Malaysia's Income Tax Vs Singapore's

Just realize Malaysia personal income tax rate is really high if compare to Singapore's. Especially when your taxable income grew when your age and salary grew.

Here is the table for Malaysia's personal income tax.

And here is Singapore's personal income tax table.

Imagine if you have a taxable income of 50,000, you will have to pay RM 3325 in Malaysia, or SGD 1250 at Singapore. It is 166% more tax you need to pay in Malaysia compare to Singapore.

Good thing and bad thing, as that's why there are much more entrepreneurs in Malaysia compare to Singapore. Being employed is just not an good option in Malaysia.

Back to reality, most of us are still being employed, counting fingers for days to come till end of month, here is a good guide for tax relief in Malaysia. Just in case you didn't know that actually you may have some of them.

Ultimate tax relief guide for Malaysian

Get richer, raise currency?

7 Nov 2009 The Star BizWeek, P.Gunasegaram wrote this on the view point. "The first step to move toward higher income is to let the currency rise". The title of this article is " An easy way to richness".

A naive view. I think none of the economist will agree with him. If by raising currency can make the country rich, who don't Indonesia, and other poor nation let their currency rise. The question is, how? When investor have no confident about your government, the investing environment is not clear, the factory output is not competitive enough, who will willing to bring their money to invest in the country. Without people bring in the money, how can your currency rise? The government bought it itself?

P.Guna was saying this statement because, Najib claimed that, in order for Malaysia to become as rich nation by 2020, we need annual growth of 7%. So P.Guna suggested, why not we let the Ringgit to rise 7% annually, it brings the same result. Yes, a simple calculation, but the problem is, how to let our currency rise, it can't be done by saying, "Let's Ringgit rise 7% today".

The currency rise must come together with the nation growth, just like China and Singapore. With the GDP growth 10% annually, plus the Yen rise more than 7% last year, actually China citizens become 17% richer than previous year. We wished to be same as them too.

But by rising the currency, the company's export will be affected. The goods is no longer cheap, unless your productivity and quality rise together with the currency, else your goods will soon become very expensive, and lost competency. I am not sure did P.Guna thought about this, before he published the article.

If the nation with highest currency is richer, than we are richer than Japan, and Taiwan, Korea etc.

Final destination of capitalism

Just finish read a book, discussing about the current situation of capitalism, which is a bit off of track from what the founder, Adam Smith wish to be. Just like every great philosopher, like Jesus, Muhammad, 孔子 and other, people tend to change their thought, to fit the situation, the situation which will benefit them. The successor misinterpret their point, intentionally, or unintentionally, to create a situation, which benefit them the most. And these misinterpretation, resulting various wars, human disaster.

Human civilization is proud with capitalism, one of the ideology which last for almost 3 century, and it is proved to be the most success, which lead civilization toward the prosperity time ever. The power of "the invisible hand", lead people react toward the most productive economic behavior, which bring specialism, the formation of metamorphosis and others.

But since a decade ago, when all the world leader gather in WTO summit, there are more and more people protest outside the building, claiming the capitalism, globalization, had bring so much pain toward them. Why did this happen, don't they remember that, is capitalism, which bring them all these prosperity?

Nope, this is not the prosperity we wish to see. Just like Kenichi Ohmae 大前研一 said, our society are moving toward M-shape society, which there are a lot of people who very rich, and a lot of people who very poor. Current middle class will move toward down side. Why does all this happen? Can't capitalism ensure everyone have a happy ever after life? Where is "the invisible hand"? It should correct the situation, toward balance.

Please always remember that, theory is always base on assumption, every theory is. Adam assume that this "invisible hand" work, base on an assumption, moral. Adam expect "the invisible hand" work fine, when people will not misuse it, to hurt anybody else. And if, when people do so, the government should come in, and correct the situation.

But now, the system reward short term profit boost, which will bring the stock price up. Every management are given some stock options, which they can only benefit with stock price surge. For example, when competition come, company have 2 choice to counter it, inprove the quality, or lower cost. Of course the ideal of capitalism is "the invisible hand" will force the company to improve the quality, which will benefit the whole society. But what management will do now is, reduce the employee cost, or even lay-off them, and use 5 people to do 10 people's work. The effect is significant, the stock price surge, management get lot of money, so do shareholder. But the product's quality is not improve, and a lot of people are suffering with job losses and low salary.

Ya, GDP grew, stock market up. It show prosperity, but most people are not enjoying it. Only those who rich, will become richer, and the poor, will only had their fate to be squeezed. People already turn this capitalism, as their own carnival, enjoying the data which only look at the profit, and sacrifice others. Money is all the thing, we are living in such generation. And finally, these bring us th greed, which generate 2008 subprime crisis. "The invisible hand" become crazy, which drive people to greed, to hurt other people in order to sustain growth.

Where will capitalism go? It already had several update version, from 1987-1997 privatism, 1997-2007 golablization, and now? No people will know. Perhaps more socialism's capitalism. We shall see.

GM should go to 0?

I really cannot see any point why GM stock price still above 3.90 today. The shareholder equity already negative for a long time. If this happen in Malaysia, KLSE will issue a PN4 to this company. If the company still cannot turn the shareholder equity to positive, in 4 quarter, they will be delisted.

From my point of view, no matter what happen, (bailout or not), it's stock price should be < 1. It is a easy mathematics calculation. But people emotion and hopes drive it up. And true to me, I am not dare to short it now also. So let's us see what would happen next.

I think it would be only in US, the bailout being so difficult to be done. If this happen to Proton, Honda, or Hyundai, the Malaysia, Japan, Korean government will not hesitate to save it. I am not sure Congress (Parliment) have a right to deny it, maybe the government just use the money, and without notice anyone. (Just like what recently happen on Malaysia, government inject 5 billion in Valuecap). I not even know what Valuecap is. Did malaysia government ask anyone to apporve this? I am not sure, but probably no.

Pull Out

I admit the lost. I pull out all my position on US stock yesterday, with 3.3k USD lost. The reason of pull out is, I am exposing too much money on the most risky region, and most risky sector, financial, which might post a great return (if recover), but might cause a deadly effect, if it collapse. So, I pull out because I can't take the risk.

After selling my Citibank, it continue to soar today, reach USD7.00. But I do not regret, because I cannot take the risk, hence, those who able to take the risk, should experience they gain. I am still bearish on current market. Hence I will create bear call spread.
Ya, it is pain, cut-lost is far far more difficult than profit taking. It need courage. Anyhow, I hope C won't collapse, because a lot of my friend still holding it, some of my friend working at C. Hope this crisis will over faster, and not affect everyone's life.

I will trade on short term credit spread, until I see another opportunity, and this time, I will hold for long run.

Investing Vs. Trading

Yesterday ask Lion, "since when we stop to cut loss, if we apply cut loss, we still can reserve most of our money, and wait for other opportunity, and even can make money at this market." Lion's answer is great, "For me, I am investing, and not trading. If you are trading, you should apply cut loss, but for investing, you are buying the business. So if the price is cheap to you, buy it and hold it."

Am I trading, or am I investing? This make me think twice. All the while, I am trading US options, and certainly that is trading. And my experience is, "cut loss when the market against you". Do not let all your profit, which collect small small portion from many trade, lost on a single trade. I experience this before, earn 100% of my portfolio in one month, and lost them all in another month, including my principal.

That is options, but now i buying stock, marvelous, great stock before, before this 2008 crisis. And as state in my previous post, I jump in too early, and now experience 40% lost of my portfolio. I am not scare this time, not as previous when I buy options, because options have expire dates, stock do not. But my fearless come with one assumption, which is these finance giant won't collapse, won't bankrupt like Lehman. I really cannot imagine a world, where Citibank suddenly disappear. Hardly imagine right, but who knows, maybe this will happen, no people will predict the collapse of Lehman also. Quote from John Mccain, "We don't hide from history, we made history!" Yes, US always make history, goods and bads. If really Citi going to collapse, let me spend some money inside, joining this history moment.

Yes, now i switch from trading to investing, partly being force to. But deep inside my heart, I still prefer trading rather than investing. If I only stick to my plan of bear call spread, my portfolio could reach at least 200%. Until now, I earn 20% every month from bear call spread, but of course, these money lost while I buy other options. I should try to find a security, which can provide cheaper price for bear call spread trading. TD Ameritradde a bit expensive, when open position, already lost 1.5% + USD20, this is quite a big ammount, if my spread is only 6%, the transaction fees already chew up >25% of my profit.

Nothing can do now, because most of the money being used to buy those giant stock. Certainly, at this volatile market, open credit spread position is really risky. The index can climb and drop >5% per day easily. Open normal call or put options is more practical, RRR(Return/Risk Ratio) is higher.

Again, I prefer trading rather than investing.

Crisis

I am so lucky, which I am able to step into invest world as 10 year old, although that time i was not really investing, i was gambling.

I had gone through 1993 crazy bull run on KLSE, 1997 Asia crisis, 2000 Tech bubble, 2003 SARS, and now, 2007 sub-prime. I always ask myself, since I had been hit down so hard on 1997, will i able to escape from the next financial crisis. I had been asking for so many time since Feb 2007, which the bull start to fade. Unfortunately, the answer is no. I am still in the market, enjoying the paper loss, which wape out all my 2006 gain.

Frankly, I can only said i was investing start 2000, thanks to internet, which allow us to read a lot of data online, making the world flat, fair to everyone. Thanks Lion, who actually bring me into the real investing heaven, US market. US stock market is the most complete stock market in the world, you can make money in all direction. There is no reason you cannot make money, just you might be in wrong position. In KLSE, when bear market, what we can do is pull out all the money, and wait to recover.

One of my friend, asked me before:"when will you pull out money from stock?". I said " I dunno". He said "then you are just playing a figure's game, watching the figure up and down, and you will never pull the money out!" Yes, he is true, i seldom pull my money out, it is just like a black hole, money go in, will hardly able to pull it out. But I believe that, it will bring me toward another level of financial freedom one day. Yes, that day will come.

This sub-prime crisis already last for one year, maybe the worst is pass, maybe is not. My prediction is correct, the stock will drop very fast, unreasonable fast, but it won't climb unreasonable. Hence my early strategy on doing bear call spread is correct, which make me earn a lot of money. But with the incredible 7 days down, i had been jump in into it on 3th day. It will be a good buy, only if the worst is behind us, else.......my confident level is not high.

The more you read, you know how naive you are.