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If you don’t already know, today is Earth Day. So today I’m going to write about something that a lot of you might overlook or think isn’t worth your time… recycling.
I’ll admit that I’m not much of a recycler. I used to do it when I was a kid and had no other source of income. However, now that I am older and make a little more, it just hasn’t seemed worthwhile to me.
For my “real job”, I work in finance. I am constantly using compound interest and the time value of money in my daily life. Recently, I got to thinking that if you include the time value of money over a considerable period of time, recycling could actually be a worthwhile investment.
I started with a few basic assumptions:
- A family of four that consumes eight soft drinks per day, on average (two drinks per person – possibly a little high, but not unreasonable).
- A pound of aluminum is worth 80 cents on average.
- An additional redemption of 5 cents per can (CRV here in California).
- All recycling income is invested monthly in the stock market with a long term average return of 9%.
- All values are adjusted for inflation at a rate of 2% per year.
Initially I was a little disapointed. Even with the rather high consumption rate, a family could only earn around $18 per month by recycling.
However, things change when you start looking at the investment over a few years. In 10 years, the family has saved nearly 4 thousand dollars. In 20 years, they have managed to rake in nearly 15 thousand dollars, and after 30 years, the family would have earned over 40 thousand dollars by just recycling and saving the money! Not too bad for just a few cans.
If you also take into account the enormous social and environmental factors, you would really have to be a fool not to recycle.
If you would like to check my work, you can download the spreadsheet I used to figure this all out here.
Do you recycle? Any tips? Leave a comment!
Thanks for reading and Happy Earth Day!
Stumble it!
This is a great idea, but the difficult task is in finding the 9% stock market return. I assume you are using an annual 9% and not monthly? I’d love to have a 9% monthly return on my trades!
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James you are correct that the 9% is the annual return. I’d love to find a 9% monthly return, but that just doesn’t exist unfortunately.
There may be some argument that 9% is too high even for an annual return, but if you look at a broad index for the last few decades like the S&P or the Dow, 9% would be about average.
You would definitely have better and worse years, but over a few decades you would probably end up around 7-9%.