Caledonia Wealth Management

EcoLuxury homes are not new, particularly in a town such as Boulder, however this showcase home represents a leap forward in design and construction.

It starts with a 100-year perspective. Unlike most American homes that are designed to last only decades, every aspect of this house is built to 100-year standards.

Built through a partnership between Boulder-based Vireo LLC and WeberHaus GmbH & Co. KG, this home was manufactured in Germany to precise tolerances (1/2 inch over a 100-foot span) and then shipped to the U.S. Once it arrived on site, assembly took a matter of days as there was no additional fabrication required.

See video below for a time lapse:

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Roth IRA conversions are a hot topic for 2010.  Many investors are heading straight for the punch bowl by converting all of their IRAs in the quest for “tax-free for life”.  However the question of whether a Roth IRA conversion is suitable is very much circumstance specific and requires thoughtful (and sober) analysis first.

Roth Conversions in summary

For a primer on Roth IRAs, please click here.

The law currently allows for IRA owners to “convert” up to 100% of their existing tax-deferred accounts (traditional IRAs, rollover IRAs, SEP IRAs, SIMPLE IRAs, etc.) into a tax-free account, also known as a Roth IRA.  Once a regular IRA is converted to a Roth IRA, no taxes will ever be owed on any future investment earnings or distributions.  However, every dollar that is converted will be taxed at today’s ordinary income tax rates.

Anyone with an IRA is eligible for the conversion as there are no restrictions on age, income or marital status.  Conversions are irrevocable, except as noted later in this article.

What’s unique about 2010?

2010 has generated Roth conversion fever for two reasons:

1. Prior to 2010 there was an income restriction where if you had more than $100K in modified adjusted gross income (MAGI), you were ineligible for a Roth conversion.  This restriction has been lifted for 2010 (and future years) and therefore there is a large group of more affluent investors who were previously ineligible to convert.
2. If you convert your IRA to a Roth IRA in 2010, you can split the taxes owed in 2011 and 2012 as opposed to having to pay them all at once.  If you convert in future years, all the taxes are owed by the filing deadline in the following year. Read more…

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A standard incandescent bulb will use almost five times the energy of an LED bulb, a German study concludes.  On its face this hardly seems significant since it’s well known that an LED is about five times as efficient as an incandescent bulb from a use standpoint.  However this study, conducted by Osram, looks at energy efficiency from a life cycle standpoint.  This is important since it refutes the notion that the efficiency of LED bulbs is compromised by an energy intensive production process.  In fact, the study finds that the primary energy used in the manufacture in an LED is less than 2% of the total energy consumed over the life of the bulb.  Compelling stuff.  Even mainstream media such as the NYT has been quick to publish the results.

However a closer examination of the study is revealing.  While 2% may sound impressive and further the study highlights how the energy consumed in manufacture is actually less than that of an incandescent, it’s important to understand the assumptions.  While it may be true to say an LED is 35% more efficient to manufacture than an incandescent, this calculation is based upon a 25,000 hour versus a 1,000 hour expected life.  That a factor of 25.

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Southwest Airlines (Ticker: LUV) is implementing measures that will not only further its positioning on sustainability but will improve its efficiency and therefore its profitability.

Weight is a critical element in any aircraft and corresponds directly to flight performance, including fuel efficiency.  Over the past two years Southwest has been experimenting with a “green plane” where numerous small improvements in the design and materials used in the seats and the cabin have been tested.  The result is a lighter aircraft (by about 472 pounds) that burns less fuel (9,500 gallons less fuel per year).  Multiply this approach over Southwest’s fleet and the savings really add up.

“Considering that Southwest flies more than 3,300 flights a day an average distance of 635 miles per flight, the savings would be dramatic. Southwest calculated that it could save 90.6 million gallons of fuel and reduce carbon dioxide emissions by 1.9 billion pounds a year.”

Extrapolate those figures to the aviation industry nationwide, fuel consumption could be cut by 760 million gallons and carbon dioxide emissions by 16 billion pounds a year.

It’s easy to be cynical about the aviation industry from a sustainability standpoint.  Planes consume lots of fuel and generate large amounts of carbon dioxide.  However we at Caledonia are always excited to see sustainability and profitability complement each other.  As Southwest claims, it makes good business sense.  Expect other carriers to follow.

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1. Enroll in e-statements. Aside from reducing paper waste, opting to receive your brokerage and bank statements online can save you time and money.  Vanguard, for instance, will waive custodial fees if you sign up to receive statements and other documents electronically.  However do pay close attention to storage and access policies.  Charles Schwab is great in this regard as it provides access to all statements, confirmations and tax documents for no additional charge for 10 years.  Yet other institutions, particularly banks, may only offer access to records for as few as several months in some cases.
2. Pay your bills online. This is an obvious time savings but this practice can also save money.  You no longer have to pay for checks, envelopes and stamps.  For many this can result in a savings of hundreds of dollars per year.  However do be careful of online banking fees as some institutions will gouge you under the radar.
3. Use your credit card more. Please don’t get me wrong, I’m only suggesting responsible use of a credit card (where you pay it off monthly and don’t carry a balance).  During tough economic times like we’re experiencing now, more service providers than ever now accept credit cards in order to guarantee payment as well as receive it more swiftly.  Although it may not be advertised, you can now use your credit card to pay everything from legal fees to school fees.  No need to write checks anymore and further benefits to you include the advantage of an essentially an interest free loan from the credit card company and either program points or cash back depending upon the credit card.  There are other sound reasons to use a credit card for routine purchases and you’ll find some of those here.  Read more…

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Auto factories normally conjure up images of smoke stacks and waste pipes spewing filth indiscriminately into their hapless surroundings. Subaru on the other hand has achieved “Zero Landfill” status with its Subaru of Indiana Automotive, Inc. plant. In fact, the manufacturing site itself is a natural wildlife refuge and this from a facility that can produce up to 200,000 vehicles per year.

Not surprisingly, Subaru has bandied its achievements in environmental stewardship in its advertising. Subaru cheerfully makes bold statements on its own website:

“Here’s something to think about: next time you take out your trash at home for collection, you’re sending more trash to landfills than the entire Subaru manufacturing plant in Lafayette, Indiana (SIA) does in a year. The Subaru plant was the first auto assembly plant to achieve zero landfill status – nothing from its manufacturing efforts goes into a landfill. It’s all reused and recycled. Each year, SIA actively recycles 99.3% of excess/leftover steel, plastic, wood, paper, glass, and other materials. The remaining 0.7% is shipped to the city of Indianapolis and incinerated to help generate steam. In 2006, SIA recycled 11,411 tons of scrap steel, 1,537 tons of cardboard and paper, and 963 tons of wood. That’s equal to conserving 31,040 mature trees, 31,572 cubic yards of landfill space, 711,631 gallons of oil, and 10,759,000 gallons of water.”

Now passionate environmentalists might argue that recognizing Subaru’s efforts are akin to congratulating the tobacco industry were it to produce a less poisonous cigarette.  After all, much of Subaru’s line up is composed of inefficient vehicles such as the Tribeca SUV.  Furthermore, Subaru’s positioning within the marketplace with its standard AWD is an efficiency trade-off as the extra weight, cost and complexity of an AWD drivetrain will always be at odds with good fuel economy.  And to make matters worse, while AWD does offer specific benefits, to tout it as a necessity, particularly for safety, is a consumer rip off right up there with high octane gas.

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When automakers successfully sued California, they claimed it was unfair for California to impose its own CO2 and fuel efficiency standards upon others.  One strong argument was there should be a single national standard.  Well, today Obama granted this wish.  And ironically, the standards are tougher than those California tried to enact.

So where are the lawsuits and lobbyists now?  In the wake of congressional hearings and collapsing financials, Detroit’s swashbuckling has given way to compliant thumb sucking.  They even “support” the measure (although there is little doubt they had no choice). Read more…

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Schritt Tempo: Walking Speed

Practically every community and housing development since WWII  has been designed around the automobile.  The post war dream of a car (or two) in every garage has been established as a sign of progress and prosperity.  So deeply ingrained is this notion,  most most U.S. cities have zoning laws  actually requiring that every residence be provided two parking spaces.

Today’s changing ideals beg the question, however: can “smart planning” separate suburbia from the SUV? Elisabeth Rosenthal wrote an interesting article in The New York Times recently about Vauban, Germany, where residents have largely given up their cars altogether.  Read more…

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A poster advertising "Veggie Day" shows a sailor rowing an aubergine

At Caledonia, this story couldn’t escape our attention.  According to BBC News, the Belgian City of Ghent is about to become the first city in the world to go vegetarian.  Starting this week, civil servants and elected councillors will opt for meatless meals with a weekly “veggie day”.  Schoolchildren will also celebrate their own veggiedag starting in September.

Aside from helping to curb obesity, the goal of the measure is to reduce Ghent’s environmental footprint, given livestock contributes more than automobiles to global greenhouse gas emissions, according to the U.N.

There is also a rumored i-Phone application under development to help the citizens of Ghent remember the day and further to direct them to restaurants and eateries that offer vegetarian dishes.  We will keep you posted.

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A number of lighting manufacturers have been scrambling to produce a cost effective LED light bulb for the broad market.  Now, Netherlands-based Lemnis Lighting, claims  its new 6-watt Pharox LED bulb is ready to take the spotlight on the lighting market.

At Caledonia, we’ve been interested in bright ideas like LED light bulbs for some time.  We first sampled some in 2008 and were impressed by the energy efficiency and the warm quality of the light, even as compared to compact flourescents (CFLs).  LED bulbs also enjoy a considerable environmental advantage over CFLs as they are mercury-free.  However,  with retail prices then over $100 per unit, the biggest obstacle has always been cost.  Although LED technology is nothing new, engineering a cost-efficient, “white light” LED in the form of a traditional incandescent light bulb is no easy task

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