We were recently told (on Reddit) that Energea was a junk investment and that we should stop sharing our experience with others.
In RideToFI fashion, we asked why they thought Energea was junk and what they recommended was a better option. Our request was down voted with no response. Since it has now been multiple days of no response, we had a choice to make. Brush this off as just someone who is angry, ignorant, or what not, or try to figure out why Energea is or isn’t junk.
The most obvious place to start is comparing it with other investments. Since we are not interested in crypto, metals, NEOS, or individual stocks, we’ll compare Energea to the SP500. We’ll use the following:
1. Six year duration, which is the time Energea began in 2020 through the end of 2025.
2. On their website homepage, Energea has the following chart, which we will use for our data.
3. A $100 initial deposit will be used, with a $100 contribution done each month after, for a total of $7,200 in contributions.
4. Compounding will be done yearly.
5. We will use a calculator and we will use AI for checking our calculation.
6. At the end, we will take it further and run a hypothetical scenario for the year 2026, adding a 7th year.
Alright, here we go…
If we add up the 6 years of data for each and divide by 6, we get:
12.61% – Average yearly return for Energea
16.28% – Average yearly return for SP500
Both look awesome so far. No junk here.
But since we are interested in compounding with monthly contributions, we need to dig even deeper.
So, if we work in our initial deposit and monthly contributions, after 6 years of compounding yearly, we get:
Energea: $10,541 total, 46.4% gain on principal
SP500: $11,571 total, 60.7% gain on principal
The clear winner is the SP500.
Does this now make Energea a junk investment?
No, we do not believe this makes it junk, but it does mean the SP500 was the better option over that time frame.
But wait, there is more for us to consider. One of the biggest reasons for us choosing Energea was that the SP500 has detached itself from it’s mean. It’s been on fire! While we can’t predict the future, history shows that at some point, valuations will come back down and for that to happen, there will need to be years that the SP500 returns less.
So, creating a hypothetical 7th year with the same $100 monthly contributions, which brings Energea to its historic mean (approx. 12%) and the SP500 to it’s historic mean (approx. 10%) we use the following data:
12% for Energea Return 7th Year
-27.7% for SP500 Return 7th Year
And this provides us with the hypothetical following totals over 7 years:
Energea: $13,083 total, 55.8% gain on principal
SP500: $9,377 total, 11.6% gain on principal
The clear winner is Energea.
Since we believe the SP500 will eventually come off it’s high valuations and return to its mean, this supports our belief that Energea is not junk and where we are in our RideToFI, it makes for a great fit. We’re sticking with it!
Oh, and case you were wondering, we ran one other 7th year scenario, keeping Energea at 12% and having a flat year for the SP500 making it 0% (putting it way above the mean again).
Energea was the winner.