Home-conservation projects that yield 8% - 41% annually!

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Today I’m going to discuss how safe returns in the neighborhood of 10% to 40% annually can be made through home conservation that leads to substantial-yearly savings. In the process of making a savvy (and possibly tax-free) investment, you get the additional benefit of feeling good about lessening your impact on the environment. I like comparing the annual savings to the earnings that a traditional investment like a 12 month CD would make (currently paying a measly ~2%).

When diversifying a portfolio an investor naturally chooses yields with the highest return when comparing investments of similar risk. These energy-conservation investments in your home should be approached in a similar manner; the returns with the highest yield that are applicable to your personal situation should be considered first. The investment opportunities that I will be describing generally range from about $100 to over $1,000 with annual yields (savings) ranging from about 10%-40% per year.

Let’s start by studying some of the estimated-annual-savings yields that the Lawrence Berkley National Lab (Berkley Lab) and the US Department of Energy have made available for us.

Some of the yields are quite impressive as you can see. For example, fluorescent light fixtures and duct sealing top the list at a whopping 41% yield for your investment. This table estimates that an R12 water-heater ‘tank rap’ will cost a total of $85 with annual saving of $23 per year; thereby resulting in a 28% yield.

Four of the above purchase prices (clotheswasher, dishwasher, thermostat, and heat pump) are actually in addition to the cost of a standard NAECA appliance; in these cases the yield refers to the additional cost of upgrading to an EnergyStar appliance. It obviously does not make sense to replace a brand new appliance; however, if you where planning on purchasing the appliance anyway, than an opportunity certainly exists for making a great yield on the additional cost of the energy-saving appliance. As stated earlier, investments that have the ' highest yield that are applicable to your personal situation should be considered first’. With this in mind, an investor could move right down the list choosing projects and investments that are applicable to their situation.

So, all this sounds good, but you might be thinking:
  • I am planning on selling my home in three or four years. Also, most of these upgrades would be partially recouped during the sale of the home.
  • I have a completely different cost-saving home improvement in mind and know the annual savings that will result.
  • I'm comparing the estimated-annual costs of two appliances that I saw at home-improvement store.
  • How do I calculate the the returns from my reinvested savings?
Well, we’ve got you covered! This webpage includes a handy calculator (to the right) for your convenience to estimate the annual yield you might expect. The calculator makes the assumption that at the end of each year, you deposit your savings into a CD or other investment (you estimate the yield). You also choose the estimated number of years before you sell the home and the increased value of the home that you believe will results from the upgrade.

Benjamin Franklin once said, “A penny saved is a penny earned.” Franklin was speaking in a time prior to modern income tax laws that have been taking a chunk of Americans’ incomes since about 1913. So, in consideration of this I offer an update to Franklin’s famous quote, ‘A dollar saved is worth more than a dollar earned.”

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I mean people are being conscious now about conserving energy to save on dollars etc. This is the reason why they buy things that will be of great help to save energy. Years from now, many people will buy thus return on investments from the manufacturers, distributors and retailers will increase.