How to Start Investing in Malaysia Stock Market.

Bursa Malaysia

-          Bursa Malaysia is the only exchange holding company in Malaysia which operates and regulates a fully integrated exchange offering a comprehensive range of exchange-related facilities including listing, trading, clearing, settlement and depository services. It offers a diverse spread of products covering equities, derivatives, offshore listings and services and bonds and Islamic offerings. In shorter words, it is the only and biggest stock exchange market in Malaysia.

How to have a trading account and start buying shares?

Are you eligible to start trading?

-          At least 18 years old

Open a Central Depository System (CDS) account

-          Can be opened in authorized depository agent such as stock broking company and some banks.

o    Provide photocopies of IC (identity card)

o    Fee RM10

The account document will be sent to you by mail.

Open a trading account with stockbroker

-          This will be done simultaneously when opening the CDS account.

o    Provide income statement (Students may not need to provide income statement)

o    Fill out trading account form

o    The stockbroker will check your credit status at CTOS (Credit Tip-off Service) and stockbrokers’ defaulters’ list in order to qualify you and set your trading limit.

Both accounts normally will be successfully opened within 5 days of application.

10 authorized examples of stockbrokers in Malaysia

Full list will be found at: iMoney.my

What do you need to know about CDS account?

-          to buy and sell shares

-          to trade non-equity counters such as bond and warrants

-          it is something like a bank account - you keep cash in bank accounts, you keep shares in CDS accounts.

-          you can have more than one CDS account

-          two type of CDS accounts: direct and pledge

-          if you have a direct account, you will receive the dividend checks and prospectus mailed to your house.

-          if you have a pledge account, the stockbroker will receive the dividend payout and prospectus on your behalf. Then the stockbroker will bank in to your account.

-          normally banking stockbrokers will require you to open a pledge account.

-          you will get CDS account statement monthly. If there is no activity, you will still get the statement on June and December.

Get a remisier:

Normally your stockbroker will appoint one to you if you don't have any particular preference.

-          remisier has to be licensed by the Securities Commission

-          remisier helps you make the order: sell? or buy? at what price?

-          get someone you like and trustworthy as your remisier

Buying and Selling Shares:

You can key in your order at online system provided by your stockbrokers, or call your remisier to make the order. If your buying order match a selling order, you will get a trade confirmation. The stockbroking firm will then send out contract notes to you specifying details of transaction.

Payment:

When you buy share of company S, your CDS account will be credited with share S at 9am on T+3 (T=transaction date). The 3 days only include working days. Your payment had to be made on 12.30pm that day. If not, your share will be forced sold at a contra loss or contra gain.

Fees involved:

Brokerage Fees 

Maximum 0.7% of the value of total shares traded, normal practise is 0.6%

Clearing Fees

0.03% of contract value subject to cap of RM200

Stamp Duty 

RM1 for every RM1,000 worth of value

(Source: KCLau.com)

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What is financial freedom? How can you plan to be financially free?

Financial Freedom?

Financial freedom is quite a famous term, but do we really know the real meaning of it? It is used widely by people intending different meanings. However, there is a recognized definition for it.

The Common Misinterpretation

 The common misinterpretation on financial freedom is having a lot of money. This can be disproved by examples of people who make abundance of money yet having huge financial constraint due to high consumption. On the other hand, there are also people who has an average income who consider themselves to be financially free. It is possible as this people might have fewer needs, thus, having less constraints financially.  

The Definition

The best way you can put it is financial freedom is the ability to spend our time as we desire, without financial constraints. You should think of financial freedom as what defines you. It’s what you want from life and it doesn’t necessary have to revolve around dollars and cents.

Why strive for Financial Freedom?

• Enables you to pursue what makes you happy
• Boosts your confidence 
• Able to be the curator of your life
• Helps to foster healthy relationships
• Peace of mind

Robert Kiyosaki (A prominent figure who strongly advocates "Financial Freedom")

• A Japanese American investor, businessman, self-help author, motivational speaker, financial literacy activist, financial commentator, and radio personality
• Author of  Rich Dad Poor Dad series of motivational books
• His book series ‘Rich Dad Poor Dad’ is an international bestseller
• He talks a lot about the importance of financial freedom, which concept is even included in a game he invented called "Cashflow"

Passive Income

The simplest example of a financially free person would be someone who has a passive income which exceeds the total expenses. In this example, the person is now free to do whatever he/she loves to do since there is no more responsibility of working to cover the expenses. This is what we call freedom. To be specific, financial freedom.

Passive income:

Wikipedia : Passive income is an income received on a regular basis, with little effort    

                     required to maintain it. It is closely related to the concept of "unearned income".

Investopedia: Earnings an individual derives from a rental property, limited partnership or  

                         other enterprise in which he or she is not actively involved.

Examples of passive income:

·      -   Earnings from royalties

·    -     Rental income from Property

·    -     Interest earned (e.g. fixed deposit)

·   -      Revenue from Internet advertisement

·    -     Pension

·    -     Stocks

·   -      Bonds

Steps one can take to be closer to financial freedom

Step 1 : Visualise your goals and write them down

·         How old do I want to retire?

·         What kind of lifestyle do I want to live in the next 10-20 years?

·         What will make me truly satisfied and happy?

·         How much money will actually satisfy me? (topic of concern as ultimately money by itself will not bring you happiness)

Step 2 : Think about where you are currently at financially

·         How many streams of income?

·         Am I spending within my means?

Step 3 : Educate yourself

·         Books

·         Seminars

·         Workshops

·         Internships

·         Part-time jobs

Step 4 : Track your expenses

·         Writing them down

·         Phone apps

Step 5 : Plan your finances

·         Leaving aside a fixed amount every month for certain reasons

Step 6 : Accumulate assets

·         Property

·         Paper assets

·         Commodities

The Crossover Point

The crossover point is when your passive income/returns from investments is more than your expenses. By achieving this you have just bridged a huge milestone. For some, the journey will end here. For others, it would have just begun. This is when the fun begins! Learn to play the game and play it wise. Don’t forget what/who you are doing this for and your purpose along the way.

Peace.

Credits to:
 Dhivyamaaran Anparasan @ A.D.Maaran
Nelson Liew
Fabian Au 
Jeanne Chong
Tan Shen Tze

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The things about GST you MUST know!

About GST

GST (Goods and Services Tax), also known as VAT (Value Added Tax) in many other countries, is an indirect tax imposed on the spending of goods and services in each stage of production. In short, GST is a multi-staged consumption tax.

Even though GST is imposed at each stage of production, the valuation of the product will not be affected as the tax does not become a part of the cost of the product. The reason for this is because the GST paid on the business inputs can be reclaimed.

Fundamentals of GST

 

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GST in Malaysia

GST had already existed for a relatively long time. However, it was only until the year 2005 that GST was announced for the very first time in Malaysia. It was scheduled to be implemented in 2007 but it was delayed as more feedbacks were required from the public before it could be officially implemented. Finally, on October 2013, the Malaysian Prime Minister announced that GST will be implemented starting from April 2015 onwards.

Ever since the announcement of GST was made public, many eyebrows were raised. Most of the general public are wondering as to why the government is implementing GST when they are already have a sales tax to pay for most of the goods they purchase.

The insufficient knowledge about GST has caused many individuals to be misled into believing that GST is a new tax that they would have to shoulder and this is one of the reasons why the implementation of GST have been recieving negative receptions.

Hence, GST should NOT be mistaken as a NEW TAX. It is a new taxation system which replaces the existing sales tax.

To understand more about GST, we have drawn up a few reasons as to why the government should implement GST

The Reasons:

·      To Prevent Double Taxation

GST will help pevent consumers from being taxed twice as the tax levied on each stage of production can be reclaimed whereas sales tax are not reclaimable. Thus, the GST paid in one stage of production will not be cascaded into the price at the next stage. As a result, the consumer will only bear his share of tax and not the tax paid by retailers/whole-sellers to the manufacturer.

·      To Reduce Budget Deficit

As a developing country, the national debt will always be rising as the government is constantly improving and building new infrastructure. With the implementation of GST, the government is able to generate additional income to reduce the debts when consumption increases.

·      To Improve Transparency

Unlike sales tax, consumers will now know exactly whether the goods they consume are subjected to tax and also the amount that they would have to pay for.

·      To Improve Competitiveness in the Global Market

Exports are considered zero-rated and will be exempted from GST. This will mean cheaper exports which will certainly improve our country's competitiveness and boost our economy.

Zero-Rated Goods

Zero-rated goods are goods that will not be taxed by GST. Heres a list of goods and services that falls under this category

Category	Example
Food Stuff	Rice, Sugar, Table Salt, Plain Flour, Cooking Oil, Vegetable
Live Stocks	Live animals, Cattle, Goat, Buffalo, Sheep, Swine
Poultry	Live and unprocessed meat, Eggs (Chicken & Duck )
Merit Goods	Education, Healthcare (Medications)
Utilities	First 200 units of electricity, First 35 m3 of water supplied
Fuel	Ron 95, Diesel, LPG
Exports	All goods and services that will be exported

How will students be affected by GST?

·      Education fees are exempted from GST

Education falls under the category of zero-rated good and will be exempted from GST. Hence, education fees will be least likely to rise. The rationale behind this is to ensure that more student will be able to afford better education without burdening themselves with a large debt after graduating.   

·      Affordable Basic Goods (Necessities)

Basic goods such as basic food, vegetables, and fruits are also considered as zero-rated goods and will be exempted from GST. This will most likely benefits students who are staying by themselves as they are more dependent on and likely to consume these basic food than dining in restaurants.

·      Rentals will not be charged with GST

According to a recent statement released by the government, the income from the property rentals paid by tenants staying there as a home will be exempted from GST. Only rentals for tenants who uses the property for commercial purposes will be taxed. Thus, there will be no reasons for property owner or landlords to raise the price of rentals for students.

·      Cheaper Cars

One thing that we can expect after the implementation of GST is cheaper cars. As students, cars are becoming a popular mode of transportation. Once GST is implemented, it will replace the existing sales tax of 10% with a lower tax of 6%. This will certainly make cars more affordable.

** If you would like to know more about GST, feel free to contact us at byic.unmc@gmail.com and we will

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