Solar panels can deliver better returns than a pension, new research shows
PR Web |
Choosing to invest a lump sum in solar panels instead of a pension can deliver yearly returns in excess of 10 per cent in retirement, according to figures published this week.
Six months after the
The company compared the estimated returns that could be achieved over 20 years through investing £5,550 in either solar panels, 'debentures' for renewables projects or a typical managed pension fund.
The results showed that domestic solar could deliver annual returns of more than 10 per cent for the duration of the Feed-in Tariff (FiT), while a typical managed pension fund could be expected to grow by six per cent year on year over the same period after charges.
Those choosing to invest in certain larger renewables projects through a debentures-type scheme, meanwhile, can achieve yearly returns as high as eight per cent.
While pensions come with the extra benefit of Government tax relief, the difference in annual returns between PV and a pension from the same initial investment shows yet again, according to the PV provider, why solar investing should be seen as a serious addition for investors looking to diversify their existing retirement portfolios.
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"That's more than £600 per year before inflation with just a moderate 25% saving off energy bills accounted for. Figures like that, along with the falling cost of installations and the security offered by the 20-year FiT, show that solar can now be on everyone's radar when they're planning for the future. The fact that returns are both income tax free and available before 55 just makes them look even better.
"Investing in solar is by no means a direct replacement for traditional pension funds, in our opinion. However, what it does offer is a tax-efficient alternative for a lump sum that isn't susceptible to market fluctuations that can deliver significant returns over the medium to long-term in addition to a pension."
Pensions broker
"This means diversifying investment portfolios and taking advantage of some less conventional opportunities which might not be suitable for investors operating over shorter time spans."
Aside from domestic solar, another such opportunity could be through alternative Debenture investments with companies like Abundance Generation, which allows private investors with a lump sum to invest directly into larger renewable projects which support local communities.
"Whether that's through a domestic installation or through a Debenture that invests directly into other projects will very much depend on their own individual circumstances.
"With the government reforming annuities because of a lack of competition and poor value for retirees advisers are starting to looking beyond conventional investments and considering a Debenture, which can provide an income that is less volatile and access to an uncorrelated asset.
"Each investment is individual and offers different returns, however Abundance targets projects which are estimated to produce an IRR of 7% of more. This would potentially provide investors with around 2.2 times their original investment although they should bear in mind that their capital is at risk and debentures are not readily realisable."
Full statistics can be downloaded from the
Notes to editors
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