1) Home improvements are little to no risk investments. When investing at home, you are in complete control of the situation. With my help, you can learn approximately how much you will likely earn (depending on where you live) before investing a single penny. Home investing is also scalable. Start with as little as a $5 or $10 investment. Most brokers will charge you that much just to purchase a single stock.
When investing in Wall Street, the mantra goes something like this: "If you want to make a lot of money, you need to stomach a lot of risk. If you want a safer, lower risk investment, you have to accept lower returns."
What financial advisers mean when they say "risk" is that there is a high degree of uncertainty, which doesn't sound quite as daring or sexy as "risk". The truth of the matter is that for all but the most skilled investors, it's impossible to really know what a great investment looks like. As a result, most financial advisers suggest diversifying your portfolio, either by picking a variety of stocks or investing in a mutual or index fund, because they don't know what investments will make money and which won't. If financial advisers actually knew which stocks were best, they wouldn't need a day-job telling you how to invest your money.
Investing at home is different because you have all the information you need at your fingertips. Unlike Wall Street, there is little uncertainty but plenty of money to make.
2) Investing at home offers high returns, though how high will depend on where you live, how old your appliances and fixtures are, and how much water, electricity, and natural gas you use. For a typical family of four, ten-year earnings for an investment of $1290 will range from $12,500 in Atlanta to $5,200 in Salt Lake City. The U.S. average is $7,600.
By comparison, if you invested $1290 in the S&P 500 stock index fund (a good barometer for the entire stock market) during a typical 10-year period between 1980 and 2009, you would have ended up with about $3,390 ($2,100 in earnings, plus the initial $1,290 investment). And the amount you would have ended up with at the end of the last ten-year period? $1304. Yes, investing $1,290 in the S&P 500 ten years ago would have earned just $14, not nearly enough to make up for the 28% inflation experienced during the period.
Investing in home improvements makes more money than just investing in Wall Street, and does so without exposing you and your savings to the uncertainty and risk that is inherent in the market.
3) Home improvement makes inflation work for you, not against you. If you invested $1,290 in the S&P 500 in 1995 (and re-invested dividends), you would have had about $3,040 at the beginning of 2010. After adjusting for inflation, however, the real value of your investment would drop to $1,793 in real 1995 dollars - a 41% drop.
Investing in home improvements insulates you from the effect of inflation. All of the earnings estimates I make assume that the price of electricity, water, and sewage will stay the same, forever. Of course, this is a ridiculous assumption - utility prices are virtually certain to rise! But when they do, your home investments will make more money, not less. If we assume that electricity prices rise by about 2.1% a year (the average for the past 15 years) from now until 2024, the average $1290 investment in home improvements will earn $14,064 in constant dollars - about $1,100 or 9% more than without the inflation. And that still assumes steady water costs. What are the odds that will happen? Atlanta's water and sewage rates will rise over 80% between 2008 and 2011. San Francisco's rates will increase by nearly 60% between 2009 and 2013.
4) I often call the savings produced by home improvements "earnings" or "energy dividends" because in terms of how much money is in your pocket, it's as good as getting a raise or accumulating money in the stock market. Thankfully, the IRS doesn't see it this way. Money saved/earned from home improvements is tax-free, though interest from re-investments will still be subject to taxes. Many states and towns also have utility taxes added to utility bills. Home investments will save you money here as well.
5) Investments at home can be scaled to meet your individual circumstances. Due to brokerage fees and the need for diversity, it takes at least several hundred, if not several thousand dollars to start a traditional investment portfolio. Investing at home can begin with as little as $5, and some of the cheapest investments earn the most money.
Take your most commonly used incandescent light bulb, one that's on for about eight hours a day (if you only have CFLs, you've already made one of the best investments you can make). Replacing this bulb will cost about $5, but since it will last eight times longer, doesn't actually cost much more than an incandescent bulb. This simple change will earn the average person $19.30 a year (between $13 and $33.75, depending on where you live). That money can be used to invest in more CFL bulbs, buy groceries, of whatever else is needed. This slow approach to investing at home is great if you're on a fixed income or tight on money, and can't afford to invest a large amount of money at once.
6) At home investments create passive income, which means you'll have more money availible month after month, without having to work harder. Unlike most forms of passive income, investing at home doesn't create additional revenue. Instead, you will pay less for utilities every month, puting more money in your pocket or savings account. It's effectivly the same as earning more money, except you won't have to pay more taxes.
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