What is a good return over the long term?

I often talk about what the maximum return is over a long period of time that can be achieved without taking excessive risks. After all, there are lots of financial products in the market for private individuals and everyone is trying to outdo each other to get investors.

If we take a step back and think about what we should reasonably expect for returns, I always come up with a figure around 7 – 8%.

If we could find a single product that could give us 7 – 8% return with small risks year after year, it should mean that all other investments really became uninteresting except to have as some spice in an investment portfolio as a lottery ticket.

Take, for example, a portfolio of dividend paying shares, what can it reasonably generate over time? The yield from the dividends can probably reach up to 4, 5 or 6%, but is it worth the price risk?

At Untie, we today produced a very interesting chart showing the return on Untie Lending’s Preference Share compared to the Swedish stock exchange that we represented with the index OMXS30.

Looking at the chart, one can almost believe that we have plotted a linear regression as the OMX curve bounces back and forth around this fixed rate of return from the Preference Shares.

Over the past 12 months, the stock market has vibrated up and down since August having climbed up over 20% in return. Everything was then erased in just one week and the stock market’s return is now at 6.11%. Anyone who has invested in an index fund that reflects the OMXS30 has thus had to endure a huge roller coaster in order to ultimately arrive at a return that is inferior to the fixed 7% generated by the Preference Shares without any stomach ulcer!

The chart from Untie can be viewed below.

Give your kids a head start in life by investing with reduced tax

Give your kids a great start with financial stability

Everyone wants to give their kids a good start in life, one big part is financial stability. With some capital your kids might be able to buy their first resident or in some other way take their first step towards independence.

I save SEK 1,000 per month for each child which I invest in preference shares with fixed dividend through Untie Group where I also obtain monthly payouts. I am using the return to buy more preference shares and throughout time this produces compounded interest.

The minimum investment for these preference shares is SEK 2,000 so every other month I can buy new shares. After about two years the monthly payout is enough to purchase more preference shares and it accelerates from there.

The cash return gets larger and larger and the pace of re-investment increases as well. After 18 years the amount is larger than SEK 350,000 after tax with the reduced Swedish tax rate of 25 % instead of the regular 30 % on capital gains.

The total amount is now SEK 355,078 which is made up of SEK 216,000 of deposits and the remaining SEK 139,078 is pure return after tax.

The chart below shows the relationship between the capital deposited and the generated return, notice how the return accelerates over time.

It is never to late to start investing for your kids, through smart investments you can almost double the invested capital during a period of 18 years.

You can find more information at www.untiegroup.se and www.konsumenternas.se.

Good luck with your investments!

Invest the dividends from your small business with 0 % tax and secure your pension

Small businesses in Sweden can take advantage of an annual amount of SEK 171,875 (2019) which can be paid out as dividends with a tax rate of 20 % instead of the regular +50 % that you get charged from the 3:12 regulations. Any amount that you don’t pay out can be saved for the future and also transferred to another family member.

I have given a lot of thought to weather I should keep capital in my company and receive returns there or if I should issue dividends and invest the money privately.

I now think that I have found the solution and it is called unlisted preference shares!

If I invest in unlisted preference shares through my company the received interest will be tax free, the tax has already been paid by the company that issued the preference shares. This means that my actual received interest will be higher than the terms of the shares states.

If I invest in unlisted preference shares that pays 7 % interest it means that my actual return is 8.8 % which has a huge effect for a long term investment.

The frequency of payments also matters a lot, if the issuing company pays out the interest monthly it means that I can re-invest the cash and quickly compound my interest.

In our company, Untie Group, we are launching our own unlisted preference shares in 15 hours which features all of the properties mentioned above.

Let’s say that we invest our SEK 171,875 that we make in profits each year , meaning an investment of SEK 14,323 per month with an interest of 7 % and 0 % tax, what would the result be over a period of 20 years?

After 20 years we have obtained more than SEK 7,500,000 and each month we are going to receive a payment of SEK 43,500 which we can issue in dividends against our saved annual amount or use in another way.

Best regards,

Comparing investments in loans with the stock market

With all types of long term investments the compounding interest effect is the one that determines how value will develop over time. Have a look at the video below.

This is the reason why I have a very hard time finding an investment that generates better returns then investments in loans. The chart below shows the projected return at Kreditborsen (the credit exchange) compared to the Swedish general stock index called OMX during the past 20 years.

The chart above shows the return of 50,000 invested 20 years ago, in 1998, without any additional investments.

Getting ready for investments this autumn

The most important decision I can make as a trader is to decide when not to trade.

Unfortunately, this spring and summer have been plagued by tragedies which were private in nature. Early on I decided not to trade while this was going on. First and foremost trading is a psychological challenge. If I have another issue that puts a psychological toll on me I should not trade.

During this time it has been awesome to have other investments that have generated passive income for me. I mostly use the peer-to-peer lending service called Kreditbörsen (Credit Exchange) which I founded a while back.

At Kreditbörsen I receive constant returns of around 10 % per year without having to get engaged in any daily decisions. I simply enter how much I want to lend to each individual borrower to control my risk and then Kreditbörsen does the rest.

The chart above is copied from one of my accounts with Kreditbörsen. Since May 2017 I have kept 45,000 in my account and since then I have received 12 % return after tax which I think is a great base income.

I also have accounts with Toborrow but unfortunately, Toborrow only issues corporate loans while Kreditbörsen caters to private borrowers as well.

I draw from my experience as having operated a private lending business to individuals in Sweden since 2011 when I say that the risks with private debt in Sweden is much lower than corporate debt. The system that Sweden has implemented works and offers great protection for lenders using services like Kreditbörsen to issue loans.

How should capital be allocated? Obviously, this comes down to your goals and your level of commitment. I myself is placing 40 – 50 % of my capital in passive income services that generates between 8 – 15 % per year, this gives me a very strong base.

I am now using this warm summer to prepare for more trading activity during autumn!

Keep your money machine going with minimal exposure to the stock market

The stock market is less attractive

The US stock market continues to make new all time highs and I have continued to lessen my exposure. I have secured profits by selling stocks into the climb. I am now focusing my investment capital on alternative investments like lending to companies and individuals. I am doing this through Kreditborsen.com and I am accumulating cash.

Gold is not a good alternative in a deflationary environment

I have previously made a few investments in physical gold through Goldmoney who offers a service for this. If we would end up in a deflationary period any investments in gold or other commodities will be bad alternatives. All assets except pure cash depreciates in value in a deflationary environment. Because of this risk I have also closed my gold investments.

The risks with investments in loans

I do not recommend that you place all your investable capital in peer to peer loans. Sweden and Finland are however very good alternatives for these activities since they have a functioning government collection agency. If the economy gets worse it will obviously impact a lot of borrowers who will not be able to pay down their loans at the agreed pace. As long as creditors and loan agents have done their homework before approving loans the payment plans will be possible to extend in order to solve the situation. It is very important to use personal guarantees and other form of security when working with corporate lending.

Focus on absolute returns and compound interest

My general reasoning for investments are very similar to the writings of the sound investor Per H Börjesson.

Focus on absolute returns and compound interest over time in order to grow the investment capital exponentially. My goal is a return of 10-15% per year where loan investments are an important building block.

By using a service like Kreditbörsen (The Credit Exchange) where income is paid out to my account daily and automatically invested in new loans I receive great diversification. This is taken care of without me having to do a lot of work like having to evaluate which loans to participate in.

I recently participated in an interview at  Kreditbörsen where I spoke about our history and how the service works which you can read here.

If you save 100 each month for 30 years with a return of 10% per year and you obtain interest at least one time per month your capital will appreciate to 230,000. The chart below shows how quickly this grows in the end with the increased exponential effect.


When your capital is at 230,000 you are making almost 1,900 per month from interest.


It is never too late to start and the more capital you save the quicker the effect.

Selling some stocks, shorting bonds and investing in peer to peer loans

The stock markets are continuing to raise and the US is shooting for a new top.


I took some profits today in order to reduce my risk for my trading positions and re-allocate some capital. An example is Atlassian (TEAM) where I removed the larger position which I established at the last dip during the end of February.


During August 2016 I started to initiate a short position in bonds through the ETF with the symbol TLT since I am convinced that the interest levels will rise quite a bit. It turned out to be quite a good trade when the first wave down started for the bonds and since December I have been flat in TLT. A few days ago I initiated a short position again around 124 but I had not participated that the fall would come so fast since I wanted to establish a larger position so now the trade is relatively small.


The capital that became available from the stock sales I have allocated towards peer to peer loans which I am a big proponent of and I use Kreditborsen (the credit exchange) for these investments. Through the service I get 10 – 15% returns per year which is hard to compete with when measuring the associated risks of other investments. I work with focused investments but I like to spread my bets a bit.

In general I work with one trading portfolio where I act more actively with stocks and ETF’s. I also have long term stock portfolio with a few long term holdings in a Warren Buffet manner! Outside of this I am involved with a few companies and a lot of investments in peer to peer loans to get long term cash flow which I think works better than dividend stocks.

Good luck and remember to book some profits.


Weekend analysis

Intrinsic Value is a tool that I am using to value my long term portfolio holdings in order to arrive at a value of the free cash flow that a company is generating.

For a while I have thought about establishing positions in ICA, Hufvudstaden and Hennes & Mauritz. With regards to H&M I wanted to wait for the report that was released during the past week before executing any purchases.

Hennes & Mauritz

The stock has fallen in price since the start of 2015 where the worry about lower margins and growing inventory has escalated.

Management does not seem to stand by and watch and they are taking steps to correct the problem. If I conduct a simple calculation and use 18.5 billion as the rolling 12-month earnings and 4% as the annual growth rate for the next 12 years and then 1% growth for the future together with a risk free interest of 3% I get a stock value of more than 700 SEK. The value of the free cash that H&M is generating should be valued a lot higher than the current share price of 229 SEK per share.

ICA Gruppen


The price of the ICA stock has consolidated since the beginning of 2015. The last report shows an annual profit of 3.4 billion. If I use an annual growth factor of 1% per year I arrive at an intrinsic value per share of 817 SEK. The stock closed at 305.80 this Friday and offers a very high margin of safety. I have started to acquire ICA for my long term portfolio.


Hufvudstaden is the company within properties that I like the most currently. I both like their long term operational growth and the low leverage that they have. For my intrinsic value calculation I am using the annual operational income of 1.226 billion with a growth rate of 5% per year for the next 10 years and 1% per year after that.

The value per share that I arrive at is therefore 410 SEK per share which offers a great margin of safety compared to the current share price of 130 SEK.


The holdings in my long term portfolio is not there to be sold but to be owned. I do not care about short term fluctuations and the general stock market in the same way as I do for my shorter term trading portfolio. I have started to accumulate shares of the three companies mentioned above.


Trading update

The continued trading result has been very good, looking at Adobe I last wrote about the breakout from resistance when the stock was around $113 per share and I increased my position just above $113.

Adobe then had a run up to $122 and I have taken off my excess position size and I am only keeping my core position in Adobe while waiting for a correction in the stock.


The next stock that I have been trading around is Atlassian where I sold my excess position just below $30 per share and then re-entered into the pullback at $29 and $28.50. The stock is now starting to turn up again with great fundamentals and I would be looking to take some profits again around $32.


I have also started to establish a long position in Gold again since I think it is establishing a bottom in the short term.


Finally I also have positions in Japan through the ETF called EWJ and I am looking to get back in to India through the ETF called INDA.

Through my public investment company, Willebrand Invest, I am also looking to enter into a new share offering from the FinTech company Pensiono who started their public funding round today at the crowd funding site Pepins. Pensiono is a platform customer to Bricknode (the financial platform and ecosystem provider for FinTech companies and financial institutions where I spend most of the time when I am awake, probably also when I am asleep…).

Best regards,

Main themes for 2017

So, how is 2017 sizing up? Well, 2016 was a very good year with very good trades both on the long and the short side.

First I think we should look at Japan. I have had a bet during 2016 that the 20 year long bear market was over and it has paid off. During the last few weeks the index had a correction down to 19,000 where I increased the position again after taking some off around 19,500. Long term I am a believer in Japan and if the price action doesn’t throw me any great curve balls during 2017 I will be trading from the long side.


Now Interest rates, I am a believer that we have seen the absolute low in interest rates which means that we have seen the top in Bonds since bond prices are moving inverted to the interest rates.


I went very negative around 170 in the 30yr US bond and I am playing this by shorting the stock with symbol TLT and I then covered a few times on the way down. The bonds has since bounced a bit and I am now stalking this market and looking to get in on shorting again within this bounce.


The US stock market I think is building a large top but I am still trading US stocks from the long side in some selected names like Adobe (ADBE) where I used the last correction to get a position on with an average price around 104.


Finally I will mention Atlassian (TEAM) where I am a big fan and user myself of their products. The stock had a great run of a bottom during the year and has since been in a long downtrend. I am building a position in the name since I think it is a stable business with a great future.


Hope you had a great new year and that you are now ready for some action in 2017!