Tax in Stock Investment

Some people might still confuse on Tax paying on Stock Investment. Here we will share the Taxing in Stock investment.

There is 2 kinds of income in Stock investment. (We don't discuss about lost, because there is no Tax in losing money)

1. Capital Gain
This income generate when you buy a share in a lower price and sell it in a higher price. You can only get this income when you sell off your shares.
This kind of income is TAX FREE!!! We does not need to pay any tax on capital gain. (If you are having an investment company that manage a fund, that is a different case)

2. Cashflow Gain
This income generate when the company decide to pay our a dividend. Normally the divedend will be Tax Deduct upfront. And the Tax deduction is on a maximum rate - 25%(except for REIT and some other kind of share).
In this case, it is better if you report your Dividend in your Income Tax Submition. Because you already paid all the Tax in a maximum rate.

(Malaysia is having a regulation that all the Tax will be deduct upfront before giving dividend starting on year 2012. This means all dividend also will be TAX FREE as well. Because the government already Tax it when the company make profit.)

Eg.
Maybank is giving 11sens devidend in year 2010. And you are having 1000 units.
The cheque that you will get is 11sens x 1000 - 25% = RM 82.50
And you had paid Tax for RM 27.50
Let say your Taxible income highest rate is 14%;
So when you report this Dividen in your Income Tax, you also report the Tax Paid (RM 27.50).
In a way, LHDN need to return you 11% of the tax collected in your divedend = RM 12.10

After all is your duty to report the Tax correctly. Happy investing and paying Tax.

Trading Page

This time, we will share a standard view when you start a trading. This TRADING PAGE is an online view. Perhaps this Trading Page can help you to understand more on common term.

The yellow dotted column 1 shows the Buying Q and the Buying Price. Byuing Q meaning the number of shares is Q'ing  to buy at the Buying Price

At the left bottom column; it shows a few Buying Q and Buying Price of CIMB.

Column 2 shows the Selling Q and Selling Price.

Column 3 shows the Last done Price.

Column 4 shows the Changes compare to Opening Price for the day. (For CIMB; this day is the Ex date for Bonus, so althought yesterday closing price is 14.42; but the actual equivalen price is 14.42 / 2 = 7.21 Because CIMB give out 1:1 bonuse share.)

Column 5 shows

L-V is last done volumn (how many share traded on the current price on last trade)

Vol is the volumn of the day. Take a look at GLOMAC, till this time there is still no trading for this share, so the volume is 0.

Column 6 shows the buying rate for today. When buying rate is high - meaning buying transection is high.
Eg. Total trade is 1000shares; 700 share is done on Selling Q (meaning people buy on the selling price) and 300 shares is done on the Buying Q (people buy the share by Q'ing) so the Buying Rate is 70%.

Column 7 is PE Ratio - Price / Earning Ratio. This is my favorite topic. This is one of the very important index for you to evaluate and analyse. We will discuss this topic in a later part.

As you can see there is Green "Buy" column and Red "Sell" column at the top right. This is column is to click if you want to start this trading. You will need to key in the Buying / Selling Price and the volumn on the next pop up.

Hopefully you had learned the basic from this page. Happy investing. If you have any question; you can always contact us on

mmstockmastermind@yahoo.com

Happy investing.

Margin Trading

On previous post, we had introduce for normal trading. In this post we will touch on Margin Trading.

Margin Trading is a trading that can gain / lost money without keeping the share and not using your capital money. The profit / lost made through the difference (margin) of buying and selling the share within the payment due period (Normally is T +3).

For all trading, we need to pay to the Broker Company on T+3days. If you buy and sell the share within this date, you does not need to pay to the Broker Company on the share you buy; instead you will gain / lost the difference of the trading.

Example:
Case 1
Monday - buy 1000 units of ABC in RM 1.00
Tuesday - sell 1000 units of ABC in RM 1.10

The difference is RM 0.10 x 1000 units = RM 100
The Broker Company will bank in RM 100 - all broker fee to you by next Monday (T+3 from Tuesday).

Case 2
Monday - buy 1000 units of ABC in RM 1.00
Tuesday - sell 1000 units of ABC in RM 0.90

The difference is RM 0.10 x 1000 units = RM 100
You need to bank in / pay to the Broker Company RM 100 + all broker fee by next Monday (T+3 from Tuesday).

Some Broker Company offer more margin day up to T+5; this is depends on the offer the company give to you. But common is T+3.

Intra Day Trading is to trade your share within the same day. Most of the Broker Company will give you an offer of lower Broker Fee such as 0.2% per trade. The profit is made on the difference (Margin) as well.

This kind of trading is to make money with no capital, but the risk is high. This is totally a very short term investment.

Technical Data Analysis is a very important analysis tools in this case. We will discuss on Tech Data Analysis in later part.

Start Trading in Bursa Malaysia

1. Open a Trading Account
Open a trading account from the approved securities / broker company. This will come with your CDS account (account to record your share in Bursa Malaysia).

This is the securities / broker company that approved by Bursa Saham Malaysia.
http://www.klse.com.my/website/bm/brokers/equities/list_of_brokers_alpha.html

To open an account, you will need to fill in the form and a copy of your IC. Some company will provide free account. If not, you will need to pay RM 10 to open a CDS account.

There is 2 kinds of account:
a) Direct Account
b) Pledge Account

Pledge Account, where by the broker company will manage all your dividen, form to sign on rights, annual reports. The company will send everything to the Broker Company. And this Broker company will receive and respond on behalf. If there is any deviden, the Broker Company also will bank in to your account.
Normally if you register with Bank as your Broker Company will provide you this type of account.
And this also include some service charge by the Broker Company.

Direct Account, where Bursa Malaysia will directly link to you. The dividen of the company, Purchase form for Rights, and any other material will directly send to your mailling address.
Normally independent Broker Company will provide you this account.
There is no extra service charge in this kind of account.

2. Do your research / study
As mention in few articles, you need to do studies, know your investment plan.

3. Start Trade

a) DIY Online Trading
A lot of Broker Company provide online trading service. And normally this is cheaper in broker fee (around 0.3% per trading).
You just need to log in to the online trading page, select your stock, and click BUY.
Key in the units that you want(minimum 100 units) and the price that you want.
If your desire buying price is not achieve, then you can see that you are in the buying q.

b) Call your Remisier
This is a very simple way. Just call up your remisier, and tell the remisier on the stocks name, buying unit and desier price.
Normally the remisier will call back if your trade done.

After buying on the stocks, and you can also sell on the desier price.

4. Payment

Of course you will need to pay for the stocks that you buy. Normally, payment is require on T+3.
T means for Trading Day, 3 is the days after trading.
Let say you buy the stock on Monday. Monday is your Trading Day. Thursday is the due date for your payment.
If you sell off your share before or on Thursday, you does not need to pay on the share price. BUT you will pay / receive on the difference of the price or we call as Margin. (Explain more in Margin Trading)
If you plan to keep the share, you will need to pay on Thursday. Else, the broker company will sell off your share and you will pay / receive the margin and a Penalty.

5. Monitor and Respond

If you plan to hold on the share, you will need to monitor. Depends on your strategy, you can buy / sell the share. Some of the company activity might need your responce. (Eg. Rights issue, Bonus, Dividen)

Note: This is the BASIC trading method. We will share on more kind of trading ways and strategy in other topics.

HAPPY INVESTING