4 ms·

People nowadays expect 10% return on their investment, so if you invest 1m you need to make 100k a year from it (120k to cover the deprecation over 50 years) I

by ta1243 1y ago

People nowadays expect 10% return on their investment, so if you invest 1m you need to make 100k a year from it (120k to cover the deprecation over 50 years) If you made 30k a year for 50 years you'd return 1.5m from your 1m investment, but you're only making 3%, which is a low return especially given the future risk (you'd have to run for 33 years just to get your initial investment back) Either way it's worthwhile, because the reason people expect 10% is because the externalities are borne by others. Majority of people and countries in the world do not deem ROI to be the sole or even primary driver for investment, and judging investments only on the immediate financial reward already biases the conversation

testdelacc1 1y ago
I really like this comment. Concisely explains the points of view on an investment like this. There’s not much more to add. This is why I open the comments before the link.
Avamander 1y ago
> Majority of people and countries in the world do not deem ROI to be the sole or even primary driver for investment It's partially that, other part is that we aren't really pricing in all the externalities of everything out there. So it's not that "there's no ROI", it's that "we aren't factoring things in the ROI calculation". So while a heat battery might not make a huge profit, the ability to burn less fuel (less air pollution, less waste, etc), to offer redundancy and stability, the know-how and work it creates, that is all valuable as well.
- strken 1y ago
  It's possible and often desirable to calculate the estimated impact of externalities, positive and negative. Human lives are (in)famously given a monetary value by environmental agencies to enable this calculation. I think the more likely explanation is that this is a pilot project by a clean energy startup, it intentionally operates at a loss because it's RnD rather than mature tech, everyone involved is okay with this, and the company doesn't want to release its modelling of future ROI because that's valuable proprietary data and giving it away to clients and competitors is dumb.
- hliyan 1y ago
  Externalities can (and should) be priced in by taxes that offest negative externalities (e.g. carbon emissions, pollution). Unfortunately, legislative bodies that have to decide on taxes have a much cozier relationship with industry than they do with those who must endure the effects of negative externalities (the general population).
  - ta1243 1y ago
    Put a carbon tax on fuel in a western country and you end up with an unhappy population who pay more money in tax. Personally I'd distribute the revenue as a UBI which would mean the most polluting would be worse off but the average person would be better off. The people who would mostly benefit from reduction in emissions - especially in the short term - are those in other countries. It's not going to be Finland suffering the most from doubling of the cost of food from failed harvests, it's going to be massive failures in rice harvests in south east asia. Finns will always be able to outcompete the average Cambodian when buying food. One of the costs of emissions to western countries - say Spain - is increased bad weather - more frequent storms, fires etc. All fairly small stuff compared with mass starvation or water shortages though. That starvation leads to another problem -- increased migration pressure. But those costs are going to be borne anyway. Even if Spain stopped emitting CO2, it wouldn't make an ounce of difference. International agreements have failed time after time to curb emissions. The main benefit of renewable energy for a given country isn't the reduction in emissions, it's the increase in energy independence - no need to import gas or oil from unstable countries.
kragen 1y ago
> Majority of people and countries in the world do not deem ROI to be the sole or even primary driver for investment I think this is a little unfair. If it were true, it would be the reason for wealth inequality: you're saying that the majority of people and countries are so financially irresponsible that they consume any resources they get without investing any. But in fact everyone I have observed closely, in every socioeconomic group, tries to optimize ROI. Most of them aren't very good at it, but they do try. On the other hand, people who expect a 10% risk-free return are just going to get scammed. There are 10% opportunities in most people's lives—weatherstripping, coupon clipping, bulk food buying, etc.—but you can run out pretty quickly.
- ta1243 1y ago
  > There are 10% opportunities in most people's lives Average S&P total return (reinvesting dividends) is well over 10% over any appreciable timeframe (say 30 years), even during really low times (say buying at the peaks in 1999 or 1972)
  - zahlman 1y ago
    The long term average is a bit over 10%, but there are definitely 30-year periods that have fared worse than that.
    - ta1243 1y ago
      Which specific 30 year period?
      - kragen 1y ago
        If we restrict our attention to the cherry-picked-with-hindsight US stock market, the worst 30-year period would probably be 01929 to 01959, although 01903 to 01933 isn't that great either. The S&P 500 only goes back to 01957, but https://www.econstats.com/eqty/eq_d_na_4.csv https://www.econstats.com/eqty/eq_d_na_4.csv shows the DJIA at US$382.01 on 01929-09-05. 30 years later, on 01959-09-04, it had reached US$653.91. That's 1.8% return per year, which is lower than 10%. But wait! Those are nominal numbers, not inflation-adjusted numbers. And the dollar had lost nearly half its value over those 30 years! According to https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=382.01&year1=192909&year2=195909 https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=382.01&year1=1..., US$382.01 in September 01929 would be worth US$646.99 in September 01959. So the inflation-adjusted return was 0.035% per year. At least it's not negative! And that doesn't even include the dividends! Nowhere close to competitive with insulating your house or bulk-buying food, though.
anon191928 1y ago
they print more than %10 each year, LMAO. people are not smart. remember

by ta1243 1y ago

testdelacc1 1y ago

I really like this comment. Concisely explains the points of view on an investment like this. There’s not much more to add. This is why I open the comments before the link.

Avamander 1y ago

> Majority of people and countries in the world do not deem ROI to be the sole or even primary driver for investment It's partially that, other part is that we aren't really pricing in all the externalities of everything out there. So it's not that "there's no ROI", it's that "we aren't factoring things in the ROI calculation". So while a heat battery might not make a huge profit, the ability to burn less fuel (less air pollution, less waste, etc), to offer redundancy and stability, the know-how and work it creates, that is all valuable as well.

strken 1y ago
It's possible and often desirable to calculate the estimated impact of externalities, positive and negative. Human lives are (in)famously given a monetary value by environmental agencies to enable this calculation. I think the more likely explanation is that this is a pilot project by a clean energy startup, it intentionally operates at a loss because it's RnD rather than mature tech, everyone involved is okay with this, and the company doesn't want to release its modelling of future ROI because that's valuable proprietary data and giving it away to clients and competitors is dumb.
hliyan 1y ago
Externalities can (and should) be priced in by taxes that offest negative externalities (e.g. carbon emissions, pollution). Unfortunately, legislative bodies that have to decide on taxes have a much cozier relationship with industry than they do with those who must endure the effects of negative externalities (the general population).
- ta1243 1y ago
  Put a carbon tax on fuel in a western country and you end up with an unhappy population who pay more money in tax. Personally I'd distribute the revenue as a UBI which would mean the most polluting would be worse off but the average person would be better off. The people who would mostly benefit from reduction in emissions - especially in the short term - are those in other countries. It's not going to be Finland suffering the most from doubling of the cost of food from failed harvests, it's going to be massive failures in rice harvests in south east asia. Finns will always be able to outcompete the average Cambodian when buying food. One of the costs of emissions to western countries - say Spain - is increased bad weather - more frequent storms, fires etc. All fairly small stuff compared with mass starvation or water shortages though. That starvation leads to another problem -- increased migration pressure. But those costs are going to be borne anyway. Even if Spain stopped emitting CO2, it wouldn't make an ounce of difference. International agreements have failed time after time to curb emissions. The main benefit of renewable energy for a given country isn't the reduction in emissions, it's the increase in energy independence - no need to import gas or oil from unstable countries.

kragen 1y ago

> Majority of people and countries in the world do not deem ROI to be the sole or even primary driver for investment I think this is a little unfair. If it were true, it would be the reason for wealth inequality: you're saying that the majority of people and countries are so financially irresponsible that they consume any resources they get without investing any. But in fact everyone I have observed closely, in every socioeconomic group, tries to optimize ROI. Most of them aren't very good at it, but they do try. On the other hand, people who expect a 10% risk-free return are just going to get scammed. There are 10% opportunities in most people's lives—weatherstripping, coupon clipping, bulk food buying, etc.—but you can run out pretty quickly.

ta1243 1y ago
> There are 10% opportunities in most people's lives Average S&P total return (reinvesting dividends) is well over 10% over any appreciable timeframe (say 30 years), even during really low times (say buying at the peaks in 1999 or 1972)
- zahlman 1y ago
  The long term average is a bit over 10%, but there are definitely 30-year periods that have fared worse than that.
  - ta1243 1y ago
    Which specific 30 year period?
    - kragen 1y ago
      If we restrict our attention to the cherry-picked-with-hindsight US stock market, the worst 30-year period would probably be 01929 to 01959, although 01903 to 01933 isn't that great either. The S&P 500 only goes back to 01957, but https://www.econstats.com/eqty/eq_d_na_4.csv https://www.econstats.com/eqty/eq_d_na_4.csv shows the DJIA at US$382.01 on 01929-09-05. 30 years later, on 01959-09-04, it had reached US$653.91. That's 1.8% return per year, which is lower than 10%. But wait! Those are nominal numbers, not inflation-adjusted numbers. And the dollar had lost nearly half its value over those 30 years! According to https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=382.01&year1=192909&year2=195909 https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=382.01&year1=1..., US$382.01 in September 01929 would be worth US$646.99 in September 01959. So the inflation-adjusted return was 0.035% per year. At least it's not negative! And that doesn't even include the dividends! Nowhere close to competitive with insulating your house or bulk-buying food, though.

anon191928 1y ago

they print more than %10 each year, LMAO. people are not smart. remember