Misunderstood Payback Periods of Proper Insulation:
This is a huge mistake people make. I had a consumer recently tell me that 2 years was too long to get all his money back. If he understood Payback periods, he’d understand that he was turning down a 50% return on his money.
Now, investments that return 50% every year are EXTREMELY RARE and frankly quite exotic. The S&P used to average 8%. Homes used to gain 3% a year. So here is someone who thinks 50% is too low because he doesn’t understand money and he doesn’t understand investments.
The truth is a 50% return on an investment in your building’s insulation is possible. But let’s look at other common scenarios:
36 months / 3 years: 33%
48 months / 4 years: 25%
60 months / 5 years: 20%
120 months/ 10 years: 10%
Even if it took 10 years to pay for itself (and it’s very rarely that long), investing in the right insulation outperforms almost every other investment over that same time period.
The standard payback is usually between 3-4 years. That means that the proper investment can yield somewhere between 25 -33%. I wish there were more investments out there like that because I cannot stuff my 401k into my home!
It’s a limited amount of money I can, or need to, put into my home’s insulation. And I’m not really investing in insulation per se, I’m investing in avoiding energy costs and my home’s comfort and value.
There’s another thing to think about here. It’s important to say the right insulation. Most people add insulation based on R-value and never get any savings. Why?
Air and moisture lower the cheaper insulation’s ability to control Conduction. And we know that the cheaper insulations can’t stop the convection that is already undercutting their performance. Adding more of them isn’t going to stop the problems plaguing them! That’s like adding more wood to the fire.
Author: Mark Munns, Guardian Energy Technologies; Guardian Energy Tech; 2033 N. Milwaukee #136; Riverwoods, Illinois 60015 United States