May 8, 2024
By: Travis Watts, Director of Investor Development
Five Non-Traditional Investment Ideas
- Energy-Efficiency
- Transportation
- Tax Optimization
- Insurance
- Mortgages
Mastering Personal Finance Might Be Your Best Investment Yet
There is an interesting lesson I learned throughout childhood that I want to share with you. I was raised by two frugal parents who were not investors but had mastered personal finance. Conversations about money often centered around saving, using coupons, buying off brands, staying out of debt and maximizing every dollar we had.
For many years, I embraced this philosophy whole-heartedly before becoming a full-time investor. In fact, throughout college I was living independently on $8,000 per year and managed to avoid debt altogether, while staying within my budget. While I do not advocate this extreme way of living, there is an important lesson that came from this experience.
If you are reading this article, chances are you’re an investor like me, so I encourage you to assess the potential return-on-investment (ROI) when it comes to everyday expenses that are often overlooked. Though this topic may not be widely discussed or marketed, you may find that personal finance mastery can exceed the results of many traditional investments.
A Closer Look at Each Investment Idea
Energy-Efficiency:
Installing a digital smart thermostat or upgrading an HVAC system might seem like mundane expenses, but their ROI can be quite enticing. For example, in our current home, my wife and I installed a $200 smart thermostat that has reduced our energy usage by about 10%. In the example of having a $300 monthly electric bill, this translates to a $30 per month savings which is a remarkable 180% return on investment in the first year alone. Review a list of the top 5 smart thermostats.
Transportation:
Transitioning to a more fuel-efficient vehicle can significantly impact both personal finances and the environment. Swapping out a car that offers 20 mpg for a more economical 40 mpg alternative can yield a great ROI, coupled with long-term savings on fuel costs. In recent years, my wife and I have been experimenting with hybrid and electric cars. This year we purchased a fully electric vehicle that uses 31kWh per 100 miles. This translates to about $4.65 to drive 100 miles. (Note *kWh vary from state to state). Many electric vehicles today are also eligible for the $7,500 Federal tax credit. Something to consider if you’re looking to upgrade a vehicle anyway.
Tax Optimization:
Hiring a tax strategist may seem like an unnecessary expense, but the long-term benefits can be substantial. In my experience, learning to implement tax-saving strategies has resulted in significant savings, far outweighing my initial investment. Especially if you happen to be self-employed or invest in real estate. When I switched from using a typical CPA firm to a tax strategist, my filing costs increased from $1,500 to nearly $4,000. However, my tax savings since making this change have far exceeded these additional costs. The great thing about savings is that it’s dollar for dollar. In other words, spending $4,000 and in turn saving $8,000 is a true 100% return. When I invest, I have risk, hold time, and taxes to factor in. For a deeper dive on tax strategists check out this video on our Ashcroft Capital YouTube Channel.
Insurance:
Taking the time to review and switch insurance providers can lead to substantial savings without any financial investment. Spending an hour comparing policies and switching providers could result in hundreds or even thousands of dollars in annual savings. Last year, I decided to use an insurance broker who can pull policies and quotes from several firms. We switched most of our policies to another provider and saved over $700 in less than one hour. Zero investment required and the savings continue year after year.
Mortgages:
Many homeowners are not aware that they can elect to make biweekly mortgage payments rather than one single payment each month. Biweekly payments accelerate your mortgage payoff by paying 1/2 of your normal monthly payment every two weeks. By the end of each year, you will have paid the equivalent of 13 monthly payments instead of 12. This simple technique can shave years off your mortgage and save you thousands of dollars in interest. No additional capital is required to do this; and most lenders allow it. Find out how much you could save with a free biweekly mortgage calculator.
Review the Benefits of Non-Traditional Investment Ideas
Both saving and investing are critical elements of finance. Many non-traditional investment ideas can provide immediate and tangible benefits that may exceed traditional investment ROI. With that said, it has long been my opinion that investing is the most critical to master as your earning potential is unlimited, and saving is limited. By adopting a holistic approach to wealth management, you can have the best of both worlds as you maximize your dollars, reduce overhead, and build lasting wealth.
If you are considering multifamily real estate investments in 2024, please reach out to learn more.
Watch additional Passive Income Lifestyle episodes on the Ashcroft Capital YouTube channel.
