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Cost of Living



February 03, 2012 – Comments (37)

Lets just say I drive 12,000 miles/year, get 35 mpg and gasoline averages $3.75/ gallon. I spend $1285/year on gasoline.

XOM's current dividend is $1.88/ year. At that dividend I would need to invest in 685 shares of XOM to cover my gasoline costs.

At todays price, $84.76/share I would need to invest $58,060 to cover my annual fuel cost every year well into the future if neither the gasoline cost or the dividend increases. 

$58,060 plus the $17,000 cost of a 35mpg Corolla and for $75,060 I have reduced my annual energy cost for transportation to zero.


Before tax credits an 8kw solar system is $30,000, installed. A Nissan leaf is $36,000. So for $66,000 I can reduced my annual transportion energy cost to zero - sort of. To truly get to zero, I would need a zip car or rental budget for longer than 70 mile round trips. The 8kw system should also be enough to charge my car and run most of my house too. 8kw is enough to charge a Leaf battery from empty to full in three hours.

An additional consideration is the 15% tax on that XOM dividend means I have to invest 15% more into the XOM stock to cover that expense which now comes to 788 shares for $66,769 plus the car is $83,769.

Another consideration is the liklihood that the dividend will keep pace with the price of gasoline. Since 1990, when gasoline was $1.15 the dividend has also tripled so pretty much it has negated the need to reinvest additional cash into XOM.

Right now, in the real world, I do get a Federal tax credit of $10k on the panels and $7500 credit on the leaf. (plus state and utilities depending on your state and utility but we'll leave them out to pay for the zip or rental cars)

$83,000 for the corolla and XOM stock, minus $66,000 for the leaf and panels is $17k plus the two credits is $35,000.

The Leaf and panels calculation is pretty much a sure thing, so it is zero risk.

To pay me the additional $35,000 the XOM stock would have to appreciate from $66,769 up to $101,000 or $128./share. Since I am waiting for the $35k which if I bought the panels I could invest in 413 shares of XOM today, it has to pay me inflation too, at the last 20 years average over 20 years of the panels life is another $48,000 according to one calculator I found. Now we are at $149,000/ 788 is $189/ share. 

So an investment in XOM has to more than double over 20 years to match an investment in solar panels and a leaf, before compensating me for the risk that it doesn't achieve that goal, and the cost of gasoline does not outpace the dividend. 

 Of course my 413 XOM shares have also appreciated to $78,000 plus I am saving the dividends, not spending them on gas. and thats worth another $25,000 cash, plus more if I reinvested them. That is another $60,000 that the XOM stock has to make for me, so now it has to get to $266/share in 20 years. Of course if it does then it also means my 413 shares are now worth $110,000 and thats $50,000 more that the 788 share XOM investment has to earn for me to match the leaf/panels 413 share investment of the same amount.

Now the original investment in XOM has to get to $260,000 or $329/share, and now my 413 shares are worth $135,000 and thats another $25,000 and my 788 shares have to get to $361 ea. My 413 shares are $149,000 and thats another 15,000 to get to before the gap is closed but now we are at $380/share, and thats another $8000....

So in twenty years XOM has to get from $85/share to $400/share and I've only broke even.

Does anyone else consider their investments in lowering their cost of living as an investment?

Does anyone else even consider lowering their cost of living an investment? 

Did I totally screw this up? 

Best wishes,



37 Comments – Post Your Own

#1) On February 03, 2012 at 5:17 PM, chk999 (99.97) wrote:

I'll invest in energy stocks, you invest in solar stocks and we'll see who does better over the next three or four years.

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#2) On February 03, 2012 at 5:25 PM, AvianFlu (< 20) wrote:

I own Sunpower and First Solar. I'm still trying to get the stiletto out of my kidney.

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#3) On February 03, 2012 at 6:41 PM, Hawmps (< 20) wrote:

That's a very intriguing way of look at your vehicle expense.  I occasionally drive a Leaf around for work and I drove right around 95-100 miles the other day and had 15 miles "left in the tank" when I got back to the office (it recharges a little on braking and coasting down hill).  The car is actually a decent ride and has pretty good power for a "compact" (I got the tires to chirp).  Driving the Leaf really makes me want a Tesla Model S, or its eventual successor, and the PV setup is becoming more practical than I think people realize.  In certain areas of the country with varying electrical rates depending on time of day, or peak hours, you can sell energy back to the utility when you're at work and charge your EV at a lower rate at non-peak hours.

That said, I ain't touchin solar manufacturing socks.

Yes, cost of living is a necesssary consideration in your overall investment thesis.  Otherwise, what is your reason for investing in the first place?  For me, it is to cover my cost of living as quickly as possible so that I eventually don't have to rely on my sweat equity to cover my cost of living.  If you don't know WHY you're investing, then HOW and in what doesn't really matter. 

No, you didn't totally screw it up .

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#4) On February 03, 2012 at 9:00 PM, devoish (75.63) wrote:

chk999(quickslick again?),

I have no idea why you respond to my posts if you don't read them first. The point of the post is to consider taking money out of stocks of any kind, and put it into energy savings products to keep the cost of living down. I bet you are buying solar though.


To the point of the post, do you own Sunpower and First Solar in a brokerage or on your roof? On your roof it is as close to a sure thing as you will ever get. 


Yes the cars are nice and becoming nicer. But back to the point, there's a glut of panels available, prices are down, subsidies abound. Panel prices and stock prices suffered. Take advantage of the opportunity and put guaranteed savings onto your roof, and not risk your cash in high risk investments through brokerages.

Consider some of the advantages. Saving money is tax free, so you screw the Gov't out of your hard earned cash. And that is significant. If you have enough to invest, unless you are Romney rich, you have to make $1.15 to spend $1.00. No cut to the brokerage to buy and sell. I like the Gardners and company but, no newsletter cost either. Do you really want to count on XOM to qudruple in twenty years, just to break even? You don't save electricity against your average annual cost, you save it against your afternoon peak cost. It is a real product, and you are really productive. And think of the political ramifications. You spend $20k this year, President Obama does a GDP end zone dance but the next three years you destroy $4000 of GDP by not having to buy energy, the economy, as measured by GDP crashes, stocks fall, you aren't hurt and nobody ever votes Democrat again because they crashed the economy.

Wins all around! 

Best wishes,


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#5) On February 03, 2012 at 9:05 PM, devoish (75.63) wrote:

I hope someone picks up the most obvious mistake.

Best wishes,


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#6) On February 03, 2012 at 10:17 PM, rd80 (95.74) wrote:

Good way to look at it.

One thing I think is missing is you say the solar panels have a life of about 20 years, so you'd have to replace them or reconsider the options at that point while you'd still (presumably) have the XOM shares cranking out dividends or available to be sold to raise capital for the next option.
As a strictly apples to apples, you could set it up as a 20-year discounted cash flow and include the residual values of the two approaches.  In that case, I'd also include the option of buying the Corolla and paying for the gas without the XOM purchase.

Another thing you mention, but don't specifically include in the numbers is the savings on your home electric bill.  I'm assuming the solar panel produces more than enough power to charge the car and that would be an economic benefit in favor of the solar panel + Leaf approach.

You also don't include replacing the cars, but that's probably near a wash if you assume roughly the same useful life and assume that electrics will become cost competitive over the next ten years or so.

FWIW, I think CVX would be a better choice than XOM for the gasoline option.  Higher dividend and less tied to nat gas than XOM. 
Long CVX.

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#7) On February 04, 2012 at 9:06 AM, devoish (75.63) wrote:


Thanks. I think sometimes there is too much focus on "stocks" when we think of "investments".

You are correct about the twenty years and the need to reinvest into the panels. I left it out. 

I did not include the electric bill savings because I estimated it balanced against the cost of the rental or the zip car.

As to the option of buying the corolla and paying for the gas. Thats what poor people do. This website is for those in the investor class, who need to decide what to do with that something called "extra" income. 

Fair enough, lets call replacing the cars a wash down the road.

Whether it is XOM or CVX, it still needs to quadruple in twenty years to break even against the "sure" thing. Because equities are more risky, it should probably be expected to do better. I used the solar panels to get chk999, who seems determined to sell petroleum, upset. Just like CVX might do better, insulation would probably do better than panels and the leaf at saving.

And that is one point of the post. Whether you put those panels on your roof to save on your electric bill or also invest more to buy the car and save on gas, do you really think that XOM or CVX is going to achieve that quadruple gain to justify buying any stock before saving money? 

Another questionable decision I made was that for the XOM stock investment I assumed that the dividends would increase to keep pace with gasoline prices. But for the panel/leaf investment my savings were entirely calculated at todays gasoline price, with no additional savings from higher prices. But that also balances against my bringing all the gasoline savings forward into year one for the panels/leaf which definitely does not happen.

Best wishes,


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#8) On February 04, 2012 at 9:26 AM, dbjella (< 20) wrote:

Great analysis.  Do you think the utility companies in all seriousness are going to all people to get "off" the grid?


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#9) On February 04, 2012 at 11:19 AM, HarryCaraysGhost (63.66) wrote:

I think what your missing is that most people invest for retirement. So they would not be taking living expenses out right now. Rather they would be letting compound interest work its magic by reinvesting the dividends.

Lets use your example of XOM and the #'s you provided.

You want to know how your yield on cost and income will grow if you bought 685 shares of a $84.76 stock for a total investment cost of $58060.6. Your stock started with a 2.5% yield and has an annual dividend growth rate of 7.49%. You plan to hold this investment for 20 years and reinvest the dividends.

This will be compounded quarterly assuming your stock's yield and yield growth are spaced evenly over the course of a year.

With Reinvestment QuarterMonthIncomeHoldings Value11$362.88$58423.4812$371.98$58795.4613$381.36$59176.8314$391.02$59567.85Year 1 Summary: Total Income (Reinvested): $1116.23. Yield on Cost: 1.92%YearQuarterIncomeHoldings Value25$400.98$59968.8326$411.24$60380.0627$421.81$60801.8728$432.71$61234.58Year 2 Summary: Total Income (Reinvested): $1234.02. Yield on Cost: 2.13%YearQuarterIncomeHoldings Value39$443.95$61678.53310$455.54$62134.07311$467.50$62601.56312$479.83$63081.40Year 3 Summary: Total Income (Reinvested): $1366.99. Yield on Cost: 2.35%YearQuarterIncomeHoldings Value413$492.57$63573.97414$505.71$64079.67415$519.28$64598.95416$533.29$65132.24Year 4 Summary: Total Income (Reinvested): $1517.55. Yield on Cost: 2.61%YearQuarterIncomeHoldings Value517$547.76$65679.99518$562.71$66242.70519$578.15$66820.85520$594.12$67414.97Year 5 Summary: Total Income (Reinvested): $1688.62. Yield on Cost: 2.91%YearQuarterIncomeHoldings Value621$610.63$68025.60622$627.69$68653.29623$645.35$69298.64624$663.61$69962.25Year 6 Summary: Total Income (Reinvested): $1883.67. Yield on Cost: 3.24%YearQuarterIncomeHoldings Value725$682.51$70644.77726$702.08$71346.84727$722.33$72069.17728$743.31$72812.48Year 7 Summary: Total Income (Reinvested): $2106.92. Yield on Cost: 3.63%YearQuarterIncomeHoldings Value829$765.03$73577.51830$787.55$74365.06831$810.88$75175.94832$835.07$76011.02Year 8 Summary: Total Income (Reinvested): $2363.46. Yield on Cost: 4.07%YearQuarterIncomeHoldings Value933$860.16$76871.18934$886.18$77757.36935$913.18$78670.55936$941.21$79611.75Year 9 Summary: Total Income (Reinvested): $2659.53. Yield on Cost: 4.58%YearQuarterIncomeHoldings Value1037$970.30$80582.061038$1000.52$81582.581039$1031.91$82614.491040$1064.53$83679.02Year 10 Summary: Total Income (Reinvested): $3002.74. Yield on Cost: 5.17%YearQuarterIncomeHoldings Value1141$1098.44$84777.461142$1133.69$85911.151143$1170.37$87081.521144$1208.52$88290.04Year 11 Summary: Total Income (Reinvested): $3402.50. Yield on Cost: 5.86%YearQuarterIncomeHoldings Value1245$1248.24$89538.281246$1289.59$90827.871247$1332.66$92160.531248$1377.53$93538.07Year 12 Summary: Total Income (Reinvested): $3870.49. Yield on Cost: 6.67%YearQuarterIncomeHoldings Value1349$1424.30$94962.371350$1473.07$96435.441351$1523.93$97959.371352$1577.00$99536.37Year 13 Summary: Total Income (Reinvested): $4421.30. Yield on Cost: 7.61%YearQuarterIncomeHoldings Value1453$1632.39$101168.761454$1690.23$102858.991455$1750.65$104609.631456$1813.78$106423.41Year 14 Summary: Total Income (Reinvested): $5073.26. Yield on Cost: 8.74%YearQuarterIncomeHoldings Value1557$1879.78$108303.191558$1948.80$110252.001559$2021.02$112273.021560$2096.60$114369.62Year 15 Summary: Total Income (Reinvested): $5849.60. Yield on Cost: 10.07%YearQuarterIncomeHoldings Value1661$2175.75$116545.371662$2258.65$118804.021663$2345.54$121149.561664$2436.64$123586.20Year 16 Summary: Total Income (Reinvested): $6779.94. Yield on Cost: 11.68%YearQuarterIncomeHoldings Value1765$2532.19$126118.391766$2632.46$128750.841767$2737.72$131488.571768$2848.29$134336.86Year 17 Summary: Total Income (Reinvested): $7902.37. Yield on Cost: 13.61%YearQuarterIncomeHoldings Value1869$2964.48$137301.341870$3086.64$140387.981871$3215.12$143603.101872$3350.34$146953.43Year 18 Summary: Total Income (Reinvested): $9266.24. Yield on Cost: 15.96%YearQuarterIncomeHoldings Value1973$3492.70$150446.131974$3642.67$154088.801975$3800.72$157889.521976$3967.40$161856.92Year 19 Summary: Total Income (Reinvested): $10936.09. Yield on Cost: 18.84%YearQuarterIncomeHoldings Value2077$4143.24$166000.172078$4328.87$170329.042079$4524.93$174853.972080$4732.12$179586.09Year 20 Summary: Total Income (Reinvested): $12997.05. Yield on Cost: 22.39%

You started with $58060.60 and ended up with $179586.09 for a total gain of 209.31%. This was over 20 years so that makes your average annual gain 10.47%

I picked 20 yrs since I'm 38. My yearly gas cost is $1300 so gas is covered with an extra $3,432.


(ps I hope Caps formatting does'nt totally mangle my chart)

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#10) On February 04, 2012 at 11:26 AM, HarryCaraysGhost (63.66) wrote:

If you want to see the cleaner version just type in the #'s here-

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#11) On February 04, 2012 at 2:31 PM, ikkyu2 (98.05) wrote:

I think this is not a bad way of doing calculations, but it leaves a number of things out.  The worst part of it is the assumption that the XOM share price and dividend will track gasoline prices and follow historical norms.  You're probably right, but when you put those kind of numbers at work on that assumption you are gambling with that money.  The result of a lost bet is presumably that you can't drive anywhere without damaging your finances, so, not inconsiderable.

You have also failed to include maintenance and end-of-life calculations for your solar panels and Leaf.  If you have solar panels on your house for 20 years they will probably get ripped off by wind once or twice; damage your roof once or twice, and have something rust out due to rain once or twice.  Your Leaf is not built to last 20 years and so you should probably factor in a new electric car within that 20 year period. 

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#12) On February 04, 2012 at 4:24 PM, ChrisGraley (28.65) wrote:

Good effort, but solar on your roof is still a bad investment. Wind would be better. Especially when you figure maintenance costs.


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#13) On February 04, 2012 at 4:45 PM, HarryCaraysGhost (63.66) wrote:


Theres a restaurant nearby that has a wind turbine. Heres the specs-

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#14) On February 04, 2012 at 6:21 PM, devoish (75.63) wrote:


Yes, there is a cost associated with maintaining the panels, it could be an increase in your homeowners insurance. Under either scenario there is the cost of replacing the cars.

I don't think that the assumption of the XOM share price and dividend following the price of gasoline is a bad one. There is an actual causation here being as XOM profits are derived directly from the oil they mine for the gasoline they sell. 

And yes, I did leave out "end of life" calculations. It needs an estimate from somewhere, and while the price of panels will continue to drop for the foreseeable future, how cheap they get and then how fast they climb afterward is a hard question. Feel free to take a stab.

Right or wrong, rd80 and have already agreed to weigh the cost of replacing the Leaf equally against the cost of replacing the Corolla on the presumption that the leaf, or electric cars in general, will get cheaper with economies of scale.


On the calcs you did, and thanks for the link to the calculator, you showed us a profit on that $58060 investment of $121,500.

miinus 15% tax of $18225 = $103,275. I think that XOM's ability to pay and increase that dividend is derived directly from increasing its profit on the products they sell you directly (gasoline), and indirectly (plastics, nat gas powered electricity, etc). I think if you reinvest the dividend any gain you see will be wiped out by the increasing cost of the products you buy from XOM leaving you with a net loss exactly(?) equal to the 15% capital gains tax bill.

But here's the rub. 

This chart shows retail gasoline prices matching the S&P500 over the last twenty years which means you are spending 10.64% more each year on gasoline as you "gain" 7.49% on your investment. The gas money you spend over that time will come to $155,514 leaving you $55,500 in the hole.

Whereas an investment into solar panels leaves you with the gasoline/electric bill cash of $155,514 in your hand with which to buy new panels.

Best wishes,




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#15) On February 04, 2012 at 6:30 PM, devoish (75.63) wrote:


If you say so with such conviction I guess it is so. 

Best wishes,


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#16) On February 06, 2012 at 7:22 AM, devoish (75.63) wrote:


It is my money. How can they stop me from buying panels? Right now they offer an "incentive" to me to buy panels. If I make the investment inrto the solar panels, they add to their generating capacity on hot summer afternoons, just when they need it most.


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#17) On February 06, 2012 at 9:13 AM, catoismymotor (< 20) wrote:

Does anyone else consider their investments in lowering their cost of living as an investment?

I don't invest with this in mind. My goal with investing is to be able to retire well so I'm focused on a 30+ year timeline.

Does anyone else even consider lowering their cost of living an investment? 

Yes. It has been said that what is imposrtant is not what you make but what you keep. And there is some truth to this. For example: I have not had a car payment in seven years. I've owned the same car for almost twelve years. The car costs me about $75 a month to maintain and repair, minus fuel and insurance. That $90 is a helluvalot better that trying to replace my perfectly good car with a like model that would cost $350 monthly for the next five years. The $260 I save goes toward our rainy day account and toward our family vacation fund.

There are other things we do to shave dollars off here and there that are simple. We clip coupons, use wholesale clubs for certain things and drop the thermostat in winter to 66 from 71 and from 73 to 78 in summer when we are away from the house.

If you watch the pennies the dollars fall into place. :)


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#18) On February 07, 2012 at 1:02 PM, devoish (75.63) wrote:


I absolutely agree with keeping the older car, but you have to buuy it first. Your $75./month repair cost is pretty much dead on the average that my customers spent over ten years and cars are better now.

That $275/month is a pretty significant drop in the savings bucket. 

Best wishes,


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#19) On February 07, 2012 at 1:12 PM, devoish (75.63) wrote:


I would like to give you a better reply. On Long island where I am LIPA has to buy electricity from Upstate, Canada, etc during peak consumption hours, at peak prices, just when my panels (if I had them) are cranking out more than I can use. 

LIPA is basically getting me to pay for their generating capacity. My guess is it is all good for them, up to about 20-30% of their customers based upon my guess of a similar percentage difference between average and peak demand. 

Best wishes,


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#20) On February 10, 2012 at 2:01 AM, Melaschasm (71.37) wrote:

A good idea, but you did make a few mistakes in your calculations.

$58,060 plus the $17,000 cost of a 35mpg Corolla and for $75,060 I have reduced my annual energy cost for transportation to zero.


Before tax credits an 8kw solar system is $30,000, installed. A Nissan leaf is $36,000. So for $66,000 I can reduced my annual transportion energy cost to zero - sort of.

Lets look at this with a 20 year time frame, using your basic assumptions. 

Traditional gas option.  Each car will need to be replaced every 10 years.  That adds 17k to the gas option for a total cost of $92,060.  Plus you still own stock worth $58,060, making your total cost for 20 years of transportation $34,000.

For the solar/electric option you need a second electric car at a cost between 20k and 30k.  That makes your twenty year cost between 86k and 96k.  

Financially you are saving more than $50k by investing in XOM and a fuel efficient gas car.  This assumes that XOM's dividends and share prices remains constant,  and that gas prices stay even.

While there are additional costs for each option that have not been considered, and each option has significant risks, things would have to be drastically different to make electric/solar a cost competitive solution.

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#21) On February 10, 2012 at 11:02 AM, devoish (75.63) wrote:


I don't think that less detail leads to better accuracy. 

One assumption made during the replies was that 10 years from now the cost of an electric car will have come down (or increased slower) to the point where the next car purchases are the same price.

Your estimate did not account for the stock I have from spending less initially on the solar/electric car investment vs. the stock/gas car investment which is $35,000.

Assuming that neither gasoline or stock prices or dividends change over the 20 years of this estimate I have only $15,000 more.

But I also have in my hands the dividend from 20 years of XOM stock that I bought with the difference from my initial lower investment into the leaf and panels. That is enought to give me$650/ year in dividends. Over 20 years that comes to $14,000 dollars.

So for $1000 at the end of twenty years I am taking the risk that XOM doesn't get mismanaged, that the divi keeps pace with gasoline prices,  etc.

Best wishes,



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#22) On February 11, 2012 at 12:31 AM, Melaschasm (71.37) wrote:

I only priced the replacement electric car at $3k more than the gas replacement.  Even if the electric replacement was $3k less it is not going to change the math much, so lets say that you are going to save a smidge less than $50k.

If your 9k up front investment quadruples that still makes the gas car a long term winner by $10k.  This also assumes that after twenty years XOM has not had a price increase.

While I lack confidence that electric cars will be cost competitive in 10 years, I strongly doubt that solar power will be.  However, if you buy gas now, and in ten years solar is cheap, you can always sell XOM in ten years and buy a low cost solar installation and a cost competitive electric car.

Here is the math I would use to decide which car to buy. (this differs from your assumptions).

Cost of a gas car:  $17

Cost of an electrci car:  $30k

Buy the gas car, invest the extra $13k.

After ten years both cars are gone and my investment should be worth $20k to $30k.

Even if the fuel cost of electric is half that of gas over the next decade, you are only saving $640 per year.  That works out to $6400 in fuel savings, which is less than the initial investment from the gas car, and thus will not catch up to the total value of the investment.  After ten years you will likely have between $10k and $15k from investing the fuel savings of your electric car.  Gas prices would need to skyrocket compared to electricity prices to make the electric car cost competitive over the next decade.

Since solar power is not yet at cost parity to other sources of electricity, buying solar panels does not save money.  You are better off buying from the utility.  The only place where this might not be true is a desert with very high day time electricity rates.

If I am wrong about solar power and it does become cost competitive in a decade, the person who buys a gas car now, and switches in a decade can take advantage of the better prices without having to pay todays premium.  If you are confident that solar power prices will improve dramatically, buying a nice used car now so you can switch to solar in 5 years is a nice way to hedge your bets.

About the only financial advantage of buying solar panels now is if you expect the price of energy and solar panels to skyrocket in the next few years.  If gas prices were to quadruple over the next few years and solar panel prices were to more than double, then locking in your energy costs now could turn out to be a good long term investment. 

Thanks for the great discussion idea. 

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#23) On February 11, 2012 at 10:47 AM, devoish (75.63) wrote:

After ten years both cars are gone and my investment should be worth $20k to $30k

Not if you started in 2000, or 2006. Not if it was with MFGlobal ot Madoff. Not after you pay capital gains tax, and not after inflation. 

Of course it could also do better than that, but there is no guarantee you will make money on investing unless you are the broker or investing other peoples money for a salary plus a cut of the proceeds. 

And that is part of the point of this post. Guaranteed money. Not spending is guaranteed money. You do not have to outperform inflation. As a measure of gains it is now on your side, not against you.

For your power generator, solar will be cost competitive in a few years. Like oil, coal is also getting more expensive to dig. But you aren't paying the electric companies cost for coal power. You are paying retail which is much higher. In the Northern parts of the USA the solar payback is seven years. Solar panels are worth more to you than to your power company.

I am confident that panel efficiency will improve, and panel production costs will come down. I am less confident that will impact my cost of a solar installation. Travis Holcum has already made the point that the cost of the panels represents less that 1/4th of the installed cost. 

I do not get the math in the your last paragraph at all. If solar prices were to double in a few (3-5?) years waiting would be a financial blunder. If gasoline quadruples, a disaster. There is no "and" about that. Either event alone is more than enough.

There are better investments into "cost of living" saving that you can make. Insulation, lighting, especially if you can do it yourself. Buy efficient appliances as you need them.

You are right about waiting to buy the car, because you can get the full savings against an existing electric bill the panels are where the value lies, less so than in the car. Buying the panels first, without the car, and waiting five years for the car prices to come down, or increase more slowly, until they match gasoline powered cars will probably be better still.

Best wishes,


PS, where I live my utility has "time of year plus time of day" pricing plans. My most expensive electricty cost is summer afternoons, (.16/kwh) my most productive panel time is also summer afternoons. So my savings is not at my "average" cost. At night my cost for electricty is .04/kwh so the cost to charge my car is not at my "average" cost either.

Lets say my round trip to work and back is 35 miles in my 35mpg car. My leaf range is 70 miles so I can make it easily. That one gallon trip to work and back costs me $3.75/day. Recharging that battery overnight at .04/kwh would cost me about $.50cents. The $3.25 per trip savings is worth $800/year over your ten year life expectancy of the car is $8000.

If I choose a "time of day" pricing plan.

Plus another $100 I save from not changing the oil in an electric engine.

 Research Institute (EPRI) calculated that powering a plug-in hybrid electric vehicle (PHEV) would cost the equivalent of roughly 75 cents per gallon of gasoline—a price not seen at the pump for 30 years.

The calculation was made using an average cost of electricity of 8.5 cents per kilowatt hour and the estimated distance the car would travel on one charge, versus a car that gets 25 miles per gallon and is powered by $3 per gallon gasoline 


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#24) On February 11, 2012 at 1:01 PM, devoish (75.63) wrote:

 less so than in the car

  less in the car.


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#25) On August 15, 2012 at 8:27 PM, PjKoz (< 20) wrote:

Looks like a great plan as long as the share price of XOM never goes down to a point where you lose any of your original capital. It looks like you posted this when XOM was at $84.76 a share.  I see it at $114 today.  Looking good so far. I would however question the overall impact should XOM stock decline in price for a significant period of time. What if it ever drops below your purchase price? You'd get a dividend of say $1.88 but you'd be losing your capital.   

For complete transparancy - I do a lot of financial work.  I'm not convinced the economy is out of the wood.


Paul Kosakowski

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#26) On August 16, 2012 at 6:45 PM, PjKoz (< 20) wrote:

Another thought is the possibility of hedging gasoline prices with a more direct hedge such as gasoline futures. There is no guarantee that XOM, the company,  will track gasoline prices all the time.

I've condiered doing this in the past the same way that Libor futures chould be used to hedge interet rates. Before the word futures scares anyone its not as risky as one might think. It just needs to be done properly.  

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#27) On August 16, 2012 at 6:46 PM, PjKoz (< 20) wrote:

Another thought is the possibility of hedging gasoline prices with a more direct hedge such as gasoline futures. There is no guarantee that XOM, the company, will track gasoline prices all the time.

I've considered doing this in the past the same way that Libor futures could be used to hedge interet rates. Before the word 'futures' scares anyone its not as risky as one might think. It just needs to be done properly.

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#28) On August 16, 2012 at 7:27 PM, NOTvuffett (< 20) wrote:

hey steven,

i can't remember the name of the model but chevy sells another car which is pretty much identical to the volt.  it gets excellant milelage and costs half as much.

this is america, land of freedom, if you want to drive an electric clown car, that is your right. 

i am a bit car crazy, i have 2 with 400+hp motors in them.  (i used to have 7). 

anyway, my point is the math doesn't really work for solar unless sending it to outer space or some other remote location.


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#29) On August 16, 2012 at 7:38 PM, NOTvuffett (< 20) wrote:

oh, i forgot the music, lol


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#30) On August 16, 2012 at 8:04 PM, SuntanSuperman (99.86) wrote:

I really like the post, but the investment and the mode of transportation don't have to match. It doesn't need to be an oil stock AND a gas car or solar panels AND an electric car. It can be oil stock and electric car. Or solar panels and gas car. Or a fast food stock and a bicycle. Money is fungible. Just look for the best investment, period, and use that to help pay for your transportation and other costs of living.

But (to get back to your original 'oil stock-gas car, solar panels-electric car' point): maybe a high yielding electric utility stock would do better with your electric car option.

And if you want the solar panels, there are solar leasing programs that enables you to have the panels without actually having to pay for the costs upfront. So instead of your 20-year commitment with the fully-purchased panels, you can have a shorter commitment with the lease. That will enable you to take advantage of any advancements in solar technology or cost reductions during your hypothetical 20-year window

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#31) On August 17, 2012 at 9:52 PM, PjKoz (< 20) wrote:

Regarding the investment and the transportation not having to match-- that would depend on what your goal is. If you have a crystal ball and you know wha is going to go up than it doesn't matter. However, if your goal is to hedge the price of gas with a direct relationship than then yes --the two investment must inversely relate to each other.  

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#32) On August 17, 2012 at 9:53 PM, PjKoz (< 20) wrote:

Regarding the investment and the transportation not having to match-- that would depend on what your goal is. If you have a crystal ball and you know what is going to go up than it doesn't matter. However, if your goal is to hedge the price of gas with a direct relationship then yes --the two investment must inversely relate to each other.

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#33) On August 17, 2012 at 11:53 PM, SuntanSuperman (99.86) wrote:

@ PjKoz

If hedging is the goal, then companies like XOM are a bad way to go about it. Using Exxon is essentially hedging gasoline prices with the world's largest natural gas producer. If you are looking to hedge, you need something that is as close to a pure gasoline price play as possible. Exxon isn't that. None of the integrated oil and gas companies are a good choice really, but definitely not Exxon.

If you are looking for direct relationships and pure hedging, maybe you want something like UGA or USO

I would personally get away from the idea that you absolutely have to worry about hedging a fuel type with your mode of transportation. So you are looking at either XOM and a gas car OR solar panels or a electric car. Either way, you still have other costs of living.

If you have solar panels and a gas car, they don't match, but you still have your home electricity bill you need to pay for. And those solar panels will help with that.

If you have XOM and an electric car, they don't match, but you still have your home natural gas bill you need to pay for. And those shares of XOM (or something closer to nat gas) will help with that.

One way or the other, those costs will find a way to catch up to you. They always do.

The type of hedging we are discussing definitely makes sense for companies, but maybe not so much for people like us. For example, if you are Starbucks, it makes sense to hedge against the possibility of raising coffee prices. I'm not sure how much sense it would make for us (as normal, small, average, retail investors) to attempt to hedge our own personal coffee drinking usage though.

Granted, personal coffee usage isn't the same as personal gasoline usage. We can just stop drinking coffee if prices get too high, where as we likely have to use gasoline no matter what. But if gas prices get too high, we can attempt to cut back wherever possible.

Anyway, I'm kind of rambling now (not kind of, with this long of a reply I'm definitely rambling). I guess my point is: if a company is a good investment, that should really be all the matters for us retail investors. Hedge our various cost of living with great long-term investments of any type.


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#34) On August 18, 2012 at 10:32 AM, PjKoz (< 20) wrote:


Good insights. I was just talking about hedging because the intent the original post seemed to be discussing using XOM shares to hedge gas prices. My point was that the only way to truely hedge gas prices would be directly in a gas product such as futures or the oil and gas ETF's that you brought up. 

To buy anything else to compensate for rising gas(if that is one's intent) would open up the risk of having the selected investment go down as gas goes up -achieving the opposite on the intended result.

As far as hedging making sense for companies but not people - I'm not a company and I hedge. I think the biggest issue is that people are told by 'Wall Street' that that kind of stuff is only for professionals.  They have an ulterior motive in telling us that. The futures markets are some of the 'easiest' markets to make money in provided we can manage the risk. Now I'm rambling and gettting off topic:)

Back on the topic, I like the idea of solar stuff but I'm not convinced on hybrid cars yet. I recently just bought a Ford Fusion. I considered the hybrid for about 10 seconds and then went with the V6. My main issue with hybrids is the increased up front cost which in many cases doesn't result in much better gas milage over a comparable gas engine car. It would take 10 years to break even and by that time we may have moved beyond hybrids onto a better technology.

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#35) On August 18, 2012 at 8:27 PM, SuntanSuperman (99.86) wrote:


I wasn't saying that hedging doesn't make sense for people like us (non-professionals). I have no issues with the futures market for us retail investors. I was questioning whether hedging our own personal usage of a product makes sense or not.

When I was talking about company and people (back to my coffee example):

If you are a business and your business is nothing but coffee and want to protect your business from raising coffee prices, hedging makes perfect sense. But if you just drink coffee and want to protect your personal coffee drinking habit from raising coffee prices... that's what I'm talking about when I said I'm not sure how much sense that really makes.

If you wanted to play the futures market in general, I have absolutely no issues with us retail investors doing that. Makes sense. Nothing wrong with that

But doing so for the specific reason of hedging our own personal costs of living (I drink coffee, therefore I will trade coffee futures to hedge my personal coffee drinking), I'm not sure how much sense that really makes.

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#36) On August 20, 2012 at 7:32 PM, PjKoz (< 20) wrote:


 I agree with you. I was only referring to the concept of hedging as the original post discussed using XOM shares.  I was pointing out that the only real way to hedge gas is with a direct relationship. I responded to your original post because you stated that the direct relationship didn't matter because money is fungible. I disgreed with that for the reasons I stated.  The only way to truly hedge is with a direct relationship. To try and hedge any other way opens of the risk of the hedge not working.  I'm not recommending or not recommending hedging. I'm just disucssing the correct way to do it.

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#37) On April 17, 2013 at 9:22 PM, devoish (75.63) wrote:

Pikoz and WSW,

Sorry i thought this thread had stopped.

The point of the OP was that investing money into yourself by investing into solar panels for your roof is a better investment than into XOM (XOM as a substitute for any stock, bond or gold investment) because it is risk free.

Too many folks have been taught incorrectly that an "investment" is something you buy that you then hope appreciates in value.

Right now an "investment" into saving energy costs is a better, safer investment than anything else out there. And a much better inflation hedge than gold.

CNBC is a 24 hour infomercial selling stock investing.  

I just wanted to express some original thinking - or at least my grandfathers thinking.

Best wishes,



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