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Investing for 2030

February 4, 2020 by Lazy Man 2 Comments

As a personal finance blogger, I should be encouraging you to put your money in index funds with low expenses. It’s one of the few things that nearly all personal finance people agree upon. For example, this Lazy portfolio is built with almost all Vanguard funds.

That’s boring. While boring may be best, let’s pretend that your investing tastes are a little more crazy than the basic bread and water. Let’s say you want to spice it up. After a 10-year bull market, I’m managing stock market risk different nowadays.

I don’t believe that means that you have to sit back in extremely conservative investments and wait for a crash. You could have made to case to do that in 2015 and you would have missed out on years of great growth.

Instead, I’m combining the ideas of managing the risk with some investing ideas that I think will pay off by 2030.

Environmental Trends

We may or may not get a green new deal. Even if we don’t, anyone with any kind of intelligence is delivering warnings about the effects of climate change. For once, it isn’t just landing on deaf ears. Companies are changing how they operate. Microsoft vowed to undo all the carbon emmissions it has ever created by 2050.

Solar stocks would figure to one the big winners of the next 10 years. I recommended investing in solar in 2015 and feel even more strongly about it now. My investing pick is the Invesco Solar ETF (Ticker: TAN) which I’ve personally held for a long time. It’s expense ratio is a little high at 0.7%, but I think it’s worth it. I don’t know much about individual solar companies, so this is one way that I can simply invest in the whole trend.

Over the last few years, I’ve read that a lack of water is going to be the Next Big Trend. We saw a little of this with the Cape Town water crisis a couple of years back. I have to admit, conserving water is an old story. I remember hearing about it more than 35 years ago when I was 7. I don’t think Americans have done a great job of conserving water, and yet here we are, still with water.

Despite that, I’m going to trust the smart people in the room on this. Water management is going to be a very big business over the next 20 years. I’m just starting to look into how to invest in water. From what I’ve found, it seems like Investco’s PIO is the most well-rounded ETF for your investment dollar.

Emerging Markets

I opened the article with the mention of the US market’s decade-long bull run. By now that is common knowledge. During these last ten years, emerging markets haven’t fared quite as well. I’m expecting them to catch up. You likely already have some emerging markets in your portfolio anyway. I think many people could spice it up by increasing their asset allocation to include more emerging markets.

Vanguard’s Health Care ETF

It feels like an unusual time to recommend investing in a health care ETF like Vanguard’s VHT. It’s been up sharply over the last decade. I was on the fence about including VHT, but decided to add it in at the last minute. The nation is getting older and health care keeps marching on with the discoveries. With advances like CRISPR and gene therapy becoming possibilities there’s a lot of room for advancement.

Final Thoughts

I wanted to include a few more trends in this such as ride sharing and social media. Even though I personally invest a little money in these, I don’t feel comfortable suggesting them to others. The ride sharing companies are losing lots of money and it will be a while before they can make significant profits. Social media has a dark cloud of government legislation hanging over it.

What are some of your favorite places to invest in 2030? Let me know in the comments.

Four Years of Solar Power Reviewed

April 22, 2019 by Lazy Man 3 Comments

Happy Earth Day! It’s hard to believe, but this month is exactly four years since we got solar panels installed and activated.

I was nervous about taking the plunge. We got a $16,000 Home Equity Line of Credit (HELOC) to pay for the panels. That’s a lot of money. And though I thought I understood everything about solar panels, you never truly know what you don’t know. Finally, I never know if I can trust local contractors that I’ll save money – they are interested in getting the job and it would be impossible to hold them accountable if they stretched the truth.

Fortunately, everything went according to plan and we’ve been extremely happy. (Knock on wood.)

One very important thing to note is that government funding via state grants and federal tax credits paid for another $16,000. Obviously state grants are going to depend where you live. I did very quick/rough research and it seems like the 30% federal tax credit is still around for 2019, but then it starts to become less in 2020 and 2021 before disappearing for residences/homes.

In short, if you are thinking about solar power, now may be the last chance to get the best price.

Before I get into our personal financial experience with solar power, the benefits to the environment have to be mentioned. Even if it financially break-even, why not do something that helps the environment? To date, our dashboard says that our panels have accomplished the equivalent of planting 686 trees. Using metrics from the EPA, planting one tree offsets the same amount of CO2 as 55.3 kilowatt-hours of clean energy production.

Put another way, our panels have generated the equivalent of 12,640,541 AA batteries. My math could be off, but I think that’s around 668,822 pounds of batteries. It’s a good thing our house doesn’t run on AA batteries.

Calculating the Value of our Solar Power

You can call it 686 trees or 12.6 million batteries, but scientists would say we’ve generated 37.9 megawatt-hours in 4 years. Thanks to the wonders of the metric system, we can say it’s 37,900 kilowatt-hours or kWh.

The reason why we care about the kilowatt-hours measurement is because that’s the unit your electric bill uses. In Rhode Island it costs 11 cents to create one kWh and 10 cents to deliver it. The costs are broken down into more excruciating detail, but I’ll spare you. So overall, using a kWh costs $0.21.

That’s actually the most expensive electricity in the continental United States. (For some reason their numbers are 22.67 cents, which is different than my bill, but it’s close enough.) The average bill in Rhode Island is $203.35. Ouch!

The 37,900 kWh that we’ve generated in 4 years would have cost us $7,985.53. We can round up that last nearly $15 and call it $8000… exactly half of $16,000 we financed. Roughly speaking we’ll have recouped our $16,000 in 4 more years. However to account for interest and inflation, let’s call it 5 years.

Thus after a total of 9 years, we’ll save roughly $2000 a year. (That’s based on easy math of the $8000 we saved already over 4 years.) It will be more as electricity prices rise over time due to inflation.

Our panels are guaranteed to be ~95% efficient for 25 years. It doesn’t mean that they won’t last longer, but that’s just the guarantee. By the time that guarantee is up we’ll have 16 years of free electricity. With inflation our electricity would likely cost around $3200 by the end. I’ll conservatively estimate that the savings come out to around $2500 a year over those 16 years.

That’s $40,000 in savings! If the system keeps working well, it could be more than $50,000.

For a handful of days of research and another few for doing the work, that’s quite the return on investment. It’s a year’s worth of income for many people. While your state will likely be less of a savings, it doesn’t mean you shouldn’t do it.

If you are thinking about getting solar power yourself, here’s a quick guide I wrote. It’s hard to get too specific because each state has its own tax credits as well as it’s own costs of power. If energy is cheap in your state, it could be a poor financial decision to get solar power. That’s why it can still save us money even though Rhode Island is not known for being sunny.

Have you explored solar power? Let me know what you think in the comments.

Solar Power is Still Awesome (Three Years Later)

June 27, 2018 by Lazy Man 10 Comments

It’s been more than three years since we’ve paid an electric bill… and it feels every bit as good as it sounds.

Yesterday we got our bill for May. It’s amazing to look forward to getting a bill in the mail. This was our best bill yet:

No, THANK YOU for letting me use your DirectNOPay Program.

For newer readers, I wrote an article here about how and why we transitioned to solar power. Solar power worked out for us based on a confluence of three things: house orientation (facing south), state and federal subsidies, and the price of electricity in general. The last two are Rhode Island related, but it make sense for you in your state. I think the federal subsidies are still in place, but you may want to investigate this quickly. To put it mildly, I don’t think environmental causes are near the top of this administration’s priorities.

We’re currently in the “sweet spot” of solar power. In the spring, the days are long which means a lot of sun. We don’t use much electricity as we don’t need heat or (much) air conditioning. We are starting to get into air conditioning season though, which is when we’ll start drawing down on that negative balance. (Or is it drawing up, because we’re in negatives?)

I think we’ve gotten as close as a -$50 balance, but this recent -$255 bill is the biggest credit I can remember. This June has been cooler than I remember and we were on vacation for part of the month. Maybe we’ll get to -$300.

It’s funny (and weird) to feel as much pride in that number as I do. In the grand scheme of our net worth, $255 is a round off error. Don’t get me wrong, I still run around to several groceries stores to save a couple of dollars, but we’re in a financial place where the difference between $125 and $255 isn’t a big deal… unless you “earn” it in small increments as we have. (I put “earn” in quotes there, because so much of it is passive and has nothing to do our active involvement.)

The best thing about not paying for electricity is just that… eliminating expenses. And as much as I gloat about it here, it’s a little dishonest to say we aren’t paying for electricity. Solar panels are not cheap. We took out a HELOC to cover them. A reasonable person could make the very valid case that we’re just paying someone else (the bank, plus interest) each month and we did not eliminate an expense.

If you want to make that case, at some point, we’ll eliminate the expense. The timeline on that seems to change every few months, but we are making good headway. If not for some other unexpected expenses, we would probably have been down to zero a little back.

Or maybe we won’t truly ever eliminate our monthly electricity bill. We are a couple of months away from paying off both of our SUVs (they were on 5+ years of low/zero interest loans), so in another 8 years maybe we’ll look into an electric SUV. At that point the SUVs will be 13 years old. If we don’t have Uber gPods, we’d likely be looking for an electric SUV with 4-wheel drive (for New England snow), which is a bit of a tall order right now. If it becomes a reality, we’ll shift some of our transportation costs towards our electricity bill. I’m not sure how that will impact things, but we’ve got nothing but time to figure it out.

Have you looked into the cost of solar in your area? Let me know in the comments.

Environmentally Friendly Money Saving: Make Your Home Energy Efficient

January 25, 2018 by Lazy Man 4 Comments

Because I’ve contracted the flu that’s been passing around the family, we’re going to do a guest post. Hopefully, when PainBot is done eating my soul, I’ll have a new article. In the meantime, Kostas Chiotis is here to save the day. He is an economist and he shares the latest tips on how to save money and manage finances at FinanceBlogZone.com. Connect with him on Facebook and Twitter.

Every time we think about home improvements, the first question that comes to mind is, “ Will this save me money”? Your goal might be getting out of debt, or saving money or just keeping your budget in place, but did you know that you can save money while being kind to the planet? I will talk about how we can make our homes energy efficient without hurting the environment.

In recent years, many people have become sensitized of the need to conserve the environment and save money at the same time. The perception that eco-friendly homes must be newbuilds is misleading because you can start making small changes to your home with the few bucks that you have. Such improvements can be done with any budget, without breaking the bank. If you want to make a start, here are suggestions to reduce your energy bills and help the planet.

Top 10 Eco-friendly Home Improvements to Save you Money

1. Seal Leaks and Drafts

Sealing air leaks during winter and summer will help you save some dollars off your energy bill. Check your house for possible drafty doors and windows, that bring in cold or hot air, forcing your air HVAC system to work extra hard to maintain desirable temperatures. Overworking the air conditioners or furnace means that more energy will be used up, putting a strain on your wallet. Test for leakage in draft-prone areas such as window frames, doors, baseboards, pipes and chimney and use weather stripping or caulk to seal them.

2. Roof restoration

Investing in roof restoration will save you money in the long run, although the price for the restore services could be high. During the summer, roof restoration will prevent heated air from entering your house, thereby reducing strain on the cooling system. It also helps in keeping the house warm during winter. You can lower the cost of roof restoration by using green roofing products and hiring a local contractor.

3. Use wood-framed windows

Replacing your UPVC and metal windows with wood-framed windows will save you money and protect the environment. Wood-framed windows last a lifetime, are more insulating and less polluting than the popular UPVC windows which emit toxic compounds. Also, wood-framed windows are easy to repair.

4. Install a Programmable Thermostat

If you use an old air conditioner at home, you are likely to see inflated utility bills during the summer, since these systems have to do extra work to maintain the home temperatures. Ideally, you have to turn off the AC when there is no one at home or lower the temperatures when people are asleep. You can quickly forget such actions.

With the programmable thermostat, you can regulate your home’s temperatures depending on the settings you choose for specific times of the day. Plus, it is inexpensive to install, and it will shave off some bucks from your bill.

5. Buy Energy Efficient Electric Appliances

When purchasing new appliances or upgrading your home equipment, check if they have the Energy Star label. The label means that the devices have been certified by Energy Star and meet a high level of energy efficiency. They offer significant energy savings without compromising on the performance. Also, some electricity providers offer incentives for replacing old appliances with the energy star rated models.

6. Install Solar Energy

Solar energy power is a renewable source of energy that is provided naturally from the sun. Although solar panels are expensive to purchase and install, they can result in huge savings in the long term, making your home green.

To take advantage of solar power, make sure you locate it in a place where it can collect as much energy as possible. Hire a local contractor to advise you on the best location for the solar panels. Also, you can benefit from tax breaks, grants, and incentives from the government, as they continue to encourage the public to utilize the natural power around us and bring down electricity consumption. If you are in debt, getting advice on how to manage debt and taking advantage of such government grants and incentives is good for your wallet.

7. Use Sustainable Building Materials

Did you know that you can use eco-friendly materials when building every part of your home? Using materials such as recycled plastics, recycled glass, reclaimed lumber, bamboo, and cork will help reduce the impact of the construction on the surrounding. They can be used as building materials, roofing materials, floor insulation and sealing air leaks in your home.

In addition, insist that your contractor recycles old wood floors, doors, and windows instead of sending them to the landfill.

8. Eco-friendly Lighting

Replacing your old bulbs with compact fluorescents lamps (CFLs) and light emitting diodes (LEDs) will lower your electricity bills over time. CFLs and LEDs have a longer lifespan than the traditional bulbs, even though they are pricey. They are an ideal option for eco-friendly home improvements.

9. Add heavy curtains over windows and doors

Although they may seem cumbersome, heavy curtains or drapes will help conserve energy by trapping warm air inside during cold weather. Also, the curtains will keep the sun’s heat out during the summer, thus reducing an overwork on the air conditioner. This helps to reduce energy bills in the long term.

10. Water Saving Improvements

Moving from high flow to low flow faucets and showerheads will contribute to water conservation and cutting down your water bills. Also, you can help the environment by taking a shower rather than a bath that requires a lot of water.

Collect rain water by installing a water harvesting system and storing it in a tank. Use the rainwater for household activities such as watering your landscaping and flushing the toilet. Also, using tankless water heaters instead of hot water tanks will help save space and energy, since it heats only water that is passed through the electric coil. The extra space can be used for holding the rain barrels that store rainwater.

No matter how limited your budget is, you can make your home energy efficient and save the planet. The best part is, you do not have to make complete upgrades to be eco-friendly. Instead, start making small improvements, and your home will be green. In the course of the year, plan to make small improvements such as replacing your old bulbs with LEDs or CFLs, upgrading your electrical appliances to Energy Star rated models and sealing the air leaks around your window frames and doors.

Solar Panels: One Year Later

April 22, 2016 by Lazy Man 4 Comments

Happy Earth Day, everyone!

Two years I underwent an adventure to Explore the Savings of Solar Power. We turned out to be perfect candidates and we moved forward. It took a few months to research. Then it took some time to find the right installer. After the winter was done, the installation could begin, and it was completed just around Earth Day last year.

I’ve written a number of posts on solar power overall. They may be worth reviewing if you think solar power might be right for you.

Conveniently this Earth Day gives me the perfect opportunity to write about what it’s like having solar panels for one year.

As a review, in Rhode Island there’s something called “net metering.” Rather than being off the grid or storing power in a battery, our electricity meter turns backwards as we produce power to give the grid and forward during the night (or cloudy days) as we use power. The plan is to move that meter backward. We can’t control the sunlight, but we can control how much energy we use.

Fortunately, there were really no significant surprises. The most eventful thing that occurred was a very little bit of snow where I thought, “Should I buy a telescoping broom to clean off the snow on the panels?” Fortunately, the weather turned better and it melted in a day or two.

The other big thing was that we actually produced more power in the summer than we used. That may sound like common sense since it’s the longest days of the year with the most powerful sunlight. However, air conditioning takes a lot of power, so usually the meter moves back the most in the spring and fall.

I was just looking at my National Grid bill and they do a good job of giving you an Electric Usage History over the last year. It’s particularly great if you happen to be a blogger writing about electric usage over the last year.

April 2015 – We used 387 kWh. I think that during this billing period we just starting to get online with the solar power.
May 2015 – November 2015 – We used 0 kWh. Unfortunately National Grid doesn’t report negatives here. However, this means that we paid $0 for electricity. In reality we were actually receiving credits that carry over to future months.
December 2015 – We used 59 kWh. The shorter days combined with the cold meant more heat and energy usage. This cut into our credit by a few dollars.
January 2016 – February 2016. Each month we used ~240 kWh. This is the first significant use that cut into credits by a good deal. I think they were like $20 or $30. So we didn’t need to send a check, we just watched the credits slip some.
March 2016 – April 2016 – We are back to using 0 kWh as we produce more power with the longer days. This last month, April, we built up $73 in credits as we were on vacation.

Our credit balance today is ~$270… and May should be another credit building month. It’s nice to not have an electric bill, but it’s worth remembering that we have a HELOC bill that replaces it. We won’t really break even on this for another 6 years and then we’ll start to see the financial benefits. I know that some think that’s too far in the future to plan, but we have no problem with planning for college or retirement, right?

If credits continue to build like they have, maybe we’ll look into getting an electric car someday. I’m putting that idea on the back-burner for now as I haven’t had a chance review electric SUVs with 4-wheel drive and other things that we want in a car. Also, our cars are just a couple years old, so I won’t mind if we drove them for another decade.