£30k for investment
Discussion
Paddy_N_Murphy said:
You know a month and a bit on that investment would have paid well if this ad below is realistically priced (same car)http://www.pistonheads.com/sales/1761243.htm
anonymous said:
[redacted]
That fat twerp is a passport holder to the Peoples Republic of Arse Tickling f
kwitism.The moment a human being appears on GMTV you know for sure that you are looking at a berk who is making their living peddling tat and pointless dreams to people who think velour is a socially acceptable fabric. And the sad thing is that they probably believe the drivel they're spouting.
northandy said:
Paddy_N_Murphy said:
You know a month and a bit on that investment would have paid well if this ad below is realistically priced (same car)http://www.pistonheads.com/sales/1761243.htm
Give the 30K to Warren Buffett, tell him he can keep 25% of any profit he is able to make from his investments he makes on your behalf...You will still be quids in.....
"Wall Street is the only place that people ride to in a Rolls Royce to get advice from those who take the subway."
"Rule one:- Never lose money Rule two:- Never forget rule one."
"Wall Street is the only place that people ride to in a Rolls Royce to get advice from those who take the subway."
"Rule one:- Never lose money Rule two:- Never forget rule one."
Wacky Racer said:
Give the 30K to Warren Buffett, tell him he can keep 25% of any profit he is able to make from his investments he makes on your behalf...You will still be quids in.....
"Wall Street is the only place that people ride to in a Rolls Royce to get advice from those who take the subway."
"Rule one:- Never lose money Rule two:- Never forget rule one."
You don't need to give him 25%, just buy BRK.B and wait."Wall Street is the only place that people ride to in a Rolls Royce to get advice from those who take the subway."
"Rule one:- Never lose money Rule two:- Never forget rule one."
Cheers,
FT.
Sorry, missed this earlier.
Even if you assume no depreciation at all over the 25 year period, and all your guaranteed income is included as profit, you still only get 6.4%, so your 6.7% is looking a bit ropey; interesting maths skills indeed.
For example, Proven Engineering have an excellent reputation for long life robust wind turbines, but their smallest (600 watt) one costs over £3000, i.e.£5 a watt, and their bigger turbines aren't much better. At £2 a watt a small car's 50kW engine would cost £100,000. I'm using wind because it's more financially effective than solar, at least in the UK. This leads to two thoughts: Firstly nuclear and other sources of power can be done a lot cheaper than that (in terms of £/kwh), so the question is how long the appetite for this folly will continue. And secondly, if there is a future for renewables then it will involve the economy of mass production and improvements in the technology in the coming years, both of which will leave anyone buying the current technology behind.
Every now and then I take another look but it still doesn't stack up for me. Your mileage (and your ROI) may differ. Ah'm still oot.
Cheers,
FT.
youngsyr said:
Where did I say this is a risk-free investment?
I was simply pointing out that your assumption about depreciation of the equipment was simply that, an assumption.
Straw man, where did I suggest you did? My assumption is that since these things are semiconductors and are therefore subject to both Moores law and the benefits of mass production. How happy would you be now if you still had to use a C64? I was simply pointing out that your assumption about depreciation of the equipment was simply that, an assumption.
youngsyr said:
The energy (and other) companies ARE jumping on the band wagon, they are NOT LEGALLY REQUIRED to offer to pay for the PV set up, install it and maintain it whilst giving the home owner the power that is generated from it.
They energy (and other) companies are opting to offer the "rent a roof" scheme because they see it as a worthwhile investment, even if they don't receive the benefit of lower power costs at the property from using the solar PV energy.
ROI was a struggle, how about just RO? http://en.wikipedia.org/wiki/Renewables_Obligation This is the legal framework which requires generators to obtain at least 11% of their total energy provision from renewables. Now that's all very well, however the question is how long the appetite for over inflated energy prices will remain. And how worthwhile an investment it seems to the energy companies when the ROs are cut in the face of recession? They energy (and other) companies are opting to offer the "rent a roof" scheme because they see it as a worthwhile investment, even if they don't receive the benefit of lower power costs at the property from using the solar PV energy.
Fume troll said:
I take it that you now accept that it's a 3.4% annualised ROI then? And you think that's a good return on £12,500 tied up for 25 years? I'm declaring myself oot. 
Cheers,
FT.
Cheers,
FT.
youngsyr said:
No, I don't. Show me the assumptions behind your calculation and I'll show you why it's too low.
I think the assumptions are clear, I provided you a link to the formula, and another to a calculator that would do it for you. If you can find an accountant that will let you depreciate solar panels to anything other than zero over a 25 year period, I'd recommend you steer clear of them. Even if you assume no depreciation at all over the 25 year period, and all your guaranteed income is included as profit, you still only get 6.4%, so your 6.7% is looking a bit ropey; interesting maths skills indeed.
youngsyr said:
Are you coming around to the idea at all?
No, I'm really not. I have looked into renewables as a real investment, for me. Right now unless you want to make a statement about your green credentials, or you think you are somehow doing something altruistic for the planet, the vast bulk of these schemes don't make sense. On their own they really don't make sense as a financial investment. I live in an area considered by the windspeed database to be ideal for wind farming, indeed there are wind farms all around me, but these are A. There to meet the RO of large corporations, and B enjoy the economies of scale that a smaller home installation would not benefit from. Without the hot air is well worth a read for anyone interested in how our energy mix is likely to look in the mid future.For example, Proven Engineering have an excellent reputation for long life robust wind turbines, but their smallest (600 watt) one costs over £3000, i.e.£5 a watt, and their bigger turbines aren't much better. At £2 a watt a small car's 50kW engine would cost £100,000. I'm using wind because it's more financially effective than solar, at least in the UK. This leads to two thoughts: Firstly nuclear and other sources of power can be done a lot cheaper than that (in terms of £/kwh), so the question is how long the appetite for this folly will continue. And secondly, if there is a future for renewables then it will involve the economy of mass production and improvements in the technology in the coming years, both of which will leave anyone buying the current technology behind.
Every now and then I take another look but it still doesn't stack up for me. Your mileage (and your ROI) may differ. Ah'm still oot.
Cheers,
FT.
Fume troll said:
My assumption is that since these things are semiconductors and are therefore subject to both Moores law and the benefits of mass production. How happy would you be now if you still had to use a C64?
What you and others seem to have missed is that obsolescence and maintenance are taken care of in the equation: companies are offering guarantees and warranties that their installations produce 80%+ of their initial output in their 25th year and the tariff is fixed. It doesn't matter if in 10 years time there are better panels, as your 2010 panels are guaranteed to return a certain amount.
Fume troll said:
http://en.wikipedia.org/wiki/Renewables_Obligation This is the legal framework which requires generators to obtain at least 11% of their total energy provision from renewables.
So what about the non-energy companies that are jumping on the bandwagon with absolutely no obligation to do so? A quick google search brings up dozens - another conveniently overlooked factor.Fume troll said:
It is still the energy companies hNow that's all very well, however the question is how long the appetite for over inflated energy prices will remain. And how worthwhile an investment it seems to the energy companies when the ROs are cut in the face of recession?
Is it really that difficult to grasp the fact that the government has guaranteed the tariff rates for the duration of the tariff period? 
The energy companies' appetite for over-inflated energy prices and changes to the renewables obligation are irrelevant. The only issue is whether you believe the UK government will stand by their promise.
Fume troll said:
I think the assumptions are clear, I provided you a link to the formula, and another to a calculator that would do it for you.
So you're prepared to write a small essay as a reply but not list the assumptions that have you arrive at 3.4%? I clearly struggle with investment calculations so why don't you spell it out for me?Fume troll said:
Even if you assume no depreciation at all over the 25 year period, and all your guaranteed income is included as profit, you still only get 6.4%, so your 6.7% is looking a bit ropey; interesting maths skills indeed.
My calculation clearly wasn't intended as a detailed investment appraisal, but I bet it's a lot closer to what a professional would come up with than your 3.4%!In any case I'm not saying it's a great investment, I'm just not going to see it dismissed out of hand because of common misconceptions and misunderstandings.
youngsyr said:
So you're prepared to write a small essay as a reply but not list the assumptions that have you arrive at 3.4%? I clearly struggle with investment calculations so why don't you spell it out for me?
youngsyr- you're arriving at 6.7% by simply saying you spend £12,000 and this generates an income of £800.Now I don't know much about solar panels, but I can be fairly sure that even if they still work in 25 years they will have depreciated to a value of nil
So you have already established that you will be left with a profit of £11,000 over the 25 years after an initial investment of £12,000 which is around 3.4% profit per year
Oh, and just one more point- you say that the energy companies pay for this scheme. No they don't. We pay for this scheme with our increased energy bills.
matsmith said:
youngsyr said:
So you're prepared to write a small essay as a reply but not list the assumptions that have you arrive at 3.4%? I clearly struggle with investment calculations so why don't you spell it out for me?
youngsyr- you're arriving at 6.7% by simply saying you spend £12,000 and this generates an income of £800.Now I don't know much about solar panels, but I can be fairly sure that even if they still work in 25 years they will have depreciated to a value of nil
So you have already established that you will be left with a profit of £11,000 over the 25 years after an initial investment of £12,000 which is around 3.4% profit per year
Oh, and just one more point- you say that the energy companies pay for this scheme. No they don't. We pay for this scheme with our increased energy bills.
Does its power generating ability drop to zero the day after the 25th anniversary of its installation?
People seem to be confusing the duration of the feed-in tariff scheme (25 years) with the useful economic life of the system (???).
Also, if you read the article I quoted again, you might see that the profit from the investment isn't £11K - the article stated that the amount of feed-in tariff payments is likely to be around £23k from a £12K installation.
On top of that you would see several hundred pounds (at current energy prices) worth of reductions in your energy bill each and every year. Even at only £300 per year (there are people on this site who claim to see multiples of that) in savings, that is another £7,500 of profit (at current energy prices, let alone next years or the year afters prices) over the lifetime of the panels.
If you want to dismiss it as an investment, fair enough, but at least research the facts before you do so.
As for the semantics of who actually pays the feed-in tariff in the end, it's irrelevant to the investment decision.
Edited by youngsyr on Wednesday 17th November 13:09
youngsyr said:
If a solar panel is guaranteed and warrantied (and if you're sensible, insured) to be producing 80%+ of it's capacity when it's 25 years old, why would its value be nil at that point?
What would you value it at then? Would you buy a 25 year old system?As I said I know virtually nothing about solar panels or these schemes, but in 25 years what happens? They are paying way too much for you to generate electricity at the moment so how much will the payments reduce by at that point? About 75%, right?
youngsyr said:
Also, if you read the article I quoted again, you might see that the profit from the investment isn't £11K - the article stated that the amount of feed-in tariff payments is likely to be around £23k from a £12K installation.
Right, so what you're saying is that my outgoings will be £12k and my income will be £23k so I have spent £12k to generate revenue of £23k which means my £12k has now become £23k... you really can't see that means a profit of £11k? You may wish to boost this "profit" figure by adding the residual value of the system.. but, as I have previously suggested, the residual value of the system in 25 years will be bugger all.youngsyr said:
People seem to be confusing the duration of the feed-in tariff scheme (25 years) with the useful economic life of the system (???).
I don't think anyone is confused about that.You still haven't understood how the system works.
The feed in tariff payments are paid to you even if you use the energy generated yourself. There are therefore two sources of income from the panels - the feed in tariff payments and reduced energy bills.
This is obviously simplified (and conservative, if you believe people on this forum who have installed these systems), but should spell out to you where you're going wrong:
Outgoings:
Solar panels.........................12,000
Less: savings on power bills.....(7,500)
Net outgoings........................4,500
Income:
Feed in tariff payments..........23,000
Net income.........................18,500
The feed in tariff payments are paid to you even if you use the energy generated yourself. There are therefore two sources of income from the panels - the feed in tariff payments and reduced energy bills.
This is obviously simplified (and conservative, if you believe people on this forum who have installed these systems), but should spell out to you where you're going wrong:
Outgoings:
Solar panels.........................12,000
Less: savings on power bills.....(7,500)
Net outgoings........................4,500
Income:
Feed in tariff payments..........23,000
Net income.........................18,500
youngsyr said:
You still haven't understood how the system works.
The feed in tariff payments are paid to you even if you use the energy generated yourself. There are therefore two sources of income from the panels - the feed in tariff payments and reduced energy bills.
This is obviously simplified (and conservative, if you believe people on this forum who have installed these systems), but should spell out to you where you're going wrong:
Outgoings:
Solar panels.........................12,000
Less: savings on power bills.....(7,500)
Net outgoings........................4,500
Income:
Feed in tariff payments..........23,000
Net income.........................18,500
youngsyr - i follow your logic.The feed in tariff payments are paid to you even if you use the energy generated yourself. There are therefore two sources of income from the panels - the feed in tariff payments and reduced energy bills.
This is obviously simplified (and conservative, if you believe people on this forum who have installed these systems), but should spell out to you where you're going wrong:
Outgoings:
Solar panels.........................12,000
Less: savings on power bills.....(7,500)
Net outgoings........................4,500
Income:
Feed in tariff payments..........23,000
Net income.........................18,500
the "risk" i guess is in the 7500 you quote, as who knows whether the government will change their stance on energy generation payments, or indeed how much energy costs. both these factors may eat into that number
i guess though your net outgoings arent actually realised until the end of the period, by which time you have generated the savings you have offset in your calcs
but, as we are talking about investment, and investment is money realised at the end of a term, then its fair enough to include it in your sums
snorkel sucker said:
youngsyr - i follow your logic.
the "risk" i guess is in the 7500 you quote, as who knows whether the government will change their stance on energy generation payments, or indeed how much energy costs. both these factors may eat into that number
In my opinion there is little risk about the government changing their stance on energy generation payments - they have promised to keep the feed-in tariff (as increased for inflation) for the duration of the feed in tariff period.the "risk" i guess is in the 7500 you quote, as who knows whether the government will change their stance on energy generation payments, or indeed how much energy costs. both these factors may eat into that number
It would destroy any chance of any similar scheme being put in place in the future if the government reneged, and let's not forget, the government isn't underwriting this scheme - the government is forcing the energy companies to underwrite it.
Let's also not forget that any increases in energy prices, and energy prices are projected to increase, would also increase the £7,500 nominal income figure.
Indeed, I haven't a clue how it works. There was confusion about the numbers that you posted, so I was merely trying to help you see how the numbers you posted didn't equate to the return on investment that you was claiming.
You posted an article which says "So for a c.£12,000 outlay, you get back £23,000 – that's £11,000 profit" Now all of a sudden there's a second "income" source and the profit is now £18,500. I don't understand why you didn't just post that in the first place, it would have saved a lot of time but at least we have got to the bottom of it now.
But what you have done is prove Fume troll correct- it's not a 6.7% return.
What you seem to be saying is that you spend £12,000 today and in 25 years you will have an income of £30,500, minus depreciation of £12,000 leaves £18,500 profit, plus you still have the solar panels. An investment of £12,000 that is worth £18,500 after 25 years, according to the money-zine.com link, gives a simple annualized ROI of 2.2%, again this includes a 100% depreciation in the value of the system even though they are still on your roof. I am sticking to 100% depreciation because I can't see how they could have any financial value at that stage.. I'd hope that by then we will have a new generation or 2 of technology, and who would want 25 year old solar panels?
To put this into context- if you put that same £12,000 in a fixed rate savings account for 25 years with an interest rate of 1.8% you would be better off at the end of the term. If, for example, you put the money into a 25 year bond paying 4.5% then you would be nearly £20,000 better off than investing in the solar panels. The only way I can see this being remotely worthwhile is if it can last 50+ years and mean no more electricity bills in that time. But unless I've made a gigantic cock up of those numbers (and I apologise if that is the case) I can't see it as being a worthwhile investment.
You posted an article which says "So for a c.£12,000 outlay, you get back £23,000 – that's £11,000 profit" Now all of a sudden there's a second "income" source and the profit is now £18,500. I don't understand why you didn't just post that in the first place, it would have saved a lot of time but at least we have got to the bottom of it now.
But what you have done is prove Fume troll correct- it's not a 6.7% return.
What you seem to be saying is that you spend £12,000 today and in 25 years you will have an income of £30,500, minus depreciation of £12,000 leaves £18,500 profit, plus you still have the solar panels. An investment of £12,000 that is worth £18,500 after 25 years, according to the money-zine.com link, gives a simple annualized ROI of 2.2%, again this includes a 100% depreciation in the value of the system even though they are still on your roof. I am sticking to 100% depreciation because I can't see how they could have any financial value at that stage.. I'd hope that by then we will have a new generation or 2 of technology, and who would want 25 year old solar panels?
To put this into context- if you put that same £12,000 in a fixed rate savings account for 25 years with an interest rate of 1.8% you would be better off at the end of the term. If, for example, you put the money into a 25 year bond paying 4.5% then you would be nearly £20,000 better off than investing in the solar panels. The only way I can see this being remotely worthwhile is if it can last 50+ years and mean no more electricity bills in that time. But unless I've made a gigantic cock up of those numbers (and I apologise if that is the case) I can't see it as being a worthwhile investment.
To be honest, I'm not sure it's even worth discussing this with you. You admit that you don't understand how the scheme works and aren't willing to do any research beyond what I've posted in this thread.
How you feel you can dismiss it out of hand on that basis is beyond me and makes me question why I should take the time to correct your misunderstandings.
For what it's worth though, your calculations do not take into account the basic premise of the time value of money. The figures I've quoted are present value numbers because the returns are index (or energy price) linked and the payments are made at the start of the investment.
The returns you've quoted don't take into account inflation or any risk inherent in your investments.
You also seem to struggle with the concept of a capital item having a value if it produces cash (or reduces cash expenditure), even if it has little to no resale value.
How you feel you can dismiss it out of hand on that basis is beyond me and makes me question why I should take the time to correct your misunderstandings.
For what it's worth though, your calculations do not take into account the basic premise of the time value of money. The figures I've quoted are present value numbers because the returns are index (or energy price) linked and the payments are made at the start of the investment.
The returns you've quoted don't take into account inflation or any risk inherent in your investments.
You also seem to struggle with the concept of a capital item having a value if it produces cash (or reduces cash expenditure), even if it has little to no resale value.
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