Are Solar Panels Worth the Cost? (Cost Benefit Analysis / Break Even Point) – Bad Investment

a jefferson here just going to talk a little bit about solar panels versus stocks and your bang for your buck and so what I call I was looking about a couple months ago or a while back I had some extra funds then I wanted to see if I can invest it to get the best return that I could so one of those things that come up of course is solar panel and I was thinking about hey maybe I'm going to invest in solar panels put it on my house and make some money back from my electricity bill you know I was hearing people like they make it back in about eight years I've read some blog posts some guy had like 11 years in various amounts I called a bunch of different suppliers and I did some crazy calculations I like itemized all my electrical bills all my usage and kilowatt hours broke it down by different tiers you can see here by costs various aspects to figure out you know the thing that I didn't think about and this would have solved me a lot of headache before busting my balls creating some crazy you know crazy spreadsheet was I could have just done a simple analysis here and that's what I'm going to do for you if you're determined if you're thinking about doing solar panels my basic answer to you right now is no don't do it and probably when it would be worth it is probably almost never and the reason why is because it if you're going to dump twenty thousand or actually you know the future maybe it's fifty thousand to get off the grid or even be able to sell it back to the company you're you're you're losing that money I mean you're you're investing it into something else that you can't touch you're not going to be able to touch that fifty thousand because now it's your solar panels the one into the labor it went into the the permits and versus if you took that same fifty thousand dollars that you put into the solar panels you could have put that in the stock market now when I say stock market I'm talking about index funds I'm just talking about passively it managed my preferences Vanguard funds but that's a whole other whole another podcast or video thing or video that I probably won't get into just because there's so much out there already that I that I watched and learn from those but anyway assuming you're okay with the with stock returns after taxes we're going to say seven percent now if you if you were to put it into a Roth or something I mean that's anyway that's I'm not going to get into that anyway basically assuming you get a seven percent return on stock so you can see from day one it's not necessarily that solar panels need to break even by eight years right that I put put in here it's the fact that it needs to break or be your returns that you would have gotten on that twenty thousand mark so let's say by the eight-year mark let's say you're getting seven percent return by the eight-year mark you just finally broke even so you hit zero value on the solar panels you spent your money on okay versus stocks so not only do you still keep the twenty thousand you started with you're going to go up to you'll be at thirty four thousand so now there's this huge gap there's a thirty four thousand dollar gap here so if I told you you wanted to install a twenty thousand dollar system and by the eight year mark you're going to be thirty four thousand dollars in the hole obviously you're going to say no to solar panels so I mean basically you can't necessarily just look at when you'll break even for electricity usage you also need to look at what is the opportunity you lost to invest that same amount of money into a different investment vehicle so that's essentially opportunity cost that's what I call it I mean basically you know as the years go through I mean by the 20-year mark I mean your solar panels still good I don't know probably that's going to be the end of the life cycle and of course the gap here is huge so even after twenty years at a 7% return your 20,000 almost well double tripled quadrupled almost quadrupled and your solar panel maybe you made now you're at 30,000 value in terms of your pocket I mean you can see on this graph basically it never catches up and let's say I mean let's say you change the initial investment because 50,000 is not uncommon for a you know for a full on solar panel installation you can see here did the gap does not change any better okay let's say let's say you get worse return let's say you get 6% let's say the break-even let's say the solar panels are getting really cheap now so you can break even in five years okay fine all right then maybe in your twenty year mark you're looking at that but I mean 6% after taxes that's super low or I mean whatever other investment vehicle you do let's say 5% okay fine 5% you break even around the 16 year mark fifteen and a half and I mean these are very you know they're not now we're talking about maybe in the future but in terms of like what historically it's been I mean we're looking at maybe this would probably be more realistic so as you can see if basically never meet meets it doesn't make sense it doesn't make sense if you got that much money burning a hole in your pocket don't put it in solar panels don't waste well–that's you're obsessed with being green unless you're willing to spend you know over the lifespan of it if you're willing to waste seventy three thousand dollars on being green then go for it I mean I you know I unless you I mean okay so what I'll do is I'll just share I'll share this spreadsheet with you guys so you can you can look at my formulas you can you can download it you can I think you can make a copy and make your own edits make your own calculation see if it's uh if it's worth it for you but generally speaking I would be surprised considering the cost the lost cost I don't forgot what I opportunity cost it's very hard I'll be surprised actually if if there is a calculation where it does make sense please let me know that I would be interested to see if if I you know mess something up here or if my something is off on my calculations anyway thanks for listening if this was helpful helpful for you would help me if you would like it comment and subscribe alright have going

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