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Martyn1981

Cardew wrote: »

Just a point on the economics.

If someone came up with an investment scheme where they suggested that you invest £7k to £8k and at some point, between 10 and 15 years hence, you would probably be breaking even and have got back all your money - I wonder how many takers there would be?

That would depend on how thoroughly they researched the investment?

Comparing your two scenario's,

A. £8k in an ISA @ 4.6% would become approx £15k after 14 years.

B. £8k in PV earning £700pa with the income being re-invested in an ISA @ 4.6%, and annual income on the PV going up at a modest 3% pa with index linking, would total approx £16k after 14 years, allowing £1k for a new inverter.

So very similar. However, in reality there is scenario C.

This is actually scenario B above, but remembering that you still have the solar installation, which is now earning around £1k pa, and has approx another 11 years to run, then hopefully another 15 or so, without FITs but with leccy savings.

So to answer your question on takers, yes very many, if they intend on leaving the money for 14 years, as at that stage, they'd have the equivalent of both investments (ISA & PV) now running.

Simples!

Mart.

EricMears

Peterdavy wrote: »

however one concern is that I may move in that period and therefore someone else may reap the benefits when I have made the initial outlay!

Peter

If you're likely to move within the next ten years then the last thing you want to do to your house is to rent out the roof to a 'free' SP company !

Arguably, when selling your house an SP income stream would be an asset but a 'sitting tenant' with SPs on your roof would be a liability.

Cardew

Well for once I don't disagree with your figures.

Our difference is on how many people would be prepared to invest £8k in any scheme(not just PV) on the promise of making a profit on that investment in 14 years time.

Martyn1981

Cardew wrote: »

Well for once I don't disagree with your figures.

Our difference is on how many people would be prepared to invest £8k in any scheme(not just PV) on the promise of making a profit on that investment in 14 years time.

Another classic misunderstanding of differing investments, unfortunately.

You are of course actually making a profit on it from day 1 (not year 14) since your investment is earning a rate of return.

However instead of earning 4.6%, it is earning 700/8000 = 8.75% index linked. And rather than your investment being in the form of capital in the bank / building society, it is in the form of a physical asset. Both are investments, and both are earning rewards.

The 14 year mark is not a breakeven point, rather it is the point in time when the PV investment (which still stands) has earned the equivalent of both the ISA capital and the 14 year compounded interest combined.

At that stage,
scenario neighbour A has his/her ISA with approx £15k, but,
scenario neighbour B has the £15k ISA and the PV.

As I said, simples!

Mart.

All dates, rates, and returns are only examples. Investments can go down as well as up, etc etc...

Cardew

Martyn1981 wrote: »

Another classic misunderstanding of differing investments, unfortunately.

You are of course actually making a profit on it from day 1 (not year 14) since your investment is earning a rate of return.

However instead of earning 4.6%, it is earning 700/8000 = 8.75% index linked. And rather than your investment being in the form of capital in the bank / building society, it is in the form of a physical asset. Both are investments, and both are earning rewards.

...

We agree again! another misunderstanding of differing investments!

We have discussed before the difference between investing, and an annuity.

Paying £8k for an PV system means that capital cannot be realised - it is stuck on the roof. You get your money returned to you at a rate of 8.75%(to use your figure). After 14 years or whatever, you have got back all your money. That is more akin to an annuity IMO than an investment.

Martyn1981

Cardew wrote: »

We agree again! another misunderstanding of differing investments!

We have discussed before the difference between investing, and an annuity.

Paying £8k for an PV system means that capital cannot be realised - it is stuck on the roof. You get your money returned to you at a rate of 8.75%(to use your figure). After 14 years or whatever, you have got back all your money. That is more akin to an annuity IMO than an investment.

And so, having gone in a full circle regarding ISA's, and made sure that as well as avoiding any over-selling, we are not 'accidentally' under-selling - I'm sure you wouldn't do that deliberately on a money saving site. We come back to annuities yet again.

So how much would a 25 year index linked annuity starting at £700pa be? Somewhat more than £8k perhaps?

Mart.

EricMears

Cardew wrote: »

We agree again! another misunderstanding of differing investments!

We have discussed before the difference between investing, and an annuity.

Paying £8k for an PV system means that capital cannot be realised - it is stuck on the roof. You get your money returned to you at a rate of 8.75%(to use your figure). After 14 years or whatever, you have got back all your money. That is more akin to an annuity IMO than an investment.

We seem to be using a rather strange definition of investment !

Obviously, buying solar panels can't be compared with depositing money in a bank or building society - but that's certainly not what investment means.

An annuity is indeed one form of investment but not strictly comparable to SPs because the FIT scheme has a finite life whereas an annuity terminates on death. To get anything like a reasonable comparison between SP %ROI and annuities, you'd have to look at a joint life annuity policy wth both applicants under 60 and full amount payable until death of 2nd applicant and payments increased annually in line with inflation. I'm not an expert on annuities but I'd be very surprised if you find something like that on offer for a return of anything as high as 4%.

Perhaps a better form of investment with which to compare would be the purchase of industrial plant. If you could buy a widget making machine for £8,000 and it made a contribution to the widget making process of £700 per year then you'd be mad not to order one.

Possibly the analogy breaks down a little when you compare the price of secondhand widget making machines with that of used solar panels. I'm not aware of a huge demand for secondhand SPs (or for that matter WMMs ) but would expect both to have some value to somebody.

Cardew

EricMears wrote: »

We seem to be using a rather strange definition of investment !

.

Who are 'we'?

Without repeating the above posts, with PV panels(using the figures above) you need to wait around 14 years until you see profit on your £8k 'investment'.

That is not the same as investing £8k where the capital is still available and not stuck on a roof!

It is the principle of an annuity that I was using - not the figures.

I repeat that IMO not many people would find the proposition of waiting 14 years before an investment went into 'profit' and paid dividends attractive.

Note for Martin1981:

IMO = In My Opinion. We are allowed to express an opinion on this forum I believe.

EricMears

Cardew wrote: »

Who are 'we'?

'We' are all the people who understand the meaning of the word 'investment'.

To join that club see http://www.investopedia.com/terms/i/investment.asp#axzz1v1KcUJrg

Definition of 'Investment'

An asset or item that is purchased with the hope that it will generate income or appreciate in the future. In an economic sense, an investment is the purchase of goods that are not consumed today but are used in the future to create wealth. In finance, an investment is a monetary asset purchased with the idea that the asset will provide income in the future or appreciate and be sold at a higher price.

Read more: http://www.investopedia.com/terms/i/investment.asp#ixzz1v1L6Cn7t

The_Green_Hornet

The problem with any investment is that, without knowing the personal circumstances of the person involved, it is very difficult to give advice as to whether it is suitable for them or not.

Unfortunately, on forums such as this, posters tend to think that if an investment is not suitable for them then it won't be suitable for anyone else and vice versa, and people always tend to make comparisons which simply back up the argument they are trying to make so it doesn't really assist in the decision making process.

My own advice would be to look at your own personal financial circumstances, weigh up the risks of investing in Solar PV and then make up your own mind.