Investing in a 401k is Dumb, Investing in 4.01kW of Solar is Smart, Part II

Last time I wrote about how from an investment standpoint putting your money into a solar electric systemfor your home is far less risky and better assured returns than putting that same amount of money into a 401k (or nearly any stock market investment). That’s just smart. Now for something smarter.If you live in climate where you need to heat your home a good part of the year, there’s even a smarter investment – solar air heating.

 Solar air heaters are relatively inexpensive, ranging from $1000 to $2000 (compare that to the $5000-$7000 cost of replacing a boiler with a more efficient one). They don’t replace your existing home heating system, but much like the electric motor and batteries in a hybrid vehicle offset the gas consumed by the gas motor solar air heaters offset fuel or electricity needed to otherwise heat your home. Typically installed on a southeastern to southwestern exterior wall, a single solar air heater can offset as much as 30% of your heating needs for about 750 square feet of floor space (that’s about 27 ft’ x 27 ft, or a single floor for many homes). Additionally, solar air heaters are remarkably simple to install for the weekend DIY warrior, meaning you may be able easily shed the cost of its installation.Let’s Do Some Numbers
According to the U.S. Energy Information Administration the average household using heating oil will spend about $2490* this heating season. Let’s assume you use two solar heating collectors that roughly cost you $2900 when all is said and done. Assuming it offsets 30% of your heating and for simplicity’s sake the cost of heating oil isn’t going to go up (yeah, unlikely), then you’d save about $830 per year in heating fuel costs ($2490 times 30%).How many years until your investment is paid off and you start earning effectively big dividends/interest? That would be $2900 investment cost divided by $830 saving per year which equal about 3.5 years. So holy smokes – clearly after the 4th year your are saving $830+ per year in heating costs or getting a 28-29% return per year on your original investment (i.e. $830 savings per year divided by $2900 initial investment)! I’d like to see anyone get that out of their 401k or any stock market investment – or even half of that.

To make matters even better (or worse for 401k’s), most solar air heaters sold commercially are rugged and can be expected to last decades with minimum maintenance. So your original investment will give you great returns for a very long time.

With such a fast return on your investment, installing a solar air heater on your colder climate home is even financially smarter than installing a solar electric system.  So don’t put your money into Wall St – smartly put it into your future, your home and your stability.