Savings guide for 2016

Thought it could be a good idea to share some savings tips for 2016, which every person that is aiming for financial independence should live by in the coming year.

-Although I need to admit I am not following all of them, but have as a goal to adopt as many as possible during 2016. I will also try to do a follow up within 6 months, to see how much these things saved for me.

Here comes Eighth Wonder Investing savings guide for how you should save as much money as possible during 2016:

1. Always pay your bills in time, and with in time I mean the exact date the when the receiver should have the money. Always store your money until the last day on a saving account with as high yield as possible.

2.Use the car as little as possible, walk, bicycle or ride the bus as much as possible. Preferably do not even own a car, one of the things that are draining a lot of cash.

3.Clear the garage and wardrobes and sell. If you haven't used it in the last 6 months, you probably don't need it or will never use it again. Sell, sell, sell!

4.If you really need a car, get one which is a couple of years old. The depreciation of the price is the largest in the beginning and it could loose as much as half it's value the first 2 years. After following tips number 2, the newer car with more energy efficiency will never make up the cost for the depreciation.

5. If you're buying clothes, always buy clothes with quality and with timeless design. Fashion trends is for people who is weak and never will be able to spend time on their yacht, cigar in their mouth and enjoying financial independence.

                 -Trust me, 95% of the time I am the best dressed man in the room and I am surely not the                               guy who spend the most on clothes.

6. Always buy food on a full stomach and buy in bulk.

7. Be as unfaithful as possible to all companies you have contracts with, electricity, banks, insurance etc. Always check best price and play them out on each other.

8. Going on vacation? Rent out your place on Airbnb.

9.You think you could live smaller? Rent out a room to a person, could gain you a lot of money and a new friend in life.

10. Visit a lot of physical stores, try a lot of clothes and sizes and always check prices online. Before making the purchase never forget to check the second hand market. If you don't like second hand, a lot of products are brand new and with full warranty.

11. Stop with tobacco and alcohol completely, will save you money and health.

12. Start to exercise, will make you more healthier (sick days costs a lot of missed income), same shape (yes, you could use the clothes you bought in your 20s) and you will look better.

13. Switch jobs, could boost your salary and you will meet a lot of new friends.

14. Do not eat pre-made food from the factories, make the food yourself instead. Both healthier and cheaper.

15.Never have anything electric on standby and try to connect as much as possible to power strips which should be switch off during night.

16.Have the right air pressure in the wheels on the car, often you could have a bit more then the recommendations from the car companies. This will lead to less fuel consumption.

17.Stop eating snacks and all the "snacking". Costs you a lot of money and you don't need the nutrition from it. Check below how much your body needs in terms of nutrition, goal weight etc. and balance it:
                               http://www.active.com/fitness/calculators/nutrition

18. Always bring food boxes to work. Will save you time and money.

19. Use a credit card as much as possible, pay in time and use the free interest period. This will give you reward points which you could use on more fun stuff.

20. Take care of your teeth and do practical dental care at home. Reducing the cost for professional dental care.

21. Cancel all the amusement contracts you have, Spotify, Netflix, Pandora etc. spend time with family and friends instead.

22. The last but as important as the first, track all your purchases and look over them after every month, to see where you could save extra money.



This should not be taken as a financial or any kind of advise and all the numbers on this blog could be incorrectly. I am not taking any responsibility for individuals using this information or any damage coming from it.

Vardia Insurance Group - Update and PNL forecast Q4

As I told you in my last post, I'm back with an investment in Vardia Insurance Group. This time smaller then last time though (10 000 shares). 

So why didn't I stick with my investment in Vardia and sold it when the accounting problems were announced and why did I go into it again?

The question is from my perspective simple to answer; When the accounting problems were announced all information I based my former investment in Vardia on were wiped out, since I couldn't trust the information the company had been giving to the market. In other words, no body which invested in Vardia during the time when the accounting problems were announced until last week when Price Waterhouse Coopers (PWC) did their external diligence on Vardia's bookings knew if they could trust the information from the company and were just gambling. Exactly the same way as going to the Casino and bet on black or red on the roulette table.
-This is the only reason why I didn't keep my shares in Vardia and sold them just after the announcement.

Now on the other hand, PWC made the diligence and no discrepancies were found, the information Vardia has communicated is solid and the case is from my perspective better than ever at this valuations.  

We have seen some positive revaluation of the stock since the PWC announcement were made, around 15% in the time of writing (1.65 NOK per share). I would have expect some more revaluation upwards after the announcement, probably that will come as soon as Pareto Securities (PAS) stops the heavily selling in the stock. Although I'm happy as long the price stays low since its a good opportunity to buy more shares. 

Vardia's GWP would at the moment be around 1550M NOK and at a valuation at 1.65 NOK per share we are talking about a GWP ratio on 0.44 x GWP which is an absurdly low valuation and is probably lower then what the liquidation value would be in a worst case scenario. This statement is also backed by what Vardia's peers has been acquired for in the past, how much the customer base has been worth (Aktia 0.61 x GWP, Moderna Försökringar 1.0 x GWP, NEMI Forsikring 1.0 x GWP). 

PNL Forecast Q4 

If we were looking at the past quarter for Vardia (Q3), the numbers were not perfect, there were somethings which could have been better. Total loss for Q3 were -56M NOK (Q2: -43M NOK) but were impacted by some factors. New management, whichs normally takes non-recurring costs to get clean sheets the first quarter (Q3: -27.5M NOK). The claims ratio were high 97% due to some larger claims which were utilized during the quarter. The operational costs reductions from the new organizational structure were only in place since the 10th August, only the last half got the positive cost impact from the new structure.
If we now look at the forecast for Q4, I expect we will see around the same cost reductions as we have seen from Q2 to Q3 (if you exclude the non-recurring costs) which is a 33% cost reduction. Together with that cost reduction I also think we will have a better claims ratio then Q3 gave us (Q3: 97%), which I think will be around the trailing average the last 12 months, 81% claims ratio. When applying this together with my calculations we should end up with a forecasted loss on around 6-8M NOK and then in Q1 start to show profit. This loss is good and will keep Vardia above the solvency margin until they start to show profit.
Maximum loss in Q4 without being in violations with the solvency requirements are -17M NOK, which is an important number to have in mind for the upcoming report.


As you probably could read, the case in Vardia is tempting and I would say the risk for loosing money at this valuation is small.

Happy new year!

-Eighth Wonder Investing

Full disclosure: Long Vardia Insurance Group

This should not be taken as a financial or any kind of advise and all the numbers on this blog could be incorrectly. I am not taking any responsibility for individuals using this information.

Status update - Portfolio, Equities, Savings

Hi everyone,

 

Think it's time for a status update, regarding the portfolio, equities and savings.

 

A lot of changes has been done in the portfolio, since the mess with the accounting problems in Vardia. The portfolio has now got some structure and more longterm holdings,even if I am still building the portfolio at the moment. As I often say: "Rome wasnt built in one day".

 

The portfolio today consists of 5 equites and two index funds.

 

The equities are as follow: Starbucks (SBUX), Mastercard (MA), Hennes & Maurits (HMB:Stockholm), Chipotle Mexican Grill (CMG), Vardia (VARDIA:Oslo).

 

Index funds: Avanza Zero and DNB Global Indeks.

 

In short the portfolio has been declining since purchase date overall, Avanza zero which is a swedish index fund have not been performing well and Chipotle Mexican Grill as well, due to a E.Coli outbreak. Although it gives me great buying opportunities which is good, have been buying Chipotle a lot over the last couple of weeks/months and have now stopped since it taking up to much of my assets. Mastercard, Starbucks and Vardia are all performing.

 

The next purschase will probably be Hennes & Mauritz, if the decline continues. Everything below the stockprice 300 SEK for Hennes & Mauritz do I think is a good buying opportunity for a long term investor.

 

Total value of the portfolio will be around 230 000 SEK by the end of this year. Saving rate for this year has been under all critism and need to be increased over the next year. Target number for saving next year should be around 120 000 SEK, this should be a problem since I increased my salary heavily in my new position in November 2015.

 

In the upcoming weeks will I post some articles around the portfolio, equities holding at the moment, goals for 2016 and a saving schedule for the new year.

 

Stay tuned!

 

Merry christmas and a happy new year all!

 

Best regards,

EWI