Celebrate Earth Day With a 22% Return on Your Local Investment

V.2, N.71

Would you be willing to invest in a low-risk local option that delivers a 22% annual return over the next decade?

Last week, I gave my annual “State of the Field” report on local investment to network leaders of the American Independent Business Alliance (AMIBA). I argued that with the stock market tanking (down over 10% since the election) and the U.S. treasury market wobbling (the world is losing faith in the U.S. dollar), local investments are looking better and better. I shared my own best investment, which happens to be on my roof.

My wife and I moved to Palm Springs, California, three years ago. After tax credits, we invested $22,000 in a rooftop solar system (without batteries). As detailed in the chart below, we reckon that each year, we have avoided about $7,000 in utility bills. Remember, we live in the desert where the temperature exceeded 120 degrees last summer, so our air conditioner is working triple time. By the end of this year, 2025, the system will have just about paid for itself. By the end of year ten, we will have saved $48,000 from our $22,000 initial investment, which works out to a 22% rate of return annually.

A few caveats about this calculation: Yes, tax credits may go away soon, but system costs are declining, so it’s probably a wash. Meanwhile, utility bills are increasing dramatically, which means the effective rate of return will rise. And after year 10, the annualized return continues to grow. Plus, our house might also be more valuable with the system if we ever resell.

One other detail: My wife and I financed the system by borrowing from her Solo 401(k), the tax-deferred savings vehicle for solo entrepreneurs. We took out a five-year loan, as is permitted under the law, and now plan to pay ourselves back early.

It is with this logic that I recently entered into a contract with a major U.S. city to help them solarize every house and every commercial building. Yes, the cost could exceed $2 billion, but with a long-term, low-risk return of 22%, attracting local investors to invest in this city project should not be difficult. Especially compared to the volatile stock and bond markets.

The Trump Administration can shill for all the obsolete coal, oil, and gas companies it wants, but honestly, it won’t matter. At the end of the day, it can’t prevent economic rationality from moving the planet in the right direction. Happy Earth Week!

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If you’re a paying subscriber, you will find a bunch of other inspiring articles about local investment:

• Community Capital Partners summarizes the findings from its just-published monograph, “The 2025 State of Investment Crowdfunding.” Even though market uncertainty brought down the level of investment crowdfunding last year, the cumulative results remain impressive: In nine years, 7,894 companies have raised over $2.8 billion from 2.1 million investors, creating an estimated 437,000 jobs.

• At the recent SEC Annual Small Business Forum, many attendees endorsed the idea of creating a simpler, cheaper “micro-exemption” for small businesses raising under $350,000.

• Honeycomb Credit, a reg CF portal serving primarily small local businesses, just acquired IFundWomen, in part to integrate the latter’s successful model for “coaching, community, and connection.”

• The importance of new investment options for women is underscored by a piece in the Nonprofit Quarterly discussing the historical barriers U.S. women have faced in accessing capital.

• A flurry of initiatives in the South Side of Chicago are promoting community wealth building through cooperative ownership of residential and commercial properties.

• In Hawaii, the Kaua’i Federal Credit Union has launched a down-payment assistance program, as well as other infrastructure initiatives, to make more affordable housing available to its members.

• In Australia, a new intermediary called Funded has been created to simplify and standardize how nonprofits raise charitable dollars from individuals and foundations.

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NC3 UPDATES AND ANNOUNCEMENTS

ComCap AMA (Ask Me Anything) - Tune in tomorrow, April 25, from 12-1 pm ET for our first ComCap AMA session, focusing on community investment funds. Several speakers from our Changing the Paradigm event will be present to answer your questions. Register and join us on Zoom at this link: https://us02web.zoom.us/meeting/register/egOomNJHSxqMj_Gk0KQ89A.

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