Really. Not Cash Color, but Cash Cow. That’s how I felt when I first heard the Budget 2009 tabled by the Prime Minister on August 29th.

The recent hikes in prices of gasoline, electricity, and food have caused a broad increase in prices of many products and services. Expectations were high for Budget 2009 to reduce the household and individual financial burdens. Alas, I stand to only save a maximum of RM150 in income tax. The middle income group feels let down by this budget.

The Government must have the impression that people in my group (Single with no children, earning middle income, potential stock investor) are Cash Cows.

Last year, the Government announced as an effort to simplify corporate tax administration, the corporate tax system will switch from Imputation System to Single-Tier System. This simply means that a tax at the corporate level is final. And investors in the lower tax brackets will no longer be able to claim tax refunds for the corporate taxes paid.

This year, a high allocation was given to the poor and lower income group. Even the richest people get a tax rate reduction from 28% to 27% saving them thousands, possibly millions in income tax. My group gets a tax rate reduction from 13% to 12% resulting in a potential maximum tax savings of only RM150.

Why is the Government turning a blind eye to the cries of help from the middle income group? Why is the Government reluctant to increase the tax brackets? Why didn’t the Government allow home mortgage interests to be used as tax relief like in the past?

The reason as I see it is because my group is the Cash Cow. The Government cannot continue to tax the poor and lower income because they can no longer afford to pay the same level of tax as prior years due to the increase in cost of living. Also, the Government has to close the loophole and reduce the gap between the corporate tax rates (25%) and the individual tax rates (now from 28% to 27%). This leaves my group as the only group of taxpayers the Government could depend on for consistent income tax revenue. This is why the Government wants to milk my group as much as it can.

I can feel the pain in my wallet. “Moooo.”

I read The Warren Buffett Way, Second Edition from cover to cover in less than 2 days. The author, Robert G. Hagstrom has managed to explain and illustrate the way Warren Buffett invests in such clarity even a beginner will have no problem understanding the concepts and techniques discussed in this book.

Warren Buffett is recognized as the best investor in our time. Today, he is the richest person in the world. And he is the only billionaire to have made his fortune from investing. Who wouldn’t want to learn to trade like Warren Buffett?

Robert has studied many of Warren Buffett’s transactions and has identified similarities in Warren Buffett’s techniques to investing in stocks and businesses. He calls these techniques, the tenets. His approach is to invest in a business that is simple to understand, with predictable future earnings, honest management and buying at a discount. These tenets are easy to understand, and not impossible to imitate or follow. The author uses some of Warren Buffett’s popular investments (Coca-Cola, Gillette, Wells Fargo and others) to illustrate how Warren Buffett used his techniques in the real world.

Warren Buffett’s approach is as useful today as it was 50 years ago. Circumstances and businesses have changed, but the principle behind Warren Buffet’s techniques is as valuable and practical as ever. Towards the end of the book, Robert explains how he uses Warren Buffett’s way to invest in the New Economy, an area where Warren Buffet has stayed away from.

I enjoyed reading this book. This book is worth its weight in gold.

Books in my country are expensive. If you like my review, consider donating to my book fund. This will ease my book budget.

The Government announces the general inflation rate every month, usually between 2% to 5%. Taking this cue, my employer raises my salary by 5% a year. This is so we can keep up with the general inflation. However, I feel poorer and poorer every year. Do you feel the same? Here are some reasons why.

Personal inflation rate (aka Higher commitments)
Your personal inflation rate may not be the same as the general inflation rate. While the general inflation rate is 5% each year, your inflation rate could be higher as you go through different stages of your life.

For example, a working couple earns a combined income of $3,000. Out of this, $1,500 is used for paying necessities, $1,000 for savings and $500 for discretionary spending such as entertainment.

One year later, their employers raise their salaries by 5%, thus making their combined income at $3,150. Now they also have a newborn. The need to buy baby supplies, higher medical bills and the need to rent a bigger space have resulted in them spending $2,000 in necessities. They continue to save $1,000 but are left with only $150 for discretionary spending.

Because the couple feels that their discretionary money or “extra money” has shrunk, so they feel their incomes do not keep pace with the inflation. But it is actually their personal inflation that is causing them to feel this way.

We experience this when we move through different stages of life such as moving out, dating, marriage, starting a family, buying a home, kids starting school and colleges among others.

Higher standard of living
As we adopt a higher living standard, so will our expenses increase. Upgrading from a 2-bedroom to a 3-bedroom usually means higher monthly mortgage repayments. Some switch from coffee at McDonalds to coffee at Starbucks for your caffeine fix. Some install cable TV. All these will add on to our monthly expenses “committed” expenses.

Inflation rate differs from region to region
Historically, inflation rate in the urban areas is higher than rural areas. This is because more people migrate and live in the urban areas, resulting in higher demand for housing, transportation, food, goods and services. The higher demand urban areas causes prices to increase faster than the rural areas where the demand is lower.

Outdated methodology in computing inflation
Inflation is calculated by comparing the current prices versus last year’s prices of the items in the inflation basket. However, the items in the inflation basket may not reflect the expenses of the general public. People in the urban areas spend differently compared with rural areas.

In keeping the official reported inflation figure as low as possible, the Government could be motivated to use outdated methodology in computing inflation, or simply include only the basic necessities into the inflation basket. Items such as cars, computers, childcare and tuition are deemed “luxuries” and not included in the basket even though these expenses could form a bigger portion of our budget.

In my opinion, the best way to track your inflation rate is to look at how much and on what you spend last year. Compare that to how much and what you spend on this year. Then you would have a good estimate on your inflation that is coming from a change in lifestyle and the general inflation.

Michael Moe has laid out in this book, Finding the Next Starbucks, a systematic approach to identifying and investing in the hot stocks of tomorrow.

He has put together a list of megatrends that will shape the way consumers behave and spend and the way businesses will adapt and operate in the future. He identified the types of business sectors and areas that will grow as the megatrends gain momentum. He also discusses the reasons why these megatrends will gain popularity and why these business sectors will benefit from these megatrends.

He also showed how he finds his stocks, what to look out for and how he values them.

This book is a good read for investors who are interested in growth stocks. The style of this book is suited to advanced investors. Beginners might feel overwhelmed by the argument and information presented in this book.

As for me, I wasn’t able to understand fully and appreciate this book because I have not invested in stocks before. However, this book will definitely be my reference guide when dipping my feet into the small cap stocks. I will surely re-read this book in the future.

Books are expensive in my country. I sure could use some donation. If you like my review, you are welcome to contribute to my book budget.

On July 19th, I received a text message from HSBC that read like this, “Save more with HSBC credit card! Just for you, get 10% rebate up to RM30 (per customer) on your monthly total spend. Offer till Oct 31st. T&C apply.” I was pleased with HSBC’s generosity. Before month end, I had charged RM239.85 to my HSBC card.

My statement came in August and I couldn’t find my RM23.99 rebate. I called up customer service and was told the rebate will be credited to my account in November. I was further told that since there are 3 months in total (August, September and October) I have a maximum RM90 rebate to be earned.

I was a little disappointed. I had assumed the rebate period would start from July. It’s my mistake for not finding out the commencement date. If I had known earlier then I would have charged my RM239.85 on another card which would have earned me a rebate of RM1.20 plus cash voucher of RM15.

Instead of getting a rebate of RM23.99 I had lost RM16.20. This experience has taught me to be more careful in the future.