It's a bit like me buying a coffee machine to replace my barista coffee bill. Based on your logic, if I save €1000/yr, that coffee machine is worth the same as an annuity costing €63k.
I would be purchasing / replacing the car anyway, and the hybrid car I purchased was in the same ball park as Diesel cars I was considering purchasing. The outlay was not that much more expensive.Congrats on the reduced living costs!
For your return numbers, you didn't include the cost of of car in the money 'invested'.
I tried this and that's what got me thinking. The difference between my gross and net pay from the resent pay rise was shocking. In my case it was worse as I am purchasing extra pension and have deductions for income continuance. From memory it was up on 73%. I did not include these and I was trying to make an attempt to understand the detail of it.An easy way to confirm (as I have for my own pay), is to compare two payslips from this year, before and after the changes in pay, and calculate the relative increase in net : gross when the pay agreement kicked in.
It's a bit like me buying a coffee machine to replace my barista coffee bill. Based on your logic, if I save €1000/yr, that coffee machine is worth the same as an annuity costing €63k.
As discussed above, I think it will be your tax situation in retirement that is relevant here and not your tax now.
Yes, a lot of the pay back for solar by the companies looks at the electricity generated and the cost to buy that electricity, which gives a pay back time of 6-7 years.I think this is a great way to think about it DingDing. A few of the commentators are getting too hung up on the exact minutia of the details.
Your overall point is solid. You're investment is giving you ongoing Tax free savings for the next 20+ years. And to purchase an equivalent income to match those savings would be much more expene
Then I think it's reasonable to not include that 'cost' in your investment.I would be purchasing / replacing the car anyway, and the hybrid car I purchased was in the same ball park as Diesel cars I was considering purchasing. The outlay was not that much more expensive.
The 4K for energy would require a gross pay of almost 13K
So for an investment of 20K, I am saving 13K gross which would cost about 250K to fund by an annuity.
But if you do this, then you also have to do it when calculating for purchasing the equivalent annuity, pushing it to 775K!Surely if you are considering gross pay when calculating the savings you you should also be grossing up the 20k investment - in this case it would be about €62k pretax income which was invested?
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