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Any time someone offers you investments with returns of 1000% per year, you are right to be skeptical, but this is what Australian economist “Mr 1000%” Andrew Firestone has been working on for a number of years now. He reckons he will be able to present how households can add an equivalent of $60,000 to $70,000 AUD to their annual income with some fairly simple approaches he has studied and researched. These are activities with a very high return on their labor, capital, time and sweat equity inputs. I told him about the tiny house movement philosophy of “less house, more life” and he loved that idea, his tag line is “Better Income – Better Life,” a similar pattern.
But wait, it gets better. Like veg-o-matic, K-tel direct-marketing TV pitchmen of the 1960s whose mantra was, “It slices! It dices!” you pay no income tax on these earnings.
The Veg-o-matic [1]
Huh? How is that even possible?
First, let’s work through the 1000% ROI number then deal with personal tax issues.
Full of Beans Case Study
Some years ago, Andrew purchased a pack of bean seeds for $3.50 that produced 250 grams per week of the sweetest freshest beans you can find anywhere; this went on for nine months in Canberra where he lives with his family[2]. The Canberra area has a relatively dry climate with warm to hot summers and cool winters. Elevation about sea-level is around 580-meters (1,900-feet) and you can see snow in the foothills around the capital city of Australia from time-to-time.
To keep them producing, Andrew staggers his planting. He then harvested seeds from his best producers to use for the next year (this will become important later).
Over the year, his bean yield was around 9 kilograms (nearly 20-pounds), which (as of 2021) retailed at $3.90 per kg in-store or $35.10 for his 9 kg. Now estimating his ROI is simple arithmetic—
ROI = ($35.10 – $3.50)/$3.50 = 903%
So, not quite a 1000% return, but getting close with two other key factors still to consider. It might be useful to note that a quick online search of bean prices today (circa 2024) shows much higher prices per kg for beans, ie, $11[3]! Now that’s inflation for you… And don’t forget—since Andrew’s bean seeds are now free, his ROI is currently infinite.
“But whoa, hold your horses[4],” you say. The above calculation doesn’t factor in the cost of Andrew’s labor, right?
Roman copy of a lost Hellenistic original of Homer [5]
Marble Bust of Homer
That’s true. It doesn’t. But it also doesn’t yet take into account taxes. For Andrew, the labor cost to add would be the income he could otherwise earn. But he is on a fixed salary and picking up a part-time job would be impractical. So, the real alternative is Andrew sitting in front of his TV for nine months instead of experiencing shinrin-yoku (the Japanese term for forest bathing), one could argue that his cost of labor is zero or even negative since gardening can be a positive health event, providing both exercise and mental well-being. Plus, how much work is involved? Very, very little, he informs us.
Practising forest bathing in Japan[6]
When he lived with his family in a small townhome, he was able to sneak his seeds into a tiny and neglected patch out front and just put the water to them; he used a bunch of weeds he removed from the scrubby yard as mulch. In the photos below you will also see a mandarin seedling he put in as well.
Andrew’s sneaky, puncy townhouse microgarden: YUMMY
What about income tax?
Well, the beauty of self-production is you don’t pay any. If Andrew could have worked extra hours to buy his beans, he would have to pay income tax on that income before he was allowed to go ahead and spend it. There are a couple of ways to think about tax. Firstly, if he was to go out and earn the extra, he’d lose close to half of that marginal income to taxation, so the beans would really have cost at retail (back in 2021) about $70 in after-tax income[7]. Or if he was just using his regular work income, he would lose on average 25% of that so his beans would have really cost $46.80.
He tells me, he sees this pattern over and over again with home-based production. There are some less good returns, growing watermelons or pumpkins, for instance, but many traditional pastimes such as gardening, sewing, home preserving, brewing, etc will likely hit the 1000% mark.
In fact, Andrew calculates, a household could make the equivalent of $60,000 to $70,000 worth of taxable income (but, in fact, not subject to tax) at home per year doing these sorts of tasks!
Gender roles
As far back as the early 1980s, researchers noted that, “Women do two-thirds of the world’s working hours but receive only one tenth of the income and own one hundredth of the property[8].” But this need no longer be the case—traditional crafts are being rediscovered and families are making many of them “team sports.” Things on the following list are now being done by all—
Vertical urban farms
Andrew is also skeptical about the economics of vertical farming (as well as the lack of nutrition in they produce). And he is not alone[15].
He writes—
At the very least, vertical farming has to be direct to consumer but having the word “selling” in there is going to make it tough—all the regulatory issues, packaging, and taxes and other charges will likely kill them. They would have to be like strawberry farms back in the day: Give customers a basket and let them pick their own; the operator just weighs it at the register. But I can’t see how that very, very, very expensive capital could ever pay for itself and the maintenance costs on those systems will be extreme. You have mineral rich water flowing through small pipes and pumps; it’ll be a clogging nightmare. You will have major condensation issues and molds will grow plus all sorts of ventilation problems. These can’t be magically solved. They’ll need expensive energy and capital systems to deal with it. And in terms of this being “green,” not at all! These systems use steel and glass, and they are hugely energy intensive to make and run. There is no way to make that energy back over their economic lifetime. This is just some feel-good greenwashing.
By the way, you can make super cheap dome greenhouses using plastic sheeting and poly pipes that would have much less environmental impact. But places like Canada and the US Midwest aren’t ever going have economic, full-on heated greenhouses. If they go the cheap poly dome route and get more out of their shoulder seasons (that is, forgetting about December to February periods), they have a shot to make local produce work (better). Residents should simply put a bunch of raised garden beds with domes in their existing backyards over a weekend for something like $100 bucks.
Beautiful Legs Case Study
Andrew went hunting for a nice dining room table—one with actual real wood. Retail prices for this sort of thing were around $2,400 AUD at the time with a manufacturer’s rebate (coupon) available of $300[16] so a net effective price of $2,100. Thinking of proving his point once more about 1000% ROI being widely available but little known, he purchased 2 pairs of steel table legs for $85 and scrounged around for some old wooden planks, which he paid $105 for and set about doing some home woodworking himself. Again, his ROI is simple arithmetic—
pair of steel legs $85.00
solid wood planks $105.00
total cost (home-based) $190.00
retail price $2,100.00
margin $1,910.00
ROI 1005%
E&OE
This did take him a while to complete so you might want to factor that in, but frankly, when returns are likely measured in triple digits or quadruple ones, you can stop measuring.
Bruce M Firestone, bruce@brucemfirestone.com Andrew L Firestone, a.l.firestone@gmail.com
COPYRIGHT, BRUCE M FIRESTONE, OTTAWA CANADA AND ANDREW L FIRESTONE, CANBERRA AUSTRALIA 2024.
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[1] Image source, BitBytes – Own work, CC BY-SA 4.0, https://commons.wikimedia.org/w/index.php?curid=93170611.
[2] In a cold northern shelf city like Canada’s Capital City (Ottawa), you would probably get six months and then only if you start your seedlings inside.
[3] For example, check out the price of Miss Melons fresh beans here, https://www.missmelons.com.au/products/beans.
[4] By the way, it was Homer not an American cowboy who first used this expression, Hold your horses—it was in book 23 of the Iliad.
[5] Image source, Originally from en.wikipedia; description page is/was here. Original uploader was JW1805 at en.wikipedia, Public Domain, https://commons.wikimedia.org/w/index.php?curid=2171360.
[6] Image source, Teamsamuraispain – Own work, CC BY-SA 4.0, https://commons.wikimedia.org/w/index.php?curid=43516357.
[7] Bear in mind you don’t compare your homegrown product against the cheapest produce available, but rather the freshest and best versions. When looking for crops to grow, probably best to focus on high nutrient and relatively high-cost foods.
[8] Said then President of the Canadian International Development Agency (Marcel Masse) in 1982, https://www.upi.com/Archives/1982/07/06/Women-do-two-thirds-of-the-worlds-working-hours-but/9167394776000/.
[9] Historically, women were (are) balancing out equity across communities and sharing useful information more widely. For example, a homemaker learns that a neighbor needs to clean out their stables. Next, the homemaker’s life partner helps muck out the stables and, in return, they receive a free load of manure for their backyard homestead garden. This networking/socializing is crucial in a tax-free, bartering-based, local economy…
[10] Think woodworking is one of humanity’s older art forms and that traditional skillsets have been (mostly) developed in the time period covered by recorded history (around 10,000 years)? Not so. Read this article about a recent archaeological discovery in Zambia of a log platform or shelter constructed 476,000 years ago by stone-age people. Some type of hominid accomplished this feat including notching the logs to make a better fit/stronger structure, https://www.bbc.com/news/science-environment-66846772. The BBC article is based on a paper published in the Nature journal, Evidence for the earliest structural use of wood at least 476,000 years ago, https://www.nature.com/articles/s41586-023-06557-9.
[11] Unfortunately, according to a CSIRO study, solar hot water does not produce the desired ROI.
[12] Apparently, paying off your car loan early is not important, probably because cars are, for the most part, a depreciating asset.
[13] Tree planting improves property values by about 6%, provides shade, cooling, and wind protection, as well as fresh air. Combining that with a food forest increases ROI further…
[14] Returns of about 40% for your roof, 20% for walls and 5% for floors.
[15] For example, refer to: Vertical Farming Has Found Its Fatal Flaw, https://www.wired.co.uk/article/vertical-farms-energy-crisis.
[16] Car/boat/RV (caravan)/truck manufacturers have been using this “charade” for a long time. Here’s how it works—their distributors/dealers/shops sell Jane and John a car/boat/RV/caravan/truck/piece of furniture/whatever for $5,000. There is also a separate coupon which promises them a 15% manufacturer’s rebate (ie, $750) later on… Now, Jane and John aren’t rich dudes, so they finance (say) 100% of their purchase with some kind of a buy-now-pay-later lender. The lender sees they paid $5,000 so they lend John and Jane $5,000. But the manufacturer subsequently snail mails a check/cheque to John and Jane or otherwise reimburses them for their coupon in the amount of $750. Presto magic, John and Jane have their new car/boat/RV/caravan/truck/piece of furniture/whatever plus they also have $750 in cash now. What’s interesting about this is that the $750 cash back is not considered income in the hands of John and Jane, so they don’t have to pay any personal income tax on it. For the manufacturer, it’s an allowable expense (reduction in their income) so it too lowers their overall tax burden. Of course, John and Jane are now on the hook for repayment of $5,000 plus interest. But most people, especially young people and entrepreneurs of any age, have very high personal future discount rates so cash-in-hand might look good compared with a future payment plan of some sort.