I often write on Quora.com, where I am the most viewed writer on financial matters, with over 296.5 million views in recent years.
In the answers below I focused on the following topics and issues:
- Robinhood did an IPO a few days ago. The stock soared. Could there be any reason for this?
- There was a regulatory crackdown in China recently, which could make life difficult for Chinese firms on US stock markets. This comes after the US regulators themselves made some changes last year. Should markets be worried?
- Is it true that expats living in Malaysia are taxed at 26%-28% of total income, or does it matter where the income is sourced from?
- Is the game rigged in favour of those who own capital? What can the normal, everyday, investor do about it?
- What is the best way for women to earn money online? Is it really different to men?
- How can companies, and individuals, in Lebanon deal with the present inflation issues.
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Why did Robinhood stock go up 24% today?
I wouldn’t read too much into this.
Let’s look at some other IPOs in the last decade or so.
A great start. Now it is almost back to where it was on day one.
A bad start after the IPO:
Long-term = great
Royal Mail in the UK was similar. Was at 455 on October 11, 2013.
Soared for the first few days, weeks, and even months, touching 594 in December 2013.
Hit over 600 in January 2014, so was up about 35% in a few months.
Today it is at 533! I could have used many other examples, in countless stock markets.
The point is, the price action in the first few days or even months after an IPO, isn’t a good indication of long-term value.
This is especially the case in this kind of market, where you have a lot of liquidity and few (if any) alternatives to equities in a 0% interest rate environment.
There are always the speculators and the investors. Long-term investors seldom care about short-term price movements.
Look at the history of Amazon’ss stock. Hardly moved for over a decade relative to the general market.
Should the US stock market be worried about Chinese tech companies’ regulatory crackdowns?
The US has been making it more difficult for Chinese firms to IPO on the US stock market.
It is a misconception, despite the media reports, that the US “was moving to delist” Chinese firms last year.
What the regulators in the US did do, however, is ensure that Chinese firms need to comply with auditing and other rules, which most other international firms are already doing.
Now, China is bringing in more rules on their side, partly because they are worried about these US measures, but also for many other reasons.
To come to your question, the US stock market (by which I presume you mean the regulators, investors, etc) isn’t worried by these measures.
If they were, why didn’t the US stock market fall after the Chinese announcements this year and US announcements about audits last year?
Ultimately, the S&P500, Dow Jones, and Nasdaq aren’t really American indexes anymore.
Yes, they are listed in the US, but the larger US companies often make more money overseas than locally, and many international firms IPO in the US:
China has been the biggest recent source of these IPOs, but offshore centers like Cayman have traditionally been big as well:
What would be more worrying for a market like the US is if there was a wider pull towards protectionism.
In other words, if Europe, India, the UK, and almost every country made it hard to list in the US, and tried to make it harder for US firms to sell online.
We have had some measures like that, such as the so-called digital taxes, which targeted US multinationals, yet it isn’t serious yet.
I doubt, therefore, that these stories will affect the US stock market much in the coming years and decades.
What we are more likely to see is:
- Some foreign investors being worried by Chinese and Hong Kong stocks
- OR, ironically, we could see Hong Kong gain, if many Mainland Chinese firms do IPOs in the local market.
So, you have two contradictory pulls, especially for the Hong Kong market.
On one side, some people are more worried about the situation, especially in light of the recent political problems.
On the other side, Hong Kong could gain from the US-China situation, and become more of a financial hub for Asia.
Either way, regardless of whether Hong Kong beats the US stock market or vice versa in the coming years, the US stock market is less risky.
That is despite the higher valuations.
Is is true that expats in Malaysia are taxed at almost 26-28% initially. How are they rebated in subsequent periods?
I am not a tax expert, but the information given online indicates that:
- It depends how much money you are making
- What is important is where the money is sourced – local vs international
I will copy from the guide here
Individual income tax (2021)
Progressive rates from 0% to 30%
Up to MYR 5,000
MYR 5,000 – 20,000
MYR 20,001 – 35,000
MYR 35,001 – 50,000
MYR 50,001 – 70,000
MYR 70,001 – 100,000
MYR 100,001 – 250,00
MYR 250,001 – 400,000
MYR 400,001 – 600,000
MYR 600,001 – 1,000,000
MYR 1,000,001 – 2,000,000
Qualified knowledge worker
Applies to workers in the Iskandar Malaysia, from employment with a designated company engaged in a qualified activity (e.g. green technology, educational services, healthcare services, creative industries, financial advisory and consulting services, logistics services, tourism)
30% flat rate on total taxable income
Resident individual under the Returning Expert Programme
15% for five years
Non-citizen receiving a monthly salary of not less than RM25,000 and holding key positions/C-Suite positions
15% for five years
(limited to 5 non-resident individuals employed in each company that has been granted relocation tax incentive under PENJANA initiative)
However, it is mainly for locally sourced income.
You can legally pay 0% tax if you have an overseas sourced income, like you are retired, have a business overseas etc.
That is one reason why Malaysia did well attracting in many expats on programs like MM2H, which is now suspended.
In a world where people can work from anywhere in more jobs, countries which have a “territorial tax system” (they only tax locally sourced income) can be tax free.
However, I would seek tax advice if you go down this route, as some territorial tax countries have exceptions.
Is the financial world rigged?
Is the game rigged?
Not literally. There isn’t some sort of giant conspiracy going on.
However, there is one fact that nobody can get away from. This fact has held true over any, long-term, time period.
The returns on capital, long-term, are higher than labor.
Wages have historically risen 1%-2.5% above inflation, with bonds, real estate, and especially stocks doing much better:
Yes, assets are more volatile.
Yes wages, during some ten-year periods, outpace asset prices
And yes, many people, of course, have both a wage/salary and assets on the side.
But this overall trend has held over any 30–40 year period.
That was the fundamental reasoning behind the best selling book from Piketty, the French economist, in his justification of a wealth tax:
As 2%-4.5% per year compounds over time, this makes a huge difference.
Let me give you a mathematical example.
Jeff earns $40,000 a year as a graduate and makes, on average, 2.5% after inflation every single year until retirement, 45 years later.
He is doing better than many people. His final, inflation-adjusted, salary, would be $121,516.13.
That is much higher than the average GDP per capita of almost every country in the world.
Now let’s say he invests $500 a month for 45 years, plus a $100,000 inheritance or bonus he received in his 20s.
He gets 6% per year after inflation on his pot of money, which is lower than the historical real terms on the S&P500, Dow, and Nasdaq.
In retirement, he would have over $2.7m in today’s money. If he invests $1,000 a month, he would have about $4.1m.
$15,000 a year + a one-off $150,000 from an inheritance or bonus, would give him about $5.5m at 65, and close to $10m at 75.
If his kids inherit even half of that money, they could make more money from capital than from labor.
That is one reason you hear about all of these “every day” secret millionaires who die with millions despite having low incomes.
The link below is just one of the countless examples like this.
Wealth and income aren’t the same thing, but eventually, you can take an income from a pot of wealth.
That doesn’t mean that everybody should only focus on starting their own businesses and investing.
Some people are better off as company employees. It merely means that the “wealth game”, whilst not 100% predictable by any means, has always resulted in the same outcome long-term.
People who understand that tend to get wealthier over time, for any extra work.
It doesn’t take any longer to set up an investment account to thinking about how to spend 100% of whatever you make.
I am not convinced that the answer for this question is that much different for women than men.
Ultimately it is better to:
- Stick to what you know. For example, if you are a teacher, become an online teacher, build up your name and see what is wrong with the existing status quo, and then consider going it alone. Or if you are a graphic designer, use upwork or other freelancer websites. Get good reviews. Be patient. Then start your own thing.
- Play the long game. Some of the most successful people I know started going online when they were students or had another job. This gave them a huge advantage as they didn’t need to monetise straight away.
I guess gender comes in in niche markets. For example, if you detect a problem that clients have which is gender-specific, or you see an under-representation.
For example, if you want to start an “expat mum’s YouTube channel” which deals with solving problems, it is probably better if it comes from you rather than me!
How can companies in Lebanon alleviate the impact of the hyperinflation that has severely impacted its revenues?
Before answering, your question illustrates an important point. It is Lebanon, Argentina and Venezuela today, but it could be anybody tomorrow.
In 2011 I visited Argentina and I went to Lebanon in 2009. During both trips people seemed optimistic that some of the troubles were behind the countries.
Argentina was even attracting in foreign direct investment, and like Latin America in general, seemed to be coming up.
This leads me to your question. The only way businesses and individuals can protect themselves from this situation are:
- To have foreign currency but especially foreign investment
- To receive salary and earnings in foreign currencies. For example, a Lebanon company or individual with banking, and clients, outside the country, will be in a better situation.
- Not put all your eggs in one basket.
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Adam is an internationally recognised author on financial matters, with over 694.5 million answer views on Quora.com, a widely sold book on Amazon, and a contributor on Forbes.
Adam is an internationally recognised author on financial matters, with over 296.5 million answers views on Quora.com and a widely sold book on Amazon
In the article below, taken directly from my online Quora answers, I spoke about the following issues and subjects:
- What are the best places to live as a young American expat? I look at all the different factors, such as taxes, cost of living and internet speeds.
- How do people make over $100,000 online these days?
- As a stock investor, do I take calculated risks? Is there any alternative to taking such risks?
- What are the biggest reasons people worry about money and how can this be reduced or avoided?
- Should you keep investing with markets trading at record highs? Or are they trading at record highs to begin with?
To read more click on the link below.