How would you like to get all of your gasoline, your electricity and even your natural gas absolutely free for the rest of your life?
“Wow Phil“, you may say, “is it Solar Energy? Hydrogen? Fuel Cells? Perpetual Motion…”
No, we have come up with this process, one which will forever free you from the grind of having to pay for energy for the rest of your life without our Physics, Chemichal Division or anyone in the entire Science wing of Phil’s World having even been consulted.
Who did we go to? The mathematicians!
Well, what is it, what did they say?
I want you to first take a minute because this is very important and you need to believe a little but also do your own research but I am now going to give you the plan and a blueprint for energy independance that is so simple I expect Cheney to have me assisinated by Monday:
BUY STOCK IN ENERGY COMPANIES!!!
Very funny you say, ha ha you say how will that help? Well this is where the math guys come in. I’m not telling you to buy 500 shares of Exxon and hope for the best, I am dead serious about you never paying for energy again – forever. Please indulge me while I do the math:
Let’s start with the obvious. If your family spends $1,000 a month on energy, you are about average for the Northeast, that’s a pretty good chunk of change – $12,000 a year about (I’m including gas).
At this point you’ve caught on to the fact that I’m not going to give you a machine that makes energy – just some investing advice. But if I were to give you such a machine, how much would you pay? 10 years worth of energy costs? While 10 might do it in a really good market, let’s be safe and say 20.
It can definately be done for 20 years worth of energy plus a downpayment. A lump sum 20 year payment would be $240,000. If we put that all into Exxon stock they will pay you a 2% dividend for your troubles, so that will knock just $4,800 off your bill and you are risking $240,000. Bad idea. There are plenty of companies that pay 3% for $7,200 a year but still not quite there.
So we can’t get you off the energy merry go round tomorrow but thats why this article is entitled my 10 year plan. Also, if you had $240K to dump into a single sector you probably wouldn’t be so worried about the price of energy anyway…
No, to do this correctly you need to make a downpayment – say 2 year’s worth of your energy bill and to bite the bullet for 10 years and put 20% of your energy expenditures into a basket of stocks. Now is the best time to do it because your energy costs just went down more than 20% from what you were reluctantly paying so all you have to do is keep that up!
Let’s say, for example: XOM (2%), BP(3.2%), SU(growth), EXC(3%), RIG(growth), HAL(1%/g)), XEL(5%), SO(4%), ESLR(growth), BTU(1%).
Now over time the list can change but all you have to do is follow the broad macros – which company, each year is making the most profits (that are on the upswing) in the energy sector.
You are averaging a 2% dividend and we will assume it’s consistant. The companies also average 10% annual growth, even if you throw out the last 2 years.
What if prices drop and the stocks fall? Well, you need to remember we are not doing this as a stock trade, we are doing this so you don’t pay for gas anymore – so if their stock falls, absent of a major decoupling of all known stock physics, then you must be paying less for energy so you are even.
So we have our basket we calculate from them that each $100 of stock you buy is getting you an discounted average of $10 in earnings, safely below historic levels.
Now, in our first year, we will put $240 a month into these socks and reinvest the dividnends for an annual contribuion of $2,448 (using all simple interest calculations for simplicity – you will make more).
With simple 2% average dividends and just 10% annual growth of stock in our basket we will have $123,596 socked away in 2016.
In 2016 you will collect $3,707 in dividends but you will also gain $12,360 in appreciation on your stocks. More than enough to cover your bill! Remember – if there is inflation etc. your stocks will reflect that as well.
You now have $12,000 a year (in today’s money) to pay your bills from 2016 on and, if we continue to reinvest the profits moving forward but you can now expect to have over $150,000 in stock at the end of 20 years as thanks for the $48,000 you invest between now and 2016.
I’m sure you do a lot of silly things with your money – why not try this just a bit to see how much it hurts? When you fill up your tank for $30 – put $6 into a jar. When you write a check to the utility company – write a check for 20% to yourself. At the end of each month or quarter, buy a few shares of stock with the money.
If you don’t make the downpayment, you will not be energy independant until 2030, if you make a bigger downpayment, say 3 years worth- you can hit the mark in just 8 years.
Even if you just can’t see where the money could come from, at least make a gasoline fund. In just 15 years you can be driving a free Hummer for the rest of your life and never worry that it only gets 8 miles a gallon!
Either way it could be a great long-term investment for you!
