Become $867,000.00 Richer with Solar Power

In this post we’re going to compare mortgages with, various investment options and solar power for your home, and how you how you could become $256,000 to $867,000 richer by choosing to go solar today.

Lets cut to the chase. If you own a home with a mortgage, you could become $794,000.00 to $867,000.00 richer buy going solar and putting the cost of it on your mortgage.

Or if you have $10,500 and you’re looking to invest we’ll show you how you could become $256,000.00 to $567,490.70 wealthier by choosing solar over term deposits or share market investments.

Assumptions

The assumptions we’ll be working with today.

  • Mortgage amount, $400,000 interest rate 5% per year, 30 year term
  • Term deposit return after tax 4% per year
  • Sharemarket investment returns after tax 7% per year
  • Power price inflation 2% per year
  • Cost of 4.5kw rooftop solar and power diverter $10,500 delivering:
    • Conservative estimated power savings of $85 per month
    • Optimistic estimated power savings of $100 per month
    • Power savings are used to repay the mortgage early, or invested in the share market
  • Annual solar output loss 0.5% per year
  • Finance deal on solar system 24 months no interest, no repayments

The simple stuff

This table shows you how much you’ll save of your power bill each year after installing a solar power system, including 2% rise in electricity costs per year, and a 0.5% reduction in power output.

Year Annual solar power savings conservative Annual solar power savings optimistic
1 $1,035.36 $1,218.00
2 $1,050.84 $1,236.24
3 $1,066.56 $1,254.84
4 $1,082.64 $1,273.68
5 $1,098.84 $1,292.76
6 $1,115.28 $1,312.08
7 $1,132.08 $1,331.76
8 $1,149.00 $1,351.80
9 $1,166.28 $1,372.08
10 $1,183.80 $1,392.60
11 $1,201.56 $1,413.48
12 $1,219.56 $1,434.72
13 $1,237.80 $1,456.32
14 $1,256.40 $1,478.16
15 $1,275.24 $1,500.24
16 $1,294.32 $1,522.80
17 $1,313.76 $1,545.60
18 $1,333.44 $1,568.76
19 $1,353.48 $1,592.40
20 $1,373.76 $1,616.28
21 $1,394.40 $1,640.52
22 $1,415.28 $1,665.12
23 $1,436.52 $1,690.08
24 $1,458.12 $1,715.40
25 $1,479.96 $1,741.08
26 $1,502.16 $1,767.24
27 $1,524.72 $1,793.76
28 $1,547.52 $1,820.64
29 $1,570.80 $1,848.00
30 $1,594.32 $1,875.72
31 $1,618.20 $1,903.80
32 $1,642.56 $1,932.36
33 $1,667.16 $1,961.40
34 $1,692.12 $1,990.80
35 $1,717.56 $2,020.68
36 $1,743.36 $2,050.92
37 $1,769.52 $2,081.76
38 $1,796.04 $2,112.96
39 $1,822.92 $2,144.64
40 $1,850.28 $2,176.80
41 $1,878.00 $2,209.44
42 $1,906.20 $2,242.56
43 $1,934.76 $2,276.28
44 $1,963.80 $2,310.36
45 $1,993.32 $2,345.04
46 $2,023.20 $2,380.20
47 $2,053.56 $2,415.96
48 $2,084.40 $2,452.20
49 $2,115.60 $2,488.92
50 $2,147.40 $2,526.24

Notice how the amount saved increases every year even though the output you panels generate decreases ever so slightly. We use a 50 year lifetime for the solar power system. This represents the half life of the solar panels, were power output will be 50% of the original specification. This aligns with most quality solar panel guarantees of 80% output after 20 years.

Got a mortgage?

So what does this mean as a home owner with a mortgage. If you put the cost of the solar power system on the mortgage, you will pay off your mortgage 5 years earlier.

But it gets even better, after your mortgage is paid off, if you invest your previous mortgage payment for the remaining 5 years (as if you had a 30 year mortgage), and invest the power savings you could become $867,000.00 richer.

Year Mortgage Mortgage plus solar conservative Mortgage plus solar optimistic
1 -$394,106.98 -$393,058.88 -$392,873.91
2 -$387,911.85 -$395,987.29 -$395,606.04
3 -$381,399.10 -$388,808.99 -$388,217.68
4 -$374,552.46 -$380,987.71 -$380,173.61
5 -$367,354.82 -$372,487.77 -$371,437.47
6 -$359,788.16 -$363,271.53 -$361,970.96
7 -$351,833.59 -$353,299.57 -$351,733.80
8 -$343,471.20 -$342,530.29 -$340,683.63
9 -$334,680.09 -$330,919.87 -$328,775.94
10 -$325,438.29 -$318,422.35 -$315,963.81
11 -$315,722.68 -$304,989.28 -$302,197.91
12 -$305,508.98 -$290,569.74 -$287,426.39
13 -$294,771.65 -$275,110.21 -$271,594.72
14 -$283,483.83 -$258,554.40 -$254,645.49
15 -$271,617.33 -$240,843.02 -$236,518.42
16 -$259,142.45 -$221,913.76 -$217,149.93
17 -$246,028.02 -$201,701.09 -$196,473.30
18 -$232,241.25 -$180,136.13 -$174,418.37
19 -$217,747.66 -$157,146.35 -$150,911.28
20 -$202,511.02 -$132,655.49 -$125,874.37
21 -$186,493.24 -$106,583.39 -$99,225.89
22 -$169,654.27 -$78,845.79 -$70,880.01
23 -$151,952.01 -$49,353.95 -$40,746.36
24 -$133,342.19 -$18,014.63 -$8,729.99
25 -$113,778.29 $15,270.24 $25,269.10
26 -$93,211.41 $44,514.18 $55,474.42
27 -$71,590.11 $76,087.07 $88,078.72
28 -$48,860.34 $110,154.80 $123,252.67
29 -$24,965.27 $146,894.87 $161,179.02
30 $0.00 $186,497.22 $202,053.42
31 $0.00 $201,206.17 $218,143.24
32 $0.00 $216,961.56 $235,379.04
33 $0.00 $233,836.75 $253,841.28
34 $0.00 $251,910.40 $273,616.03
35 $0.00 $271,266.50 $294,795.44
36 $0.00 $291,994.96 $317,477.95
37 $0.00 $314,192.09 $341,769.03
38 $0.00 $337,960.82 $367,781.52
39 $0.00 $363,411.42 $395,636.06
40 $0.00 $390,661.74 $425,461.82
41 $0.00 $419,838.00 $457,397.05
42 $0.00 $451,075.16 $491,589.67
43 $0.00 $484,517.72 $528,197.80
44 $0.00 $520,320.18 $567,390.78
45 $0.00 $558,647.98 $609,349.82
46 $0.00 $599,678.03 $654,268.76
47 $0.00 $643,599.73 $702,355.07
48 $0.00 $690,615.75 $753,830.57
49 $0.00 $740,942.81 $808,932.77
50 $0.00 $794,812.93 $867,915.78

Looking to invest

Do you have $10,500, and are looking to invest. Lets compare term deposits with share market investments and solar power.

Year Investing Term Deposit Investing Shares Solar conservative Solar optimistic
1 $10,920.00 $11,235.00 $12,293.28 $12,480.03
2 $11,356.80 $12,021.45 $3,728.02 $4,117.34
3 $11,811.07 $12,862.95 $5,079.24 $5,650.58
4 $12,283.51 $13,763.36 $6,541.37 $7,309.83
5 $12,774.86 $14,726.79 $8,122.41 $9,104.15
6 $13,285.85 $15,757.67 $9,830.93 $11,043.37
7 $13,817.28 $16,860.71 $11,676.10 $13,137.88
8 $14,369.98 $18,040.95 $13,667.74 $15,398.80
9 $14,944.77 $19,303.82 $15,816.35 $17,838.15
10 $15,542.56 $20,655.09 $18,133.29 $20,468.68
11 $16,164.27 $22,100.95 $20,630.59 $23,304.02
12 $16,810.84 $23,648.01 $23,321.13 $26,358.86
13 $17,483.27 $25,303.37 $26,218.68 $29,648.97
14 $18,182.60 $27,074.61 $29,337.99 $33,191.04
15 $18,909.91 $28,969.83 $32,694.95 $37,003.09
16 $19,666.30 $30,997.72 $36,306.44 $41,104.28
17 $20,452.96 $33,167.56 $40,190.53 $45,515.20
18 $21,271.07 $35,489.29 $44,366.67 $50,257.93
19 $22,121.92 $37,973.54 $48,855.57 $55,356.05
20 $23,006.79 $40,631.69 $53,679.48 $60,834.70
21 $23,927.06 $43,475.90 $58,862.10 $66,720.88
22 $24,884.15 $46,519.22 $64,428.93 $73,043.49
23 $25,879.51 $49,775.56 $70,407.09 $79,833.47
24 $26,914.69 $53,259.85 $76,825.76 $87,123.89
25 $27,991.28 $56,988.04 $83,716.15 $94,950.17
26 $29,110.93 $60,977.21 $91,111.53 $103,350.18
27 $30,275.37 $65,245.61 $99,047.62 $112,364.46
28 $31,486.38 $69,812.80 $107,562.63 $122,036.39
29 $32,745.84 $74,699.70 $116,697.48 $132,412.49
30 $34,055.67 $79,928.68 $126,495.80 $143,542.44
31 $35,417.90 $85,523.69 $137,004.41 $155,479.37
32 $36,834.62 $91,510.34 $148,273.39 $168,280.27
33 $38,308.00 $97,916.07 $160,356.35 $182,005.99
34 $39,840.32 $104,770.19 $173,310.64 $196,721.65
35 $41,433.93 $112,104.11 $187,197.63 $212,497.04
36 $43,091.29 $119,951.39 $202,082.97 $229,406.83
37 $44,814.94 $128,347.99 $218,037.06 $247,530.81
38 $46,607.54 $137,332.35 $235,135.08 $266,954.48
39 $48,471.84 $146,945.61 $253,457.47 $287,769.29
40 $50,410.72 $157,231.81 $273,090.32 $310,073.02
41 $52,427.15 $168,238.03 $294,125.86 $333,970.38
42 $54,524.23 $180,014.70 $316,662.64 $359,573.43
43 $56,705.20 $192,615.72 $340,806.26 $387,002.05
44 $58,973.41 $206,098.83 $366,669.56 $416,384.54
45 $61,332.34 $220,525.74 $394,373.42 $447,858.17
46 $63,785.64 $235,962.55 $424,047.06 $481,569.82
47 $66,337.06 $252,479.92 $455,828.85 $517,676.76
48 $68,990.55 $270,153.52 $489,866.87 $556,347.17
49 $71,750.17 $289,064.26 $526,319.54 $597,760.99
50 $74,620.18 $309,298.76 $565,356.28 $642,110.88

Here we see a solar power vs term deposits creating up to $567,490.70 extra wealth. And solar power vs investing in shares creating $256,057.52 to $332,812.12 extra wealth.

Summary

Do your own maths, make your own assumptions, get independent investment advice and call around various solar power installers. It could be the best financial decision you’ll ever make.

Favourite FI Podcasts

I love podcasts as they provide a way for me to learn something while I’m out walking/running/driving/what have you.

Here are some of my favourite FI podcasts:

ChooseFI  :  “Join a global community of people that are pursuing Financial Independence through Investing, Real Estate and Business creation.” The why of FI is one of my all time favourite episodes.

Afford Anything:  “You Can Afford Anything … Just Not Everything. What’s It Gonna Be?”

The Mad Fientist:  “Join the Mad Fientist as he talks to personal-finance icons about investing and all things related to early retirement and financial independence!”

Planet Money:  “The economy, explained, with stories and surprises. Imagine you could call up a friend and say, “Meet me at the bar and tell me what’s going on with the economy.” Now imagine that’s actually a fun evening. That’s what we’re going for at Planet Money. People seem to like it.”

For a more local flavour try The Happy Saver Podcast:  “Saving, investing and learning about personal finance in New Zealand. Debt free and saving hard. What on earth could I invest in and how do I do it?”

 

Which are your favourites?

When broken stuff can’t be fixed.

Our broken gate latch. A little glue is not going to fix this.

So you’ve broken something around the house, or more likely one of those monkeys you call children have managed to brake it, and it simply can’t be fixed. What do you do? Pony up the dollars and buy a replacement? No way. Use this quick little quide to get it replaced for free:

1. Track down the manufacturer.

2. Email their customer support with a modified version of this template.

Hi, I have a XXX. The XXX has broken. What’s the best way to repair it or get a replacement?

 

Thank you.

 

Your Name.

3. Attach photos of the damaged object to the email and hit send.

4. When they respond be super grateful, and answer any of their questions.

5. Watch in amazement as the company or their local against offers to send you replacement items/parts at no cost to you.
Now this isn’t going to work every time. But my success rate is much higher than I ever expected. Especially considering in many cases I was not the original owner and they had no obligation to replace their products that were broken by monkeys running wild.

What have you had replaced by a manufacturer? Let us know in the comments.