Your Solar IRA
Let me start by informing you that I am not a financial consultant, an accountant, or a tax advisor. What I am is a small business owner that has been running a small business for almost 20 years. What I have found out about small businesses is that one has to pay very close attention to unnecessary expenses in order to make or keep any money at the end of the year.
That is why I am advocating the "Solar IRA" that will reap you an approximate 10% plus on your investments in the future. IRA accounts are for retirement. If you can make an investment now that could save you over 50% on your power bills when you retire, is that not one of the smartest investment strategies available to you.
If you haven't checked your retirement accounts performance lately please do so and see if your funds performance can keep up with a solar investment.
Let's examine the numbers:
If you invested $30,000.00 today on an energy retrofit (solar photovoltaic, solar thermal, etc.) you would receive approximately 50 to 60 % in rebates and tax credits from the State of Florida, the IRS, and your Power Company. If we assume a 50% defrayment in cost, that would decrease your out of pocket cost to $15,000.00.
On that $15,000.00 investment, you should expect to save somewhere between 40 to 50% of your energy cost for your home or business. Assuming your utility rate is about 14 cents per kilowatt-hour and you saved 50 % of this cost, you would save $126.00 per month (900 kw x 14) or $1512.00 per year. This is what you would save today without any energy rate increases in the future (fat chance). For more information on how to read your power bill, go to our home page and click "How to Read Your Power Bill".
When you factor in inflation, pending carbon taxes, a $100 per barrel oil cost, a 10% yearly increase in your power bill is not very farfetched. So, let's get back to the IRA scenario. In order to receive these kinds of rates from a conservative retirement vehicle (Bond Fund or Money Market Fund) currently at 3 to 4% per year, you would need to invest $40,000 to $50,000 dollars in your IRA to achieve these after tax rates. Remember, when you start withdrawing your retirement benefits you will be taxed.
Whether you are looking to someday retire or are just frugal in your monthly expenses this investment makes sense. This is an investment in your home that will actually increase the value of your home. According to the Department of Energy this is one of the only investments in this real estate market that will improve your home's value and marketability (www.energy.gov).
Please remember that I am not a financial planner and do not pretend to be. Like every investment individual, results will vary depending upon your building/home and your tax bracket. If you are considering "Going Green", you should start with an energy audit of your home or business and then consult with your financial or tax planner to see what is available to you. You may not be able to control your property taxes, property insurance, gasoline, or milk cost, but you can control your energy cost in your home or business. "It's not how much you make, but how much you keep."
© 2008 Jean Morrissette