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Reinvest: Your Home


If some or all of the money that has been freed up through divestment is not in an IRA or other retirement account, think about reinvesting in your home. Whether switching to LED lights, adding insulation, buying a new appliance or putting a solar array on the garage, an investment in a home energy project will save money every day. And, you may be able to take advantage of government incentives - accelerating the time it takes to recover the cost of the investment. After that, every dollar saved on your energy bill is profit on your investment (and you will have increased the value of your home). If you put your investor hat on when you think about home energy, you'll find investment ideas that have great returns - whether you're a conservative or aggressive investor.

To make things easy, think about it this way. Energy projects at home start in one of three places: (1) the energy consuming items in your home, (2) the house itself, and (3) where your power comes from.

Hidden from most people is the fact that many of the new appliances and systems we buy use much less energy than they did 20 years ago. The energy used in clothes washers has declined by about two-thirds and the water consumed has fallen by as much as 20 gallons per use. Improvements like that have been made in other appliances, in entertainment equipment, and in other household items we use every day. LED and CFL lights consume much less energy compared to old incandescent bulbs, and have much longer life spans. However, the flipside of the home energy picture is that the average home is now substantially bigger and has more energy consuming items in it (e.g., computers, multiple televisions, multiple refrigerators, etc.). So, keep in mind that it's also important to shut off or disconnect things that are not being used (automatically through a setting on the device or with a smart power strip).

With respect to systems built into the house, new heating and cooling equipment has also become more efficient, and there are new equipment options that didn't exist a few years ago (e.g., heat pumps). Replacing an old furnace or making other improvements to your heating/cooling system may be an excellent way to reinvest your money. At the same time, companies like Nest and Honeywell have created "smart" thermostats that can save you money - the leading edge of the "networked" home that will provide homeowners with more control and automatically reduce the amount of wasted energy.

Then, there is the structure of the home or apartment itself. A very common problem is that houses are often leaky. That is, money spent to heat or cool air is immediately wasted as air flows out through poorly insulated and sealed walls, attics, doors, and windows. If you live in a house or apartment like this, you're paying to heat (or cool) the outdoors. One of the benefits of the increasing interest in home energy is the growing number of contractors who specialize in "air-sealing" homes and improving how homes are insulated. While not glitzy improvements, you will enjoy seeing a substantial and persistent decrease in your monthly energy bills. (Note that a "tighter" home will still allow for a healthy amount of fresh air by adding inexpensive air exchangers.) Another investment idea may be replacing your water heating system. Like other home products, the efficiency of conventional water heating systems has risen dramatically over the past few decades. And, there are new technologies and system design ideas that can bring down water heating bills further (while also saving water).

An "integrated" approach to home energy brings renewable energy into the mix. The price for a solar system has fallen dramatically in recent years because of technological breakthroughs and intense global competition. At the same time, installation companies have embraced new business models that many people find attractive (e.g., equipment leasing). As a result of all these changes, more and more people are choosing to install solar "PV" to generate electricity. Less common, but also growing, are solar hot water systems (actually a very old and once widely used idea). From both financial and carbon footprint perspectives, its often smarter to invest in a renewable energy system after energy efficiency improvements have been made.

Depending on where you live and the type of energy project you are thinking about, there is a good chance that there are government based (and/or electric/gas utility company based) incentive plans that will help offset the cost of your project - shortening the time needed to recoup the investment. As you might expect, local contractors and appliance/equipment suppliers know the ins-and-outs of these programs very well - saving you the time and effort needed to move up the learning curve.

For people who are long range planners, think about investing in multiple energy projects over several years – based on a plan that will bring you to a fully integrated, comprehensive set of energy improvements. If that approach doesn’t fit your style, start by finding a few smaller projects and then move out from there.

Reinvesting in a home energy project may be your smartest investment. The savings on energy bills will last for as long as you own your home - and those improvements will be a future selling point. For more information, see the Resources page to get started. Talk with friends who’ve taken on a home energy project or two. Talk to local contractors who specialize in making homes more energy efficient or installing renewable energy systems. With the help of some local contractors, "run some numbers." There’s a very good chance you’ll find home energy investments that provide very solid long-term returns (and with financial performance that’s substantially more predictable than the stock market).

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