The world of investing can be a difficult place to navigate. Stock markets, CDs, IRAs, mutual funds, bonds – the list goes on and on. What if you could invest in a home improvement that would outperform most of these with little to no risk while improving the comfort of your home and adding value to your home? Sounds too good to be true; but it isn’t. Invest money in energy efficiency improvements and you won’t regret it.
They say that the only certainties in life are death and taxes. If you own a home, you can add utility bills to this short list. To keep a house comfortable year round, it needs to be heated and/or cooled, which can cost a lot of money. On average, utility costs also increase about four percent per year. If you want your home to be comfortable year round, then it’s going to cost money. It’s a given. In Flagstaff, the average electric and gas bills amount to $1,400-$1,700 per year.
Traditional investments balance risks and returns. Usually, the greater the risk, the greater the potential return. As a simplified example, let’s say you invest $1,000 in a mutual fund, you keep it for 10 years, and then sell it. It performs well and you make an eight percent annual return on it. With the compound interest at play you would end up with $2,159 in your pocket at the end of 10 years. Not bad for a $1,000 investment. Now, let’s look at that same $1,000 and (with a little help from utility and city rebates) let’s say you invested it into sealing up your leaky duct system and insulating your attic. Savings will vary quite a bit depending on how leaky your duct system is and how much insulation you already have, but on average, you could expect to save around $350 per year. In less than three years, you will pay off that initial investment and then for the next seven plus years you will have an extra $350 in your pocket every year. At the end of 10 years you would have $2,500, versus $2,159 from your mutual fund – even without figuring in the rising cost of utilities every year.
Energy efficiency investments are usually much less risky than traditional investments. The stock market will go up and down over time and if you catch it at the wrong time you can lose your shirt, as many people experienced during the 2008 financial crisis. Utility costs are usually pretty stable and tend to increase over time. Investing in energy improvements can help buffer you against those rising costs with minimal risk.
Economics aside, energy efficiency improvements will also increase the comfort and value of your home. Living in a house that is too hot in the summer and too cold in the winter can be a miserable experience. Improvements like insulation and duct sealing can make those problem rooms more comfortable year round while saving you money on your utility bills.
So, which energy improvements should you start with? This can vary from house to house and can only be accurately determined by having a comprehensive home energy audit performed. Any APS customer can have a home energy audit performed by a licensed, APS participating contractor for only $99 and will receive a detailed energy modeling report, which shows the predicted savings for potential energy efficiency improvements. This information lets you make an informed decision to determine what investments will give you the best bang for your buck. FBN
Written by Eli Chamberlain. Learn more about Cozy Home AZ, online.