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Over 100 % A Year Return On Your Investment For Saving Energy

By Bruce of Stone Marmot

June 23, 2008

How would you like a virtually risk-free investment that earns over 100 % a year … after taxes … and your initial investment and subsequent contributions can be as low as $4? And you would be saving energy and helping the environment, also. A fantasy? No, a real opportunity readily available to most all of us.

How do you get in on this fantastic investment opportunity? Simply replace any incandescent light bulb in your house that is used more than a couple hours a day with a compact fluorescent light bulb with equivalent light output.

Well, people have been saying for years that compact fluorescent bulbs pay for themselves in savings on your electric bills. Compact fluorescents have also dropped significantly in price in recent years so that, if you shop around, you can get them for under $3 each (My local Sam's Club sells five 26 W compact fluorescent bulbs in one package for $14.58, which is less than $2.92 a bulb). Many state and local governments and power companies are also offering rebates for purchasing these bulbs.

You can determine the savings yourself for your own special situation using a convenient Excel spreadsheet http://www.homepower.com/files/kerrcflbulbs.xls available from the Home Power website that Andy Kerr developed. This spreadsheet was discussed in detail in an article starting on page 96 of the Dec. 2001/Jan. 2002 issue of Home Power magazine.

As an example, I put the following data into the spreadsheet, which reflect my own situation here in central Florida:

  • The light is used an average of 4 hours a day.
  • The original bulb was a 100 W incandescent with a 1710 lumen light output and a life of 750 hr. listed on the package. The bulb cost $0.25.
  • The replacement bulb is a 26 W compact fluorescent with a 1700 lumen output, a life of 8000 hr. listed on the package, and cost about $4.00.
  • My local cost for electricity is $0.08 per kW-hr.
  • I assumed a federal income tax rate of 27 %. Florida has no state income tax.
  • I assumed no local rebates for the compact fluorescent bulb.

The spreadsheet result was that the compact fluorescent would save $8.64 in electricity a year, paying for itself in a little over five months. The investment return is over 230 % after taxes, which is equivalent to an investment paying almost 316 % before taxes! Where can you get ANY investment that has a return like this?! And this return is virtually risk-free.

To put this in perspective, if you put $1000 into a bank CD with a 2.5 % interest rate, this would yield $25 of interest a year. After taxes, assuming a 27 % tax bracket, you would be left with $18.25 a year. If you purchased five compact fluorescents with the above conditions ($4 each, used 4 hours a day, etc.), you would have an initial cost of $20 and save $43.20 in electricity, which leaves you with $23.20 at the end of the first year. This is almost $5 more than the CD would give you, and you would only have to lose use of $20 for a little over five months (when it is all paid back through electricity cost savings), instead of $1000 for a year. And the compact fluorescents would continue to save you $43.20 a year with no additional investment until the bulbs needed to be replaced (approximately every 5.5 years with the above conditions), whereas the CD would only be paying $18.25 for each year you agree to continue to tie up $1000 in the CD. Any investor not taking advantage of this opportunity is a fool.

Your situation is not the same as above? You don't use any light more than 2 hours a day? Compact fluorescent bulbs cost twice as much in your area? Test your situation in the above mentioned spreadsheet. Except for lights used very infrequently, such as in closets, you will probably find that the rate of return for investing in compact fluorescent light bulbs is better than any investment you've ever had.


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