Energy Stocks

Conserve Energy to Increase Returns

Over the last 100 years, the average annual return of long-term stocks has been about 10%. That’s what buy-and-hold-forever investors can expect to earn over time.

But I know an easy way you can nearly double that. How does 18.5% per year sound?

It requires an initial investment and some time on your part. But after that, those double-digit returns are all but guaranteed.

Still wondering what I’m talking about? It’s an energy efficiency upgrade to your existing home.

Sometimes the best investment you can make is saving money. That includes paying down high interest rate credit cards or, as I’ll discuss today, significantly reducing your utility bills. The money you save can be invested in the stock market.

People are motivated to save energy for different reasons. Most just want to make their home heating and cooling more affordable by reducing overall energy use.

Others are interested in doing their part to stanch global warming. Still others may want to see the U.S. ditch foreign oil and become energy independent.

Regardless of your reason, the potential annual energy savings can reach 18.5%, according to the American Council for an Energy-Efficient Economy.

Leaking Cash

There are plenty of choices when it comes to conserving energy use. You may be tempted to jump right into a big-ticket energy project like adding solar power and/or battery storage.

I find the easiest way to tackle energy use is to consider it a problem-solving exercise. Like any problem, all facets of your energy use need to be considered.

Is your home losing heat in the winter or gaining it in the summer? Are your appliances old and inefficient?

Rather than guess, the best thing to do is have a professional do an energy audit of your home. The average energy audit should cost around $395.

There are plenty of places to get a quote, such as HomeAdvisor.

Most assessments will identify the most glaring energy loss issues. When addressed, these can save between 5% and 30% on energy bills.

Most professionals will perform two tests. One is a blower test on entry doors.

In this test, any air leaks around doors are quickly identified. A smoke puffer is used all around the doorframe to search for leaks.

The second test, using infrared thermography, is more comprehensive. A handheld infrared camera is used. The thermal images show where hot air is entering or leaving the home. Uneven or missing insulation in walls or roofs is quickly identified.

Breathe Easy

Once you have your report, start with the biggest leaks first. They will be the most cost-effective and provide the biggest annual savings.

And there are other things you can do. Staying on top of normal filter replacements in forced air HVAC systems is a must.

A dirty filter can reduce air flow by 20%. This makes your system work harder and use more energy.

Also, turn on the blower and check any exposed ducts in the basement or attic for any air losses. Mark them and seal with duct tape or a silicone duct sealant.

Air losses reduce efficiency and cost money. And they’re easy to fix.

If your system is hot water-based, you can bleed radiators. You can also replace air vents that no longer work.

Make sure the system’s expansion tank has enough air in it. And have your boiler cleaned on a regular basis.

On the outside of your house, make sure no bedding plants are constricting air flow around your HVAC condenser unit. A good rule of thumb is to keep them 3 feet away.

Just about everything I have mentioned requires either no tools or very simple ones.

Lighting the Way

After you’ve tightened up your home and tuned up your heating and air conditioning systems, there are other things you can do to increase your savings.

Let’s start with lighting.

Consider replacing all of your lighting (incandescent and fluorescent) with LED equivalents. I did this in all of my buildings (we live on a sizable farm with five out buildings), and it cost me about $2,000.

I am saving about $840 annually.

I did it three years ago. But today, those same bulbs will cost you about half of what I spent. So your payback will be even faster.

Finally, if your refrigerator or freezer is from the mid-1990s or earlier, consider replacing it even if you think it’s working well. The reality is, a new one will pay for itself in six years or less, as most use about the same energy as a 100-watt bulb.

Our old Sub-Zero (1990 vintage) uses about 10 times that much. Which is why we’re currently looking for a new one.

Even the lowly electric hot water heater has seen plenty of efficiency upgrades. Consider a more efficient model when yours gives up the ghost.

The more effort you put into saving energy, the higher your return will be. It could be as high as 18.5%.

And that’s money you can reinvest in something else.

Have any other ideas regarding saving energy? Comment below.

Good investing,

Dave