options, so opt for those if you can. But make sure you pay the amount off before the interest-free period wears off. If you don’t, the interest will be calculated from the date you purchased the goods. According to the National Credit Regulator, if you don’t repay the loan within the interest-free period, your interest will be substantial.

Step #3: Don’t wait for your end of year review – get that raise today!
Have you met – or better yet, surpassed – the targets your boss set out for you at the beginning of last year? If you have, now’s the time to negotiate a raise. And the truth is, the only way to do this is to ask.

Sure, the economic recession means you may not get the exact amount you’re looking for, but if you can prove you’re a valuable asset to the firm then there’s no reason why you shouldn’t be able to raise your salary a few percent. So aim high. And remember, even if your salary only increases 5%, you’ll be significantly wealthier in 12 months time.

Quick tip: According to www.mywage.co.za, you need to time your request correctly. So don't push for a raise when your boss is distracted or your company’s finances are in jeopardy. And remember, the best time to ask for a raise is right after you've accomplished something significant.

Step #4: Earn tax-free bucks
Buying “great dividend growth stocks at above average yields are a great way to finance your retirement and increase the compounding effect of your future income,” reports dividendmoney.com.

The JSE is full of shares that rise and fall, from small-caps to large-caps.

Some pay dividends and some don’t, and the amount paid can vary between companies. Apart from needing to know which pay the best dividends, and which companies don’t, the most important thing you need to know is this: Dividends are completely tax-free. And that means you not only get capital growth on your investments, you generate income at the same time.

Step #5: Cut your utility bill in half
It may seem trivial, but do you know how much water and electricity you waste each day? Just think about it, a leaky tap can cost you up to R340 extra a year. Or what about this: Are you one of those people who keep their appliances on “standby mode” instead of switching them off? If you are, you’re wasting up to 50% of the energy it takes to actually run the appliance!

That means, if you keep your high definition, flat screen TV (which uses 120W) on standby for 100 hours a month, you’re paying for 12kW of power you’re not even using! At an average price of 40c per kW, you’re wasting R4.80 a month or R57.60 a year. Now consider the fact that Eskom’s looking to increase that amount by 45% every year for the next three years! Isn’t it time you start cutting back?

Step #6: Take a good look at your bond
With the property market in the toilet, there are dozens of mortgage brokers out there just waiting to give you the best possible deal. So use this to your advantage and negotiate a better rate.

And don’t forget to use lower interest rates to your advantage. When rates fall, your bank automatically reduces your repayment but the best thing you can do for your aspirations of wealth is to instruct them not to. Paying the same amount – at a lower interest rate – is a great way to reduce your bond by years. 

Here’s to your financial freedom,

Karin Iten
For the Investment Academy

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