Are We have to Pay Credit Card Tax?

In the recent 2010 budget announcement, Prime Minister was announce that there will be a service charge of RM50 a year to be imposed on each principal credit card and charge card and RM25 a year on each supplementary card including those with free for life effective from Jan 1, 2010.

This cause dissatisfaction to many credit card holders because in average, each person hold two to three cards. Some have more than half a dozen, including co-brand cards between banks and retailers, airlines and hypermarkets.

Will customers have to pay the RM50 service tax on principal credit cards or can it be absorbed by the banks that issue them or do government willing to abolish them due to many complains?

Currently there are 9.8 million principal and 1.3 million supplementary credit cards issued according to statistics from Bank Negara. From the soon-to-be imposed tax, the Government will earn about RM555mil every year.

By looking at the figure, it is unlikely that banks will be able to absorb the service tax across the board. It would also defeat the purpose of implementing the tax to promote prudent spending.

Credit Card Tax Payment Date Confirmed

The credit cards tax is to stay & no changes will be done. It is will be according to the budget accouncement last October as it was approved in the parliment recently. Principal credit or charge cards holder have to pay RM50 per card while supplement card holder have to pay RM25 per card.

Starting 2010, new credit card applicants will have to pay the RM50 service tax upfront when they issued with new credit or charge cards.

For existing card holders, the charge will be imposed on the anniversary date of cards. The service tax will be pay through their issuing banks. For example, if the card’s anniversary date is in April, then you pay the tax in starting April 2010 & every subsequent anniversary date.

This clarification was announced by Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah will clear the doubts among the millions of credit card holders in the country. They have been raising queries regarding when they need to pay the tax since Prime Minister Datuk Seri Najib Tun Razak announced the new tax during Budget 2010 announcement last October.

Those holding a string of cards were most eager to know before deciding to cancel some of their accounts.

Is Entertainment Expenses Tax Deductable

For income tax purposes, any expenses incurred in the course of a business will only be eligible for tax deduction if the expenses are solely incurred in producing the business income.

It is important to establish the deductibility of an expense as in the event of a field audit which results in the Inland Revenue Board (IRB) discovering an understatement of tax due to claims on expenses which are not tax deductible, a taxpayer will not only suffer additional tax but also a 45% penalty.

With effect from year of assessment 2004, entertainment expense will only be eligible for 50% tax deduction except for specific circumstances where it will qualify for full deduction.

This article will explain the three steps to determine the amount of entertainment expenses allowable as a deduction.

How Much Points Needed to Pay Credit Card Tax

Credit Card Tax for 2010 is to stay no doubt about it. Credit card industry as a whole has come to a consensus that this tax will be borne by the cardholders and not the banks. Association of banks also confirmed on the tax payment date.

Now, banks in Malaysia are strategising to help customers pay the credit card tax by hoping that they can retain their customers.

Most banks are willing to allow customers to utilise their reward points collected to pay the tax charge. However, some banks said that consumers could easily offset the tax with the many cash rebates offered with their credit cards.

For banks that agree to use points, how much are needed?

Is a Weak US Dollar Good or Bad?

The mighty greenback is no longer mighty. US dollar weakness has been one of the financial markets' strongest trends over the last three months. As the world's primary reserve currency, US dollar fluctuations affect every nation in the world. Since March, the US dollar has depreciated 20% against the New Zealand and Australian dollars and approximately 10% against the British pound and euro. Even the Singapore dollar has risen 6% against the greenback.

There are many reasons why investors are bailing out of US dollars. The improvement in market sentiment has helped to fuel risk appetite and ease safe-haven flows. There were also concerns that the US faced a similar credit outlook downgrade as the UK, encouraging some investors to diversify out of US dollar-denominated assets.

For currency traders, the US dollar's weakness has provided plenty of opportunities, but what does a weak dollar mean for the US economy? As there are two sides of every coin, a weak currency also has its advantages and disadvantages.

Precious Metals as Alternative Investments

Precious Metals as Alternative Investments
Wednesday, November 04, 2009 | Gold, Personal Investing | 0 comments »

Precious metals are considered alternative investments for investors to preserve wealth as they rush for safety amidst the decline of financial asset values. Precious metal resources are rare and finite therefore, have high investment value. The metals include gold, silver, platinum, palladium and rhodium.

Gold is the most popular investment of all the precious metals due to its characteristics and the roles it played throughout human history. Gold is the oldest universal currency and has been used as a medium of exchange for thousands of years. Over the centuries, gold is appreciated for its beauty, rarity and near indestructibility. This article will focus on precious metals as well as gold in particular.

How to Invest in Gold

Historically, gold is perceived to be a safe haven during uncertainties and economic crises as it is considered more stable than other asset classes. It is generally an effective hedge against inflation and fluctuations in the US dollars.

Gold is an investment tool for preservation of wealth and a store of value in times of market volatility. It is an asset diversifier that could lower the overall risk in an investment portfolio.

This article will focus on different ways to invest in gold.

Gold and gold-related funds

Gold and gold-related funds are unit trust funds that allow individuals, corporations and institutions with common investment objectives to pool their money for investment in gold and other precious metals. Professional fund managers then use the pooled money to acquire assets which will help meet those objectives.

Generally, a gold fund invests in gold mining equities and/or gold bullion accounts, while a gold-related fund invests in gold and other precious metals including platinum, silver, rhodium and palladium.

What is the Real Value of Gold?

What is the real value of gold? Gold has industrial uses, especially in the electronics industry where it is used for electrical wiring due to its high conductivity. However, close to two-thirds of its demand is for jewellery, particularly in India and China.

Increasingly, it is being used again as a store of wealth as investors lose confidence in paper money, hedge against inflation or worry about economic and political turmoils.

Money could as well be in the form of sea shells and indeed Pacific islanders used sea shells as money. Before paper money, what constituted money came in many forms – sea shells, salt, leather, copper, silver and gold. Money was used as a store of wealth which could be used to purchase goods and services without resorting to barter trade.

In all of history, only 161,000 tonnes of gold have been mined, barely enough to fill two Olympic-size swimming pools, according to a January 2009 National Geographic article. To be valuable and used as money, it has to be something durable. That would exclude fair maidens as their perceived value in the eyes of lustful men may diminish with age. Still, without the demand of gold from the fairer sex, its value would be much lower.

All That Glitters is Gold

Gold is king, going by the strength of its price, which was trading above US$1,200 an ounce after getting a boost from Barrick Gold Corp's move to eliminate its hedge positions against declines in gold prices. Barrick is the world's biggest gold producer.

The company had sold forward its gold and as such, did not benefit from any increase the gold price. Barrick said its positive view on the gold price prompted it to accelerate the elimination of these contracts ahead of schedule.

Gold has risen close to 40% this year amidst US dollar weakness, central bank buying and investor interest in a low interest rate environment. The greenback has fallen 8.7% against a basket of six major currencies, while the US Federal Reserve has kept the federal funds rate at close to zero since December 2008.

Given the gains gold has seen this year, is there more upside for the precious metal? Analysts are still bullish with UBS AG saying gold may reach US$1,300 next year while Standard Chartered Bank raised its price forecasts for 2010 and 2011.

David Barclay, commodity analyst at Standard Chartered, believes the momentum in gold prices will continue although he expects a correction in 1H2010 when the greenback gains in strength as risk aversion returns.

Diversify Your Investment in Comodities

As a result of the financial crisis, even though most commodities have not been performing well, gold has outperformed the conventional asset classes like equity and bond.

This has prompted some investors to consider commodities as one of their investment asset classes. In this article, we will look into how to invest in commodities.

Bruno H. Solnik and Dennis W. McLeavey in their book titled “International Investments” classified commodities in three major categories – agricultural products, energy and metals.

Examples of agricultural products are fibres (wood, cotton), grains (wheat, corn, soybean), food (coffee, cocoa, orange juice) and livestock (cattle, hogs, pork bellies). Energy products can be crude oil, heating oil and natural gas whereas examples of metal products are copper, aluminum, gold, silver and platinum.

The main reason behind investing in commodities is that they have negative correlation with stock and bond returns. This will provide a good way to diversify portfolio risks. Besides, given that commodities are positively co-related to inflation, they can help investors hedge against inflation.

The Gold Bubble and Bugs

Gold prices have been rising sharply, breaching the US$1,000 barrier and in recent weeks rising towards US$1,200 an ounce and above. Today's "gold bugs" argue that the price could top US$2,000. But the recent price surge looks suspiciously like a bubble, with the increase only partly justified by economic fundamentals.

Gold rose above US$1,000 again in February-March 2009, when it looked like most of the financial system in the US and Europe might be near insolvency, and that many governments could not guarantee deposits and backstop the financial system, because banks that were too big to fail were also too big to be saved.

That panic subsided and gold prices started to drift down again - after US banks were subjected to "stress tests". America's 'Troubled Asset Relief Programme further backstopped the financial system by removing bad assets from hanks' balance sheets, and the global economy gradually bottomed out.

There are several reasons why gold prices are rising, but they suggest a gradual rise with significant risks of a downward correction, rather than a rapid rise towards US$2,000, as today's gold hugs claim.

Indeed, investors increasingly want to hedge against such risks early on. Given the inelastic supply of gold, even a small shift in the portfolios of central hanks and private investors towards gold increases its price significantly.

The recent rise in gold prices is only partially justified by fundamentals. Nor is it clear why investors should stock up on gold if the global economy dips into recession again and concerns about a near depression and rampant deflation rise sharply. If you truly fear a global economic meltdown, you should stock up on guns, canned food and other commodities that you can actually use in your log cabin.

Nouriel Roubini is professor of economics at the Stem School of Business in New York University, and chairman of Roubini Global Economics.

New Public Bank Day2Day Visa Debit Card

Public Bank launched its latest card product, the PB Day2Day Visa Card. The new PB Day2Day Card functions as a Visa Debit card and ATM Card. It is directly linked to the Public Bank Savings Account maintained by the cardholder. Customers can use the card for retail purchases, such as shopping, dining or entertainment at any establishment that accept Visa/Bankcard or MEPS locally or globally, or over the internet. There was a report that saying this card can be used to verify paypal account & also withdraw paypal fund.

With this PB Day2Day Visa Card, customers have the opportunity to enjoy savings while they shop. They can enjoy up to 1.0% Cash Back for Petrol and Grocery transaction for a promotional period of 6 months, up to a maximum of RM30 per month. The promotion will run until 7 December 2009 after which customers will be entitled to 0.8% Cash Back. Customer can also enjoy unlimited Cash Back of up to 0.3% on other retail purchases charged to their PB Day2Day Visa Card.

Beginning at launch, a campaign will be held to award the first 3,000 customers a welcome gift of an Eco Bag when they swipe a minimum RM50 for retail purchases 6 times during the promotion period. Customers are not required to submit any contest entry forms but they are required to maintain a minimum of RM3,000 available balances in their Savings Account during the selection period to qualify.

Below are the details about PB Day2Day Visa Card.

•1.0% Cash Back for Petrol and Grocery transaction (until 7 December 2009). After that 0.8% cash rebate.
•Unlimited Cash Back of up to 0.3% on other retail purchases.
•Maximum rebate of RM30 per month for petrol ang grocery transaction & will e credited to account monthly.
•Accepted at 29 million VISA merchants locations worldwide.
•Internet friendly card.
More details are available at Public Bank webpage.

CIMB e.MasterCard

Recently, CIMB Bank Malaysian second largest bank is introducing CIMB e.Mastercard. CIMB e.Mastercard is a prepaid debit card that offers payment convenience anywhere, anytime. To start enjoy the benefit of CIMB e.Mastercard, all you have to do is topping up and start shopping.

Prepaid debit card is different than normally issue debit card where it is not linked to any saving or current account of the card holder. Card user need to top up the money prior to use it. The advantage of prepaid debit card is if the card was stolen, the lost is limited to the amount reload to the card but the disadvantage is card user need to remember to top up everytime before shopping.

CIMB e.MasterCard is targetted for college and university students.

Below are the advantage of CIMB e.MasterCard

•FREE FOR LIFE
•No income requirement
•Worldwide acceptance
•Discounts and privileges at over 500 outlets all year round
•Secure e-Pay
•EZ Top-up at any CIMB ATM machine
•Discount for LIVE celebrity concert tickets
•PayPass enabled
•Online shopping including Paypal.
Application form is available here.

How to Create a Prepaid Virtual VISA Card (VCC) Part 2

In part 1 there was an introduction on VCC and where you create VCC for personal use. In part 2, I am going to provide a pictured tutorial on how to register yourself for a VCC account. If you miss part 1 on these articles series kindly click here.

For those who want to create a VCC, the first thing that you need to to register yourself with the VCC provider which is Entropay in this case. Before you start, remember that you need to have a real debit or credit card with a minimum of $20 to spend during registration. For those who just like to register but don't want to spend, forget it as Entropay does not allow for that.

For those who want to proceed, here are the step by step guide on how to register,

Step 1

Proceed to Entropay website with your internet browser.

Step 2

When the page fully load, click on sign up link as shown in picture below.

Step 3

This is page 1 of the registration process. You need to fill up your chosen account username, password and security question. You can change your country and account currency. Make sure you momorize your account username and password.

Step 4

On the same page, fill up you personal information. Remember to enter your real email address correctly as Entropay will send an activation code to this email address. You need to fill in all other information as well and click NEXT when complete.

Step 5

In page 2 of the registration process, you need to provide details on your real debit or credit card which is to be used for source of funding. Fill up your card number, expiry date, card secutity code or CVV and name printed on your card. Card secutity code or CVV is 3 digit number behind your card. When done, click NEXT.

Step 6

I page 3, you are required to activate your account. Check your email for the activation code and enter it in the form together with your password. Click NEXT when complete.

Step 7

In page 4, you are required to charge your real debit or credit card for a minimum of $20. This money will be transfer to your default Virtual VISA debit card. In this page, you are shown with your Virtual VISA debit card number, secutity code or CVV and its expiry date. Click NEXT when complete.

Step 8

In page 5, you are required to confirm the amount of money the Entropay will going to charge you by entering card secutity code or CVV. This is the final page. Click Submit and you will see the summary page on your Virtual Card details and amount of money you have load up.

Step 9

Congratulations. You successfully create your self a VCC. Log-in to your account if you would like to see your VCC details. Your VCC is ready to be used.

Feel free to leave your comments if any

How to Create a Prepaid Virtual VISA Card (VCC) Part 1

Virtual Credit Card (VCC) is gaining popularity nowdays due to increase in demand for online shopping and more importantly for privacy protection. However, some of the VCC user demand VCC for PayPal and eBay account verification. Previously, the only option to hold off VCC is via purchasing it from the internet but now you can create it yourself. It is not new but I just discover it myself recently.

Virtual Credit Card that I am going to introduce is a prepaid Virtual VISA Card and branded by VISA as the 'VISA Classic Debit'. Anyone in the world that have a valid REAL Credit or Debit Card can apply for this. The Virtual VISA Card works just like a normal VISA card when you make online purchases. The card have no finance or interest charges associated and because the card is prepaid, spending is limited to the amount of funds loaded onto the card.

Introducing Entropay, a VCC provider company which has been developed and operated by Ixaris Systems Ltd, a company registered in England and Wales. Their main business is to enable internet users to create their own VCC and use it instantly after fund was loaded to the card.

To own and use the card, user have to do the following

1.Register for Entropay account
2.Create a new VCC
3.Funded the VCC
4.Start using it.
There are no monthly or annual fees with an EntroPay Virtual Card. The only fee is the 4.95% charge on each amount loaded onto an EntroPay Virtual Card. There are no hidden fees. VCC can be funded with your regular credit or debit card

This is part 1 about Entropay VCC, I will create tutorial on how to register for Entropay Account and create your first VCC.

Click here for the pictured tutorial on how to Create a VCC.

How to Withdraw Paypal Fund to Malaysian Bank

As announce earlier on the policy changes, finally Paypal user from Malaysia is able to withdraw their Paypal fund to their Malaysian bank account. This is indeed the most wanted feature dream by them.

Paypal withdrawal to Malaysian bank account will be completely free of charge if the withdrawal amount is equal or above RM400.00 but there will be a nominal fee of RM3.00 if the withdrawal amount is less than RM400.00. The withdrawal will take 2 to 3 business days to be reflected in the bank account. I expect that Paypal is utilizing MEPS network for the fund transfer.

If your Paypal fund is in other currency other than Malaysian Ringgit, Paypal will automatically convert it for you with 2.5 percent exchange fee.

If you unsure on how to withdraw Paypal fund to your Malaysian bank account, below are the step by step guide.

Step 1

Click on "Profile" Menu & follow by "Add/Edit bank Account".

Step 2

Click on "Add"

Step 3

Fill in all the required information. Clink on "Details" to find out your bank MEPS routing code. Click "Continue" when done.

Step 4

Review your details and if everything if in good order Click "Add Bank Account"

Step 5

Click on "Withdraw" and "Withdraw to your bank account"

Step 6

Fill in the amount to withdraw & select your Malaysian bank account. Click "Continue" when done.

Step 7

Review the information & Click "Submit when done.

You successfully withdraw your paypal fund to Malaysia bank account. Your fund will be credited in 4 to 5 business days.

New VISA Debit Card with Cash Rebate from RHB Bank

RHB Bank recently launch 2 new VISA debit cards namely Cash-Connect & My-Cash-i VISA debit cards. Previously RHB Bank have similar debit card but with Mastercard logo. With the new offering, customers will be able to choose either Debit Card with VISA or Mastercard logo.

Together with the launching, RHB Bank offering 2% cash rebate for any transactions made with the card. Maximum cash rebate entitlement per account is RM30 per month. This promotion will ends 31st March 2010. After the promotion period the cash rebate will be reduce to 0.5% on all transaction.

Below are the additional features,

•0.5% Cash rebate on all transaction except e-debit purchase. Cash back will be credited into the designated Current or Savings account on monthly basis.
•Enjoy interest/dividend from saving or current account
•Set your own purchase limit up to available balance in account
•No minimum income is required
•Can be used to access the Internet for online purchases
•No government service tax
•Option for personalized or instant debit card

Fees and Charges

•The annual fee is RM20
•Card replacement charges is RM20
•FRM2 per page for for hardcopies of statements.
•RM1 per withdrawal at other MEPS ATMs
•RM8 per withdrawal at all other ATMs via VISA or PLUS network
•Service fee of RM20 for sales draft request
•Service fee of 1% for overseas spending.
For more information kindly visit RHB bank website.

Yearly stock market returns

I took this off the Schroders investor handbook as I was taking part in their investment quiz. This chart is rather interesting as it shows that poor performance years are often followed by significant rises subsequently. That's why one should rejoice when the stock market is doing poorly as it offers a chance for investors to buy in. One thing that they don't mention is that poor performance years can be followed by another year of poor performance as seen by the negative year to year returns for 1973 to 1974 and 2001 to 2002.

Genneva Gold

There is a pretty interesting post with a few hundred comments on lioninvestor's site. The post was about a company called Genneva Gold, which exists in Malaysia and Singapore. The links to the company's website can be found here. In this post, there were a lot of comments that debate on whether this investment is true or not and there were a lot of heated arguments and debates.

In my opinion, Genneva Gold is likely to be a fradulent company. Firstly, the returns does not corresponds with the risk. It seems to be a high return and low risk investment and that is not possible at all. Secondly, the business model of Genneva Gold seems to be unsustainable. Not much is said about how is the profits of the company being generated. Without being profitable, Genneva Gold will not be able to last long.

There were a lot of interesting insights and detailed analysis made by various parties that explains on why Genneva Gold seems to be a scam. The strange thing is that many still choose to believe that Genneva Gold is workable and not a scam. This is where I think that the greed has blinded them and they choose only to look at the good side of things instead stepping back and take a serious look at this investment. Unfortunately, this is also the very same reason why I think that the majority of people are not likely to do well when it comes to the stock market.

Always pay yourself first

Always pay yourself first. This is something which we can do as a start to manage our finance prudently. I do think that the majority of us tend to spend their salary first once they receive it. Only at the end of the month, the remaining amount will then be transferred to a savings account. If you actually think of it, we are actually using the money to pay others first before we pay ourselves. In some cases, the savings account is not really one since funds are frequently transferred from it to cover for the shortfall that may occur in any month or to spend on big ticket items. Thus in the long term, the savings is likely to remain at a stagnant level.

As such, it can be hard to pay yourself first. However, there are a few steps which you can do. Firstly, you should make your savings account as inaccessible as possible. Preferably, there should be no ATM card linked to this account so there will be no chance of you withdrawing cash from the ATM from this account. Secondly, establish only one link to your savings account to other accounts and that account should be the account which your salary will be credited to.

Thirdly, reduce the transfer limit of this savings account to the minimum so that you will not be allowed to transfer a large sum of money from this savings account. Lastly, you should set up an automated instruction in your internet banking to transfer a set amount of money from the account which your salary will be credited to, on the payday itself. This ensures that you get to save a sum of money first before you get a chance to spend your salary. Hopefully, this ensures that your savings will grow to a substantial amount.

Energy, Ags, & Infrastucture

The only three areas that continue to work are energy, ags, and infrastructure. I see no compelling reason to own a financial. My current exposure to the financial sector is through Banco Bradesco (BBD). Wachovia's earnings miss today confirms that no bank is safe. Thornburg Mortgage (TMA) is virtually operating in bankruptcy. TMA's convertible debt offering had an exercise price of $0.01 per share.

The bottom line...

Stay long McDermott (MDR), Diamond Offshore (DO), Petrobras (PBR), Chesapeake Energy (CHK), Terra Industries (TRA) Monsanto (MON), & Mosaic (MOS).

Note: I am long MDR, DO, CHK, TRA, & MOS

Adding Nucor (NUE) & Selling Agriculture Strength

I made a few moves today. Towards the close I sold calls against some agricultural positions. Shorter term (next couple of trading sessions) I expect the agricultural stocks to come in a bit. I have been bullish on Mosaic for a 170% gain since October 3rd and have liked Terra (TRA) & Terra Nitrogen LP (TNH) for almost a year.

The infrastructure boom cannot be ignored. I am currently holding McDermott (MDR) and Vale (RIO). Today I added Nucor Steel (NUE) to the portfolio. I also considered US Steel (X), but felt that Nucor is better managed (higher operating margins and return on equity) and is also less expensive based on forward earnings estimates. US Steel is also a bit more volatile with a Beta over 2.50. Nucor reports earnings before the open tomorrow.