Tuesday, 10 August 2010

How to answer some typical questions in a job interview

Q: Tell me about yourself
A: Are you interested in my work experience, my personal experiences, or both?

Q: How long would you stay with our company?
A: I would expect to have a great career with this company. I'm always looking to learn, and I define success as being ready when an opportunity arises. How long do you think I'd be challenged here?

Q: Talk about a time when you had to overcome major obstacles

Q: What interests you about this position?
A: Reasons are personal (such as a narrative about what spurred them to seek a new job), or it may connect the candidate to the company: her experience with the brand, the mission statement, or the organization's role in the community

Q: Is there intelligent life in outer space?
A: As long as it's not too short or too long, virtually any response is a good one. But pay attention to attitude, the way the candidate approaches the problem, and the ease or difficulty they have in coming up with a response.

Q: What are the seven reasons why manhole covers are round?
A1: Because that's the only shape where the cover won't fall into a circular hole.
A2: Round tubes are the strongest and most material-efficient shape against the compression of the earth around them
A3: It's easier to dig a circular hole and thus the cover is also circular
A4: The bearing surfaces of manhole frames and covers are machined to assure flatness and prevent them from becoming dislodged by traffic. Round castings are much easier to machine using a lathe.
A5: Circular covers do not need to be rotated to align them when covering a circular manhole.
A6: Human beings have a roughly circular cross-section.
A7: A round manhole cover can be more easily moved by being rolled.
A8: Tradition.
A9: Supply. Most manhole covers are made by a few large companies. A different shape would have to be custom made.

Q: Imagine we've just hired you. What's the most important thing on your to-do list on the first day of work?
A: You want to see whether he demonstrates the competencies and priorities that are important to the job.

Q: Why did you get into this line of work?
A: Communicate a sense of their values and motivations. Concepts like values and culture can be subjective and difficult to define, but you should be looking for someone whose work ethic, motivations, and methods match the company's. 

Q: But enough about you. What about us?
A: Commnicate how curious and knowledgeable a candidate is about your company.

Q: If you were a book, what would you're title be.
A: 

Q: If you were a condiment on a burger which would you be?
A:

Q: If you could be any item in the supermarket, what would you be?
A: A paper towel because it can clean up a lot of messes.

Q: What do you want written on your tombstone? 
A: Nothing, don't plan on having one, I don't want to take up 6 feet of ground for eternity

Do not bad mouth your previous employers.

Tuesday, 8 June 2010

Investment strategy with property in Australia

Primary place of residence
Do not pay any interest on a home loan on your primary place of residence. i.e. either pay off the entire mortgage, or fully offset the principal in a 100% offset loan. The benefit of using the offset account rather than having no mortgage is that it provides you with flexibility and quick access to funds if you need to take advantage of an investment opportunity.

Never have an interest only loan on your primary place of residence.

There is no capital gains tax on your primary place of residence. Therefore, sell when the market is high and move into an existing investment property temporarily. Then buy the next primary place of residence when the market cycle is low.

Investments
Use a margin loan to buy share indexes. Interest on the margin loan is tax deductible.

Use investment property loans to buy investment properties. Target 2 bedroom CBD apartments less than $600K. Select 100% offset interest only loans. Interest is tax deductible. Costs to inspect your property are tax deductible (flights to Australia, transportation, etc).

Wednesday, 5 May 2010

Historical individual income tax rates in Australia

1959-70
$32,00 and over - $12,153 + 68.3675% for each $1 over $32,000

1975
65%

1976
65%

1977
65%

1978
65%

1979
61.5%

1980
60%

1981
60%

1982
$4,041 - Tax Free Threshold
$34,479 and over - $12,153 + 60% for each $1 over $34,479

1983–84
$4,594 - Tax Free Threshold
$35,788 and over - $11,963.88 + 60% for each $1 over $35,788

1984–85
$4,594 - Tax Free Threshold
$35,788 and over - $11,867.36 + 60% for each $1 over $35,788

1985–86
$4,594 - Tax Free Threshold
$35,000 and over - $11,346.25 + 60% for each $1 over $35,000

1986–87
$4,889 - Tax Free Threshold
$35,000 and over - $10,954.19 + 57.08% for each $1 over $35,000

1987–88
$5,100 - Tax Free Threshold
$35,001 and over - $10,001 + 49% for each $1 over $35,000

1988–89
$5,100 - Tax Free Threshold
$35,001 and over - $10,001 + 49% for each $1 over $35,000

1989–90
$5,099 - Tax Free Threshold
$50,000 and over - $16,157 + 48% for each $1 over $50,000

1990-91
$5,249 - Tax Free Threshold
$50,000 and over - $15,734.75 + 47% for each $1 over $50,000

1991-93
$5,400 - Tax Free Threshold
$50,001 and over - $15,314 + 47% for each $1 over $50,000

1993-94
$5,400 - Tax Free Threshold
$50,001 and over - $14,556.50 + 47% for each $1 over $50,000

1994–2000
$5,400 - Tax Free Threshold
$50,001 and over - $14,102 + 47% for each $1 over $50,000

2000-03
$6,000 - Tax Free Threshold
$60,001 and over - $15,580 + 47% for each $1 over $60,000

2003–04
$6,000 - Tax Free Threshold
$62,501 and over - $16,182 + 47% for each $1 over $62,500

2004–05
$6,000 - Tax Free Threshold
$70,001 and over - $18,612 + 47% for each $1 over $70,000

2005–06
$6,000 - Tax Free Threshold
$95,001 and over - $28,200 + 47% for each $1 over $95,000

2006–07
$6,000 - Tax Free Threshold
$150,001 and over - $47,850 + 45% for each $1 over $150,000

2007–08
$6,000 - Tax Free Threshold
$150,001 and over - $47,100 + 45% for each $1 over $150,000

2008–09
$6,000 - Tax Free Threshold
$180,001 and over - $58,000 + 45% for each $1 over $180,000

2009–10
$6,000 - Tax Free Threshold
$180,001 and over - $55,850 + 45% for each $1 over $180,000

2010–11
$6,000 - Tax Free Threshold
$180,001 and over - $54,550 + 45% for each $1 over $180,000


Around 10% of Australian taxpayers pay the top marginal income tax rate.

Monday, 26 April 2010

Future investment trends

Making money using the Internet The main goal with the Internet is to bring in site traffic. This traffic is monetised through running advertisements (e.g. Google Ads). A metaphor would be a heavily used road (your web site), and the passing traffic is monetised through the use of signboards/billboards (Google Ads). Therefore, the guidelines are: 
1) A website that is free to use by visitors 
2) A website that is convenient 
3) A website that requires frequent visits by the same users (daily, weekly, etc) 
4) A website that can be transformed into a mobile app (iPhone App, Android App) to broaden the user base to include mobile phone users 
5) Sending a push email to subscribers with a "preview" headline, so that users click and re-directed to your website for the full article 

 The growth area is to identify business models that: 
1) Use geo-location by leveraging the GPS functionality provided on mobile phones (Google Maps, reviews of shops, suggestions of restaurants, etc) 
2) Use photo information by leveraging the camera provided on mobile phones (e.g. Google Goggles, augmented reality, etc) 
3) Stream audio/video rather than mere static text/graphic data 

  China China doesn't need to import technology or standards from other countries. It will develop its own (e.g. bypass Blu-Ray by developing its own HD standard). Also, since they do not have existing reliance on particular industries they can leap frog certain industries. A good example is that they may develop electric cars to bypass internal combustion engine cars for the mass market. After they have developed for their domestic market and have reached economies of scale and keep the costs low, they can export to foreign countries to undercut existing technology used in these foreign countries. Video conferencing such Skype-enabled High Definition televisions may also be a major growth area. It would provide a relatively cheap way for mass market of China to connect with the rest of the world.

Wednesday, 21 April 2010

Enjoying your wealth in Hong Kong

Restaurants
Hutong
28th Floor, One Peking Road, Tsim Sha Tsui

Aqua Roma
29th Floor, One Peking Road, Tsim Sha Tsui

Hung Tao Chinese Restaurant
2/F, 94 Granville Road, Toyo Mall, Tsim Sha Tsui

Tai Ping Koon (soy chicken wings)
40 Granville Road, Tsim Sha Tsui

Dai Wing Wah (fried rice with lard - 猪油饭)
2/F Koon Wong Mansion, 2-6 On Ning Road, Yuen Long

Tung Po Sea Food Restaurant (cuttlefish cooked in squid ink with noodles)
2/F, 99 Java Road, North Point

Drinks
Salon de Ning
B/F, The Peninsula Hotel, Tsim Sha Tsui

Knutsford Terrace
Kimberley Road, Tsim Sha Tsui

Hillwood Soho
Hillwood Road, Tsim Sha Tsui

Circle Tower
28 Tang Lung Street, Causeway Bay

Phonograph (cocktails)
G/F, 2 Austin Avenue, Tsim Sha Tsui

Activities
Avenue of the Stars
starting from New World Centre to Salisbury Garden, Tsim Sha Tsui

West Kowloon Waterfront Promenade
10-minute walk from Kowloon MTR station

Wing Lee Street, Sheung Wan
off Ladder Street, near Caine Road

Tai Pan Reflexology Beauty & Foot Spa
B/F, 83 Nathan Road, Tsim Sha Tsui

Happy Valley races on a Wednesday night. Take the Happy Valley tram as it will circle the racecourse.

Diamond Coast Kart Circuit
http://www.dckart.com/index.php?lang=en
22, Sheung Tan Village, Lung Kwu Tan, Tuen Mun

Cattle Depot Artist Village
63 Ma Tau Kok Road, To Kwa Wan

Oil Street, North Point
near Fortress Hill MTR station

Kwun Chung Cinema
30 Kwun Chung Street, Jordan
near Austin MTR station

Kubrick (Obscure books, music, film)
Shop H2 Prosperous Garden 3 Public Square Street, Yau Ma Tei

Nature
Signal Hill Garden
East Tsim Sha Tsui. Walk up Minden Row off Mody Road/Minden Avenue.

Kowloon Park
Behind Park Lane Shopper's Boulevard on Nathan Road

Centenary Garden
East Tsim Sha Tsui. Corner of Chatham Road South and Mody Road

Mody Road Garden
Off Mody Road, behind East Ocean Centre

Trio Beach, Sai Kung

Sai Wan Beach, Sai Kung

Tai Tam Reservoir Road
Off Wong Nai Chung Gap Road, Happy Valley

Robin's Nest
Sheung Shui

Fei Ngo Shan
off Clear Water Bay Road in Choi Hung

Bride's Pool
Bride's Pool Road, Plover Cove Country Park, North East New Territories

Dai Long Wan
Big Wave Bay Road

Tai Mei Tuk Village (for Thai food)
near Tai Po

Shopping
Sin Tat Plaza (for mobile phones)
83 Argyle Street, Mongkok

Argyle Centre (DJ plays in the evenings)
688 Nathan Road, Mongkok

Yan On Building (war games)
1 Kwong Wah Street, Mongkok

Tuesday, 13 April 2010

Another metric for housing value in HK

There is a fixation on the location of property in Hong Kong. However, I think the focus should be on travel time because basically it is the opportunity cost of time that is paramount. Reduction in travel time should mean an increase in leisure time.

Time = distance / speed.

Even though the distance may be greater, as long as the speed is faster, there is no change in time. Faster speed may be attributed to less traffic congestion, less traffic lights, less stops along a train line, etc. Due to the efficient public transport/general transport infrastructure in Hong Kong, speed is generally faster than in other countries.

A value metric for property based on travel time is proposed.

Price (purchase price or rent) is usually a function of convenience and also property size. One factor when determining convenience is the travel time to reach to Central, which is where most office jobs are located.

Raw distances
19.9kms - Seasons Monarch -> Prince's Building
3.9kms - Park Avenue -> Prince's Building
1km - Valiant Park -> Prince's Building


Via MTR from Seasons Monarch
Kam Sheung Rd MTR -> East TST MTR -> TST MTR -> Central MTR
27 minutes + 4 minutes (walking time) = 31 minutes
$4.9 + $15.9 = $20.80 fare

Door to door is 45 minutes
leave Seasons Monarch at 8:45am, arrive in office at 9:30am.

Kam Sheung Rd MTR -> Nam Cheong MTR -> Hong Kong MTR -> Central MTR
15 minutes + 12 minutes (3 minutes walking time at Nam Cheong and 9 minutes from Hong Kong MTR to Central MTR) = 27 minutes


Via Bus from Seasons Monarch
Tai Lam Bus Interchange -> ICC at Kowloon MTR via KMB bus no. 968, 969, 969P
20 minutes

Tai Lam Bus Interchange -> Central via KMB bus no. 968, 969, 969P
40 minutes


Via MTR from Park Avenue
Olympic MTR -> Hong Kong MTR -> Central MTR
7 minutes + 8 minutes (walking time from Hong Kong MTR to Central MTR) = 15 minutes


Seasons Monarch
$7,753,340 - Purchase Price/Cost Base on 13 October 2009
2,837 square feet. 1,322 square feet internal (usable). 46.59% efficiency. Excluding roof, driveway & backyard.

$2,732.94 price per square foot
$2,732.94 X 32 minutes = $87,453.96 to Central

$5,864.85 price per internal square foot
$5,864.85 X 32 minutes = $187,675.20 to Central

Park Avenue
$8,000,000 - Purchase Price on 27 May 2008. 8.8% compound annual growth rate.
$4,343,000 - Purchase Price on 1 March 2001
982 square feet. 743 square feet internal (usable). 75.66% efficiency.

$8,146.64 price per square foot
$8,146.64 X 15 minutes = $122,199.6 to Central

$10,767.16 price per internal square foot
$10,767.16 X 15 minutes = $161,507.4 to Central

Considering time to travel to Central with the price per square foot, Seasons Monarch is 28.4% cheaper than Park Avenue.

Considering time to travel to Central with the price per internal square foot, Park Avenue is 13.9% cheaper than Seasons Monarch.

Note 1: We are not including the benefit of a driveway at Seasons Monarch. A car park at Park Avenue is about $2,000 - $3,000 per month. To buy a car park is approximately $320,000. To make a fair comparison, then the $320,000 should be added to $8,000,000. The price per square foot for Park Avenue becomes $8,472.51. Therefore considering time to travel to Central with the price per square foot, Seasons Monarch is 31.2% cheaper than Park Avenue.

Note 2: We are not including the travel time door to door. It takes 5 minutes using the shuttle bus from Seasons Monarch to reach Kam Sheung Rd MTR station and 10 minutes to reach the Tai Lam Bus Interchange. However, it also takes 5 minutes walking time from Park Avenue to Olympic MTR station.

Owning in Seasons Monarch versus Renting in Park Avenue
$9,886.53 - monthly cash expense at Seasons Monarch (interest, management fee, rates, insurance) for 2,837 square feet
versus
$25,000 - monthly rent at Park Avenue for 982 square feet, in Tower 9, upper floor.

Assumptions:
If you live in the same location, but pay lower cost, then this is better.
If you live further away and pay a higher cost, then this is worse.
If you live closer and pay a higher cost or live further away and pay a lower cost, then we need to calculate whether it is better value or not.

Seasons Monarch - 32 minutes X $9,886.53 = 316,368.96
Park Avenue - 15 minutes X $25,000 = 375,000
Sorrento - 13 minutes X $26,000 = 338,000
Mei Foo Sun Chuen - 21 minutes X $16,000 = 336,000

The lowest value above indicates best value for money in terms of travel time to Central.

What HK property boils down to

If you want larger living space, and have a limited budget, your two choices in Hong Kong are:
1) Live in an old, run down place
2) Move further away from Central

We chose option 2).

Monthly housing expenses
$7,554.70 - Interest (average over 48 months)
$2,078 - Management Fee
$675 - Government Rates
$405 - Government Rent
$598 - Home Insurance
-$1,424.17 - Home Loan Interest Tax Rebate capped at $100K
$9,886.53 - TOTAL

on a per square foot basis, this is $9,886.53 ÷ 2,837 square feet = $3.48 per square foot.
which can be used to compare against the rent price per square foot of other properties.

Monthly housing cashflow
$16,442 - Mortgage repayment instead of just interest
everything else the same
$18,773.83 - TOTAL


Owning versus Renting
The HK government believes the rateable value is $13,500 per month. They are not far off in their calculation compared to $11,519.33. Landlords in Seasons Monarch are asking $25,000 per month in rent. Therefore your monthly saving by owning rather than renting in Seasons Monarch is $25,000 - $9,886.53 = $15,113.47.

In 4 years time when you want to sell your house, the savings accrued will be $15,113.47 X 48 months = $725,446.36.


Profit Potential of Owning
Non-capital expenses when purchasing the property were:
$281,250 - stamp duty
$2,500 - solicitor's disbursements
-$42,000 - HSBC cash rebate
$241,750 - TOTAL

Total cash used in 4 years:
$2,250,000 - deposit
$253,340 - renovation cost
$241,750 - non-capital expenses when purchasing the property
$18,773.83 X 48 - monthly housing cashflow
$3,646,233.84 - TOTAL

Assuming the renovation cost is added to the cost base of the property, then the property after renovation should be worth $7,753,340.

Loan principal outstanding after 4 years is $4,887,374.20 maximum.

A conservative estimate on the capital appreciation of your house would be that it is in line with inflation in Hong Kong. The inflation rate in Hong Kong is 2.8% at February 2010. Of course if the property appreciates faster than the inflation rate, the cash-on-cash return would increase. e.g. for a moderate annual growth rate of 5% or bullish rate of 10%.

Annual Growth Rate - Cash after repaying mortgage - Net Cash Return - Cash-on-Cash Return
2.8% - $3,771,497.16 - $125,263,32 - 3.44%
5% - $4,536,859.03 - $890,625.19 - 24.43%
10% - $6,464,290.89 - $2,818,057.05 - 77.29%

If you did not own you would not enjoy any capital gain on the property you are renting. However, with the opportunity cost of not buying a property with your cash, you could leverage and make money from another investment, i.e. share investing.

Net Profit at the end of 4 years, total capital gain % at the fourth year
Capital Gain % - Profit/Loss
Nil - -$716,303.63 loss
11.68% - $189,286.47 (2.8% p.a.)
21.55% - $954,541.13 (5% p.a.)
46.41% - $2,882,021.45 (10% p.a.)


Net Savings at the end of 4 years, total capital gain % at the fourth year
Capital Gain % - Profit/Loss instead of renting (saving of $725,446.36)
Nil - $9,142.72
11.68% - $914,732.83 (2.8% p.a.)
21.55% - $1,679,987.49 (5% p.a.)
46.41% - $3,607,467.81 (10% p.a.)

Basically, the property could be sold for 0.12% less than the cost base of the property, and you would still be the same as if you had rented. This is the only fair comparison that should be made. Therefore there is plenty of upside potential and minimal downside risk.

Monday, 29 March 2010

Socialised healthcare

Now that the US has some kind of socialised medicine, it is worth commenting on how such a system could be improved.

Critics cite that when something is free, it is usually of poor quality, inefficient, is ultimately more expensive (due to the inefficiency and higher taxes) and creates long waiting queues.

I would agree, that anything that is free to the patient, creates the "free rider problem". In other words, people with a lower socio-economic background consume more than their fair share of public healthcare and of course shoulder less than their fair share of the cost because their income is lower and they pay lower taxes than everyone else.

But in a user pays system like the US had, this did not not necessarily mean health costs were much lower due to greater competition or efficiency. If insurance companies and doctors collude on pricing, they could control the market as prices were unregulated. Since health care is a necessity, patients would have no other choice but to pay because health care is price inelastic (price changes have a small effect on the demand for health care). Also, the US is very litigious country and therefore doctors pay to pay hefty insurance premiums in order to practice. Therefore tort reform by limiting the damages that could be claimed is an important aspect to reduce the overall cost of healthcare.

In Australia, the Medicare system is totally free to the patient if the doctor provides "bulk billing". Under "bulk billing" the doctor receives 85% of the scheduled fee from the government. The benefit for the doctor is that they avoid the costs of and risks of debt collection since the government will pay. However, this incentivises the doctor to see more patients in a smaller amount of time in order to increase their own income, which may lead to poorer quality patient care.

An alternative to "bulk billing" is where the patient pays the doctor first, and then the patient seeks a 85% to 100% rebate from the government for the cost. Under this alternative, the doctor is not restricted to the scheduled fee and can charge what they please. Usually the doctor can spend more time with the patient since their fees are not capped by the government, which may lead to higher quality patient care.

The "free rider problem" is most likely encountered with "bulk billing" doctors. There is usually much longer queues for doctors who offer "bulk billing". Instead of zero cost to the patient, the government or doctor should charge a nominal fee for the visitation, perhaps $10. This would discourage a significant amount of free riders as it poses an upfront cost, and only patients with significant illness would see a doctor under such circumstances. However, this would not eliminate the incentive for doctors to try and see more patients in a fixed amount of time and therefore the quality of service may not necessarily improve.

In Australia, people can also purchase private health insurance. Theoretically, they are paying more for health care, and therefore should be able to jump waiting queues and receive better quality of service. Australia incentivises wealthier people to have private health insurance otherwise they pay a higher taxation levy on Medicare.

The problem with the Australian system is that it does not encourage people to consciously adopt a healthier lifestyle to avoid illness. Perhaps the Singapore system should be adopted in part because it similar to a user pays system with a government safety net. In Singapore, a percentage of your salary is credited to a MediSave account. When a person is sick, they use the monies accumulated in their own (or family members') MediSave account to pay for their medical bills. For a healthy person, they would hardly use anything in the MediSave account and should they die, the money in the MediSave account could be passed onto family members. If the MediSave account is depleted, then the government provides a safety net to cover costs of essential health care.

Rather than 100% of the costs being paid from the MediSave account, perhaps the government should co-pay so that it is 50-50 between the government and patient paying for their medical bills. This is slightly more socialised than fully privatised. Also, tax rebates should be offered for people who choose to purchase private health insurance. This would encourage wealthier people to pay higher premiums for private health insurance to reduce their tax burden while at the same time supposedly obtaining better health care.

My proposal for Australia:
  1. Reduce (or eliminate) the compulsory 1.5% Medicare Levy on taxable income.
  2. Eliminate the 1% Medicare Levy Surchage if your household income is greater than $140,000. Instead, offer a tax rebate (e.g. 1%) if a minimum level of private health insurance is purchased. This would encourage not only families earning more than $140,000 household income but also those earning less than this because a percentage tax rebate would apply to anyone with a minimum level of private health insurance. By increasing the pool of consumers of private health insurance this would generate more competition in the private health insurance which may lead to lower premiums.
  3. Introduce a compulsory MediSave account where each taxpayer (or person within working age) must set aside 6 to 8% of their income to meet future personal or immediate family's hospitalization, day surgery and for certain outpatient expenses. The government should then reduce (or eliminate) the compulsory 1.5% Medicare Levy on taxable income. Also, the government should co-pay instead of 100% payment from the taxpayer for their medical expenses. This would ease the medical cost for any unfortunate illness or injury that may occur for an individual.
  4. Allow doctors and hospitals to set their own prices to encourage competition and greater quality of service. But there must be a government authority to monitor any price collusion/price fixing. There should still be some government hospitals where the cost is very affordable but there may be longer waiting queues or the quality of service may not be as good. Payment for medical bills should still come from a mixture of private health insurance, MediSave account and co-payment from the government.
  5. Continue the Pharmaceutical Benefits Scheme (PBS)

Tuesday, 9 March 2010

The 48 Laws of Power

The 48 Laws of Power

by Robert Greene and Joost Elffers

Law 1

Never Outshine the Master

Always make those above you feel comfortably superior. In your desire to please or impress them, do not go too far in displaying your talents or you might accomplish the opposite – inspire fear and insecurity. Make your masters appear more brilliant than they are and you will attain the heights of power.

Law 2

Never put too Much Trust in Friends, Learn how to use Enemies

Be wary of friends-they will betray you more quickly, for they are easily aroused to envy. They also become spoiled and tyrannical. But hire a former enemy and he will be more loyal than a friend, because he has more to prove. In fact, you have more to fear from friends than from enemies. If you have no enemies, find a way to make them.

Law 3

Conceal your Intentions

Keep people off-balance and in the dark by never revealing the purpose behind your actions. If they have no clue what you are up to, they cannot prepare a defense. Guide them far enough down the wrong path, envelope them in enough smoke, and by the time they realize your intentions, it will be too late.

Law 4

Always Say Less than Necessary

When you are trying to impress people with words, the more you say, the more common you appear, and the less in control. Even if you are saying something banal, it will seem original if you make it vague, open-ended, and sphinxlike. Powerful people impress and intimidate by saying less. The more you say, the more likely you are to say something foolish.

Law 5

So Much Depends on Reputation – Guard it with your Life

Reputation is the cornerstone of power. Through reputation alone you can intimidate and win; once you slip, however, you are vulnerable, and will be attacked on all sides. Make your reputation unassailable. Always be alert to potential attacks and thwart them before they happen. Meanwhile, learn to destroy your enemies by opening holes in their own reputations. Then stand aside and let public opinion hang them.

Law 6

Court Attention at all Cost

Everything is judged by its appearance; what is unseen counts for nothing. Never let yourself get lost in the crowd, then, or buried in oblivion. Stand out. Be conspicuous, at all cost. Make yourself a magnet of attention by appearing larger, more colorful, more mysterious, than the bland and timid masses.

Law 7

Get others to do the Work for you, but Always Take the Credit

Use the wisdom, knowledge, and legwork of other people to further your own cause. Not only will such assistance save you valuable time and energy, it will give you a godlike aura of efficiency and speed. In the end your helpers will be forgotten and you will be remembered. Never do yourself what others can do for you.

Law 8

Make other People come to you – use Bait if Necessary

When you force the other person to act, you are the one in control. It is always better to make your opponent come to you, abandoning his own plans in the process. Lure him with fabulous gains – then attack. You hold the cards.

Law 9

Win through your Actions, Never through Argument

Any momentary triumph you think gained through argument is really a Pyrrhic victory: The resentment and ill will you stir up is stronger and lasts longer than any momentary change of opinion. It is much more powerful to get others to agree with you through your actions, without saying a word. Demonstrate, do not explicate.

Law 10

Infection: Avoid the Unhappy and Unlucky

You can die from someone else’s misery – emotional states are as infectious as disease. You may feel you are helping the drowning man but you are only precipitating your own disaster. The unfortunate sometimes draw misfortune on themselves; they will also draw it on you. Associate with the happy and fortunate instead.

Law 11

Learn to Keep People Dependent on You

To maintain your independence you must always be needed and wanted. The more you are relied on, the more freedom you have. Make people depend on you for their happiness and prosperity and you have nothing to fear. Never teach them enough so that they can do without you.

Law 12

Use Selective Honesty and Generosity to Disarm your Victim

One sincere and honest move will cover over dozens of dishonest ones. Open-hearted gestures of honesty and generosity bring down the guard of even the most suspicious people. Once your selective honesty opens a hole in their armor, you can deceive and manipulate them at will. A timely gift – a Trojan horse – will serve the same purpose.

Law 13

When Asking for Help, Appeal to People’s Self-Interest, Never to their Mercy or Gratitude

If you need to turn to an ally for help, do not bother to remind him of your past assistance and good deeds. He will find a way to ignore you. Instead, uncover something in your request, or in your alliance with him, that will benefit him, and emphasize it out of all proportion. He will respond enthusiastically when he sees something to be gained for himself.

Law 14

Pose as a Friend, Work as a Spy

Knowing about your rival is critical. Use spies to gather valuable information that will keep you a step ahead. Better still: Play the spy yourself. In polite social encounters, learn to probe. Ask indirect questions to get people to reveal their weaknesses and intentions. There is no occasion that is not an opportunity for artful spying.

Law 15

Crush your Enemy Totally

All great leaders since Moses have known that a feared enemy must be crushed completely. (Sometimes they have learned this the hard way.) If one ember is left alight, no matter how dimly it smolders, a fire will eventually break out. More is lost through stopping halfway than through total annihilation: The enemy will recover, and will seek revenge. Crush him, not only in body but in spirit.

Law 16

Use Absence to Increase Respect and Honor

Too much circulation makes the price go down: The more you are seen and heard from, the more common you appear. If you are already established in a group, temporary withdrawal from it will make you more talked about, even more admired. You must learn when to leave. Create value through scarcity.

Law 17

Keep Others in Suspended Terror: Cultivate an Air of Unpredictability

Humans are creatures of habit with an insatiable need to see familiarity in other people’s actions. Your predictability gives them a sense of control. Turn the tables: Be deliberately unpredictable. Behavior that seems to have no consistency or purpose will keep them off-balance, and they will wear themselves out trying to explain your moves. Taken to an extreme, this strategy can intimidate and terrorize.

Law 18

Do Not Build Fortresses to Protect Yourself – Isolation is Dangerous

The world is dangerous and enemies are everywhere – everyone has to protect themselves. A fortress seems the safest. But isolation exposes you to more dangers than it protects you from – it cuts you off from valuable information, it makes you conspicuous and an easy target. Better to circulate among people find allies, mingle. You are shielded from your enemies by the crowd.

Law 19

Know Who You’re Dealing with – Do Not Offend the Wrong Person

There are many different kinds of people in the world, and you can never assume that everyone will react to your strategies in the same way. Deceive or outmaneuver some people and they will spend the rest of their lives seeking revenge. They are wolves in lambs’ clothing. Choose your victims and opponents carefully, then – never offend or deceive the wrong person.

Law 20

Do Not Commit to Anyone

It is the fool who always rushes to take sides. Do not commit to any side or cause but yourself. By maintaining your independence, you become the master of others – playing people against one another, making them pursue you.

Law 21

Play a Sucker to Catch a Sucker – Seem Dumber than your Mark

No one likes feeling stupider than the next persons. The trick, is to make your victims feel smart – and not just smart, but smarter than you are. Once convinced of this, they will never suspect that you may have ulterior motives.

Law 22

Use the Surrender Tactic: Transform Weakness into Power

When you are weaker, never fight for honor’s sake; choose surrender instead. Surrender gives you time to recover, time to torment and irritate your conqueror, time to wait for his power to wane. Do not give him the satisfaction of fighting and defeating you – surrender first. By turning the other cheek you infuriate and unsettle him. Make surrender a tool of power.

Law 23

Concentrate Your Forces

Conserve your forces and energies by keeping them concentrated at their strongest point. You gain more by finding a rich mine and mining it deeper, than by flitting from one shallow mine to another – intensity defeats extensity every time. When looking for sources of power to elevate you, find the one key patron, the fat cow who will give you milk for a long time to come.

Law 24

Play the Perfect Courtier

The perfect courtier thrives in a world where everything revolves around power and political dexterity. He has mastered the art of indirection; he flatters, yields to superiors, and asserts power over others in the mot oblique and graceful manner. Learn and apply the laws of courtiership and there will be no limit to how far you can rise in the court.

Law 25

Re-Create Yourself

Do not accept the roles that society foists on you. Re-create yourself by forging a new identity, one that commands attention and never bores the audience. Be the master of your own image rather than letting others define if for you. Incorporate dramatic devices into your public gestures and actions – your power will be enhanced and your character will seem larger than life.

Law 26

Keep Your Hands Clean

You must seem a paragon of civility and efficiency: Your hands are never soiled by mistakes and nasty deeds. Maintain such a spotless appearance by using others as scapegoats and cat’s-paws to disguise your involvement.

Law 27

Play on People’s Need to Believe to Create a Cult-like Following

People have an overwhelming desire to believe in something. Become the focal point of such desire by offering them a cause, a new faith to follow. Keep your words vague but full of promise; emphasize enthusiasm over rationality and clear thinking. Give your new disciples rituals to perform, ask them to make sacrifices on your behalf. In the absence of organized religion and grand causes, your new belief system will bring you untold power.

Law 28

Enter Action with Boldness

If you are unsure of a course of action, do not attempt it. Your doubts and hesitations will infect your execution. Timidity is dangerous: Better to enter with boldness. Any mistakes you commit through audacity are easily corrected with more audacity. Everyone admires the bold; no one honors the timid.

Law 29

Plan All the Way to the End

The ending is everything. Plan all the way to it, taking into account all the possible consequences, obstacles, and twists of fortune that might reverse your hard work and give the glory to others. By planning to the end you will not be overwhelmed by circumstances and you will know when to stop. Gently guide fortune and help determine the future by thinking far ahead.

Law 30

Make your Accomplishments Seem Effortless

Your actions must seem natural and executed with ease. All the toil and practice that go into them, and also all the clever tricks, must be concealed. When you act, act effortlessly, as if you could do much more. Avoid the temptation of revealing how hard you work – it only raises questions. Teach no one your tricks or they will be used against you.

Law 31

Control the Options: Get Others to Play with the Cards you Deal

The best deceptions are the ones that seem to give the other person a choice: Your victims feel they are in control, but are actually your puppets. Give people options that come out in your favor whichever one they choose. Force them to make choices between the lesser of two evils, both of which serve your purpose. Put them on the horns of a dilemma: They are gored wherever they turn.

Law 32

Play to People’s Fantasies

The truth is often avoided because it is ugly and unpleasant. Never appeal to truth and reality unless you are prepared for the anger that comes for disenchantment. Life is so harsh and distressing that people who can manufacture romance or conjure up fantasy are like oases in the desert: Everyone flocks to them. There is great power in tapping into the fantasies of the masses.

Law 33

Discover Each Man’s Thumbscrew

Everyone has a weakness, a gap in the castle wall. That weakness is usual y an insecurity, an uncontrollable emotion or need; it can also be a small secret pleasure. Either way, once found, it is a thumbscrew you can turn to your advantage.

Law 34

Be Royal in your Own Fashion: Act like a King to be treated like one

The way you carry yourself will often determine how you are treated; In the long run, appearing vulgar or common will make people disrespect you. For a king respects himself and inspires the same sentiment in others. By acting regally and confident of your powers, you make yourself seem destined to wear a crown.

Law 35

Master the Art of Timing

Never seem to be in a hurry – hurrying betrays a lack of control over yourself, and over time. Always seem patient, as if you know that everything will come to you eventually. Become a detective of the right moment; sniff out the spirit of the times, the trends that will carry you to power. Learn to stand back when the time is not yet ripe, and to strike fiercely when it has reached fruition.

Law 36

Disdain Things you cannot have: Ignoring them is the best Revenge

By acknowledging a petty problem you give it existence and credibility. The more attention you pay an enemy, the stronger you make him; and a small mistake is often made worse and more visible when you try to fix it. It is sometimes best to leave things alone. If there is something you want but cannot have, show contempt for it. The less interest you reveal, the more superior you seem.

Law 37

Create Compelling Spectacles

Striking imagery and grand symbolic gestures create the aura of power – everyone responds to them. Stage spectacles for those around you, then full of arresting visuals and radiant symbols that heighten your presence. Dazzled by appearances, no one will notice what you are really doing.

Law 38

Think as you like but Behave like others

If you make a show of going against the times, flaunting your unconventional ideas and unorthodox ways, people will think that you only want attention and that you look down upon them. They will find a way to punish you for making them feel inferior. It is far safer to blend in and nurture the common touch. Share your originality only with tolerant friends and those who are sure to appreciate your uniqueness.

Law 39

Stir up Waters to Catch Fish

Anger and emotion are strategically counterproductive. You must always stay calm and objective. But if you can make your enemies angry while staying calm yourself, you gain a decided advantage. Put your enemies off-balance: Find the chink in their vanity through which you can rattle them and you hold the strings.

Law 40

Despise the Free Lunch

What is offered for free is dangerous – it usually involves either a trick or a hidden obligation. What has worth is worth paying for. By paying your own way you stay clear of gratitude, guilt, and deceit. It is also often wise to pay the full price – there is no cutting corners with excellence. Be lavish with your money and keep it circulating, for generosity is a sign and a magnet for power.

Law 41

Avoid Stepping into a Great Man’s Shoes

What happens first always appears better and more original than what comes after. If you succeed a great man or have a famous parent, you will have to accomplish double their achievements to outshine them. Do not get lost in their shadow, or stuck in a past not of your own making: Establish your own name and identity by changing course. Slay the overbearing father, disparage his legacy, and gain power by shining in your own way.

Law 42

Strike the Shepherd and the Sheep will Scatter

Trouble can often be traced to a single strong individual – the stirrer, the arrogant underling, the poisoned of goodwill. If you allow such people room to operate, others will succumb to their influence. Do not wait for the troubles they cause to multiply, do not try to negotiate with them – they are irredeemable. Neutralize their influence by isolating or banishing them. Strike at the source of the trouble and the sheep will scatter.

Law 43

Work on the Hearts and Minds of Others

Coercion creates a reaction that will eventually work against you. You must seduce others into wanting to move in your direction. A person you have seduced becomes your loyal pawn. And the way to seduce others is to operate on their individual psychologies and weaknesses. Soften up the resistant by working on their emotions, playing on what they hold dear and what they fear. Ignore the hearts and minds of others and they will grow to hate you.

Law 44

Disarm and Infuriate with the Mirror Effect

The mirror reflects reality, but it is also the perfect tool for deception: When you mirror your enemies, doing exactly as they do, they cannot figure out your strategy. The Mirror Effect mocks and humiliates them, making them overreact. By holding up a mirror to their psyches, you seduce them with the illusion that you share their values; by holding up a mirror to their actions, you teach them a lesson. Few can resist the power of Mirror Effect.

Law 45

Preach the Need for Change, but Never Reform too much at Once

Everyone understands the need for change in the abstract, but on the day-to-day level people are creatures of habit. Too much innovation is traumatic, and will lead to revolt. If you are new to a position of power, or an outsider trying to build a power base, make a show of respecting the old way of doing things. If change is necessary, make it feel like a gentle improvement on the past.

Law 46

Never appear too Perfect

Appearing better than others is always dangerous, but most dangerous of all is to appear to have no faults or weaknesses. Envy creates silent enemies. It is smart to occasionally display defects, and admit to harmless vices, in order to deflect envy and appear more human and approachable. Only gods and the dead can seem perfect with impunity.

Law 47

Do not go Past the Mark you Aimed for; In Victory, Learn when to Stop

The moment of victory is often the moment of greatest peril. In the heat of victory, arrogance and overconfidence can push you past the goal you had aimed for, and by going too far, you make more enemies than you defeat. Do not allow success to go to your head. There is no substitute for strategy and careful planning. Set a goal, and when you reach it, stop.

Law 48

Assume Formlessness

By taking a shape, by having a visible plan, you open yourself to attack. Instead of taking a form for your enemy to grasp, keep yourself adaptable and on the move. Accept the fact that nothing is certain and no law is fixed. The best way to protect yourself is to be as fluid and formless as water; never bet on stability or lasting order. Everything changes.


Monday, 8 March 2010

Trust

In game theory, you do not simply trust someone because they agree with you on a plan. You trust them because it is in their self-interest to help you.

Think ahead and reason backwards. Sketch a game tree and construct ranking outcomes. If the outcome is not desirable, think about how to change the game (change contractual terms, change the order of moves).

You can win by exploiting conflict among weaker members.

Consolidate your strength by forcing others to act sequentially (prevent others from co-ordinating).

It is always better to be on the attack because you can decide on time and place and the form of attack. It is first-mover advantage. First-mover advantage does not exist where a subsequent bidder can undercut your bid.


Negotiating a pay rise at your current job

Negotiating a pay rise at your current job

Negotiating isn't always about what you can do but rather what other's can't do.

To demonstrate your value (and what others can't do) is to withhold supply. In other words, working less or producing less if you are truly in a position of power. Working longer and harder isn't always the best negotiating tactic.

Therefore take those long extended holidays or many sick days. Your employer will notice that things are falling apart at work in your absence. When you return, quickly remedy all the problems that occurred while you were absent. This will impress upon your employer that you are invaluable.


Negotiating salary for a new job
Always let the interviewer reveal the salary. Do not be the one to initiate a salary negotiation.

When the interviewer does bring up the question of desired salary, try to reflect the question back to them by asking what the employer is expecting to pay someone with your qualifications/experience.

My favourite reply is:
Regarding my expected salary, I envisage that a more appropriate time to discuss this matter would be during or after my meeting with [NAME OF SUPERVISOR], when we have reached a meeting of the minds. However, I have no doubt that a prestigious firm such as [NAME OF FIRM] would be offering a competitive package consistent with the market for a person with my experience, background and technical skills.

Alternatively, you can deflect the question with this:
I am much more interested in doing [TYPE OF WORK] here at [NAME OF FIRM] than I am in the size of the initial offer.
If the question is repeated, then be more direct with this reply which is a stalling tactic:
I will consider any reasonable offer

If the question is repeated once more, then everyone is knows they're playing the game. So reply with this:
You are in a much better position to know how much I'm worth to you than I am.

If this does not work, provide a relatively large salary range that you are comfortable with.

Do not disclose your past or present salary as this reduces your negotiating power.

If the offer is too low, then tell them its too low but do not say by how much. Your only response to any counteroffer is OK or higher, until they break off negotiations.

When a salary offer is on the table, do not say yes immediately. At least 1 day to think it over.

Negotiate for more.

When there is agreement on salary, then it must be put in writing, disclosing everything from the salary to the benefits (insurance, holiday leave, etc) you will be receiving.


Salary counteroffers

Over 85% of employees who accept a counteroffer from their current employer (as opposed to going to a new employer) leave their current employer within a year.

Employers provide counteroffers to keep employees around temporarily until they can prepare to replace them when they ultimately do leave.

If you must accept a counteroffer, ensure that the counteroffer is in writing. After an employee verbally accepts a counteroffer, they lose their negotiating power. This is because after accepting, the employee's only remaining option is to leave. To mitigate this risk, the employee will need to make the conditions of the counteroffer as public as possible (tell friends, co-workers, managers) so it would be embarrassing for the employer to reneg on them.

Discovering average salary without disclosing your own to another

To determine the average salary among a group of friends, you need to encode your own salary by adding a random number to it. These encoded salaries are added together and the random numbers are subtracted.

Example:
Salary A = $50,000
Salary B = $55,000
Salary C = $53,000

A adds 25,776 (random number) to his salary ($50,000) and provides the sum to B. $75,776
B adds 15,899 (random number) to his salary ($55,000) and provides the sum to C. $146,675
C adds 13,499 (random number) to his salary ($53,000) and provides the sum to A. $213,174

A subtracts his random number (25,776) from the sum received from C ($213,174) and provides the result to B. $187,398
B subtracts his random number (15,899) from the sum received from A ($187,398) and provides the result to C. $171,499
C subtracts his random number (13,499) from the sum received from B ($171,499) and provides the end result to everyone. $158,000

($50,000 + $55,000 + $53,000) / 3 = $52,667.

But strategy this requires everyone to be truthful! Participants need to be guaranteed some useful information so they want to participate. Participants need to be given a reason to be honest or else whey will free ride on other people's honesty. The process should be anonymous so that no one fears revealing their personal salary to others face to face.

Transfer pricing to minimise tax


International transfer pricing is also known as profit up-streaming. It is a strategy of moving profits from a high tax jurisdiction (Australia/New Zealand) to a low tax jurisdiction (Singapore/Hong Kong).

Services may be performed by a service provider in Hong Kong for a client in Australia. No work is performed in Australia, and if any income is received by an Australian entity a corresponding charge by the Hong Kong entity to the Australian entity as a supplier should match to minimise any tax liability in Australia. In other words, the Australian entity should have little or no profit to declare to the Australian Tax Office.

The
Hong Kong corporate tax rate is 16.5%. But the individual tax rate is only 0 - 15%. The Singapore corporate tax rate is 17%. Individual tax rate is 3.5 - 20%.

You can effectively pay less than 10% tax if you income split between your branch offices in Hong Kong and Singapore. This would provide a great competitive edge against Australian firms as you avoid GST (10%) and income tax (45%) and therefore could charge 50% less than Australian firms and maintain the same profit margin as they do.

Furthermore, technology costs and labour costs are much cheaper in Asia than in Australia. There is no payroll tax and the MPF is much less than the 9% superannuation required in Australia.

Thursday, 4 March 2010

Bought too much for your business

Bought too much for your business? Not to fret, simply donate the excess to charity (either give it away or use it as a prize for a raffle), and claim it as a tax deduction. No need to take a loss on it.

Monday, 22 February 2010

Options for Skype

3 Skypephone

You can use a 3 Skypephone so you don't have to be at home to make a free call using Skype. The only cost is the purchase of the 3 Skypephone and leaving a small credit balance (which may never be used). The 3 Skypephone allows you to make free Skype calls to anyone on Skype including other people using a 3 Skypephone. The 3 Skypephone will use the Three (3) network and therefore it basically functions as a mobile phone so you don't need to be near an Internet connection with a traditional Skype phone.

HK$1,216 - 3 Skypephone
HK$30 - monthly fee every 30 days
Local voice call (non-Skype) HK$0.30 per minute (usually HK$0.70 per minute for normal phone plans)


Pamela for Skype
This is great software for a small business if you are already have your own Skype number. Pamela provides the following important telephone functions for a small business:
  • answering machine
  • call recording
  • contact personalisation
  • e-mail forwarding
  • video recording
  • chat recording

The Business Edition has all the features and costs US$40.81 to purchase.

Other answering machine software for Skype include:
  • Skype Answering Machine (SAM) by KishKish Products
  • CallButler
  • PrettyMay Call Recorder

Skype phone (no PC required)
RTX Dualphone 3088 is HK$1,055 (I bought it for HK$930 in April 2008 and AU$283.15 in July 2007)
RTX Dualphone 3088 additional handset HK$655

Saving telecommunications cost

The main reason I have a fixed line telephone at home is 'cos sometimes I need to send faxes. PCCW charges me HK$88/month for the fixed line telephone.

PamFax
But now you can use PamFax (free to download) and pay only when you use it. The cost is HK$0.983 per page to send in Hong Kong, Australia, Singapore, etc which are the main places I ever would send a fax to. You simply scan in the document you want to fax first, and then use PamFax to actually have it faxed to a fax number.

Voice Calls
I use Skype for long distance calls with relatives in Australia which is free for Skype to Skype. However, if the Internet were to go down, I would still be contactable via mobile phone. Its free to receive calls on the mobile phone. But to call internationally using a mobile phone would be:
  • HK$5.12/minute on Three (3).
  • HK$7.15/minute on PCCW IDD 001
  • HK$1.99/minute on PCCW 0060
  • HK$4.98/minute to an Australian mobile phone on PCCW 0060

Skype
To save money on voice calls, you can use SkypeOut instead which is charged at:
  • HK$0.166/minute to an Australian fixed telephone.
  • HK$1.609/minute to an Australian mobile phone.
  • HK$0.166/minute to a Hong Kong fixed telephone or mobile phone.
The connection fee (flagfall) for each call is: HK$0.39 (to Australia, Hong Kong, Singapore).

You purchase Skype Credit. Minimum purchase amount is HK$100.
which is active for 180 days after the last use. Therefore you need to make a SkypeOut call at least once every 6 months (which isn't very hard to do).

Assuming you make 5 minute telephone calls:
HK$100 credit equates to $100 / ($0.39 + (5 X $0.166)) = 81 telephone calls.


"Unlimited World" plan with Skype
If you make alot of voice telephone calls, then you can use the "Unlimited World" plan offered by Skype which is HK$99.95 per month (landline & mobiles in Hong Kong, landline in Australia and many other countries).

HK$1,019.45 - Unlimited World (with 15% discount for annual plan)

You need to talk more than 4,045 minutes per month to an Australian fixed telephone to make this worthwhile.


"Unlimited Country" plan with Skype
If you don't call many countries and only specific countries, then you can use the "Unlimited Country" plan.

HK$468.65 - Unlimited Country (choose Hong Kong with 15% discount for annual plan)

You need to talk more than 2,823 minutes per month to an Hong Kong telephones to make this worthwhile.


Skype Online Number
For people to call your Skype phone who don't use Skype themselves, you can get a Skype Online Number for HK$150 per 3 months (usual price) or HK$450 per year ($37.50 per month). If you get an "Unlimited Country" or "Unlimited World" subscription plan, then the price for the Skype Online Number is HK$225 per year.

HK$225 - Skype Online Number (so other non-Skype people can call you). This is a 50% discount off the regular price because you bundle it with "Unlimited Country" or "Unlimited World" subscription plan.

The Skype Online Number can be an Australian telephone number and not necessarily a Hong Kong telephone number.


Cost for complete replacement of services from PCCW fixed telephone
For a complete replacement of services from PCCW fixed telephone to Skype you would need:
HK$468.65 - Unlimited Country (choose Hong Kong)
HK$225 - Skype Online Number
HK$693.65 - TOTAL per year ($57.81 per month)


My strategy
Pay for use only. I only pay when I need to send a fax, and only pay when I need to make a voice call since it is highly unlikely I will use more than 2,823 voice minutes per month especially when there are free minutes offered under a mobile phone subscription plan.

Pay per use:
HK$0.983 - per page to send a fax anywhere
HK$0.021 - per minute to Sydney fixed telephone
HK$0.203 - per minute to an Australian mobile phone.
HK$0.166 - per minute to Hong Kong fixed telephone or mobile phone

The only inconvenience would be non-Skype people trying to call you. However, our relatives in Australia all use Skype and have our mobile phone numbers (in case of emergency). Our friends in Hong Kong generally call our mobile phone numbers. Therefore, there seems no need to get a Skype Online Number.


Conclusion
Therefore there is no need to pay the fixed amount of HK$88/month for a fixed line telephone (free local calls only) when you can use a pay per use service for sending faxes anywhere in the world, and you can use Skype and your existing mobile phone plan to make/receive voice telephone calls.

For people who call you often (especially from overseas), its better that you simply buy them a Skype phone assuming they already have broadband Internet.

Sunday, 21 February 2010

Best home loan in Hong Kong

Just found out today Bank of China is offering 2.05% for a deposit-linked home loan with 0.7% cash rebate.

Wednesday, 17 February 2010

Long term investment theme on technology

There is currently a shift from desktop computing to mobile computing. Whereas the 1990s to date have been about providing a computer in every home with an Internet connection, the next decade is going to be about providing computing power in the pockets of everybody.

Leading the charge is Google which attempts to do the heavy computation in the "cloud". Basically turning the mobile phone into a thin-client display device and input device. NASDAQ:GOOG is currently $539.01 a share (all time high was in 7 December 2007 at $714.87). They provide an open mobile platform (Android operating system) and many useful basic applications such as Gmail, Google Maps Navigation, Google Goggles, Google Voice, Google Translate, Google Latitude, YouTube and of course, their search engine.

I'd pin my hopes on Google with their many mobile applications rather than a one trick pony like Facebook which could be made extinct at any moment by a better social networking application (cf: the quick death of MySpace) and the new kid on the block from Google called Google Buzz.

Eric Schmidt said "Now our programmers are doing work on mobile first, and that is in fact a change ... [our] top programmers want to work on those [mobile] apps," he said.
Schmidt predicted that in three years, if not sooner, smartphones would pass global PC sales - "a remarkable achievement".

However, another investment theme could focus on the hardware side. Qualcomm make the Snapdragon ARM processor which seems to be used by many handset manufacturers using the Android platform. Unlike Apple's closed system which uses the Apple A4 chip, I believe because of the openness of Android and with the support of Google, that Android based mobile phones will become dominant in the market eventually when it becomes more idiot friendly and Apple iPhone users start to churn over. NASDAQ:QCOM is currently $39.43 a share (all time high was in 31 December 1999 at $88.06).

Also, the touchscreens are an important component in these mobile phones. Projective Capacitive Touch (PCT) technology is the hot stuff right now.


Thursday, 11 February 2010

Where to live for various phases of your life

School Age until University
Australia. Education is free (except for private schools). Public healthcare is free (or inexpensive for private health insurance). Large amounts of land/space at relatively low cost.


Working Age
Asia. Tax rate is low. Salary is higher for the same job compared to Australia. Vibrant nightlife and shopping until late. Cheap travel to other countries.


Roughly speaking:
Australia -> 4 - 21 years old
Asia -> 22 - 35 years old
Australia (when your children are primary school age) -> 36 - 52 years old

While working in Asia, remember to buy investment property in Australia to accrue negative gearing tax credits.

Before returning to Australia, sell your investment properties to reduce the amount of tax payable under capital gains tax. i.e. sell 1 property each financial year. Sell enough such that there would be no loan balance outstanding on your primary residence. Only 50% of the capital gain is taxable if the asset has been owned over 1 year, and there would be no other Australian income to push you into the higher Australian tax brackets while you are currently working in Asia. Keep the cash in AUD$ if you are worried about currency fluctuation and reduce the loan principal (or put into an offset account) of your primary residence.

Upon return to Australia, use the accrued tax credits to offset Australian salary income. Use the capital gains from the sale of your investment properties to eliminate any loan on your primary residence (because interest on a home loan for your primary residence is not tax deductible). Any surplus cash can be used to purchase a new investment property (for more negative gearing), or shares using a margin loan (for negative gearing). Only borrow money if the interest is tax deductible. Alternatively, any surplus cash can be left overseas for foreign investments that are unknown/untraceable by the Australian Tax Office.

Salary sacrifice into superannuation after all the accrued tax credits have been depleted to reduce your taxable income. Use a self-managed superannuation fund to purchase investment property or shares for your retirement. Do not pay fees/commissions to a fund manager.

Tuesday, 9 February 2010

Differences in schooling between Australia and Asia

University
Assuming the goal is to have your children study at a University, then the FEE-HELP system offered in Australia is the most cost-effective. FEE-HELP defers the upfront costs of attending university and is paid back later by the child when they start to earn income and is not means-tested to be eligible. If their salary is > $43,151 they starting paying back their FEE-HELP loan to the government at 4% per year. The maximum repayment is 8% when they start earning > $80,137.

The lifetime loan limit for FEE-HELP is $85,062 for 2010 (higher limit for medicine, dentistry). For example, a 4 year Bachelor of Laws undergraduate degree at the University of Technology Sydney will roughly cost $35,424 in university fees. (192 credit points X $184.50) You must be an Australian citizen or permanent resident of Australia AND be a New Zealand citizen to be eligible.

Such a scheme is not offered in Asia. Attendance at a university in Asia requires upfront payment of fees. For example, at the University of Hong Kong, a 4 year Bachelor of Laws undergraduate degree incurs tuition fees for HK$42,100 X 4 = HK$168,400 = AU$24,680

Therefore attending an Australian university if you are an Australian citizen is not a difficult choice to make. Even though it may cost less to obtain a similar university degree in Asia, you must determine whether it is of the same quality and whether there are enough places to gain a place or if the entry mark is too high.

High School
Countries have both public high schools and private high schools. Public high schools are generally free while private high schools are not.

Private High School in Hong Kong versus Private High School in Australia

Australian International School in Hong Kong
Year 7 - HK$106,600 + HK$12,000 (capital levy) = HK$118,600
Year 8 - HK$118,600
Year 9 - HK$118,600
Year 10 - HK$118,600
Year 11 - HK$112,000 + HK$12,000 (capital levy) = HK$124,000
Year 12 - HK$124,000
Total: HK$722,400

English Schools Foundation (ESF) - Shatin College, New Territories
Year 7 - HK$89,250
Year 8 - HK$89,250
Year 9 - HK$89,250
Year 10 - HK$89,250
Year 11 - HK$89,250
Year 12- HK$89,250
Total: HK$535,500 (25.8% cheaper than the Australian International School)

Many schools in Hong Kong are Direct Subsidy Scheme (DSS) schools. They can set their own schools fees (usually HK$3,000 - $110,000 per year) and receive some government funding. A list of DSS schools in Hong Kong is found here:


Sydney Grammar in Australia
Year 7 - AU$24,318
Year 8 - AU$24,318
Year 9 - AU$24,318
Year 10 - AU$24,318
Year 11 - AU$24,318
Year 12 - AU$24,318
Total: AU$145,908 = HK$996,665


Public High Schools - Hong Kong

In Hong Kong, there are comprehensive public schools. Only 112 of 400 government-funded high schools are allowed to conduct classes in English. These are referred to as English Medium Secondary Schools. Funnily enough these English Medium Secondary Schools are also the best performing government-funded high schools. However, even in English Medium Secondary Schools, many instructions to students are given in Cantonese.

Therefore comprehensive public schools are not an option for someone seeking future study in an Australian university (which is taught in English).

Public High Schools - Australia

In NSW, there are public high schools which are Selective High Schools. The students who attend these type of public high schools must pass a Selective High School Placement Test when they are in Year 6 and therefore must be of high academic ability if they are offered a place. There are 3,533 vacancies for Year 7 in Selective High Schools and each year there are approximately 13,336 applicants. This represents a 26.4% chance.

In 2009, the top 5 Selective High Schools that accept boys based on their minimum entry score were:
1) James Ruse Agricultural High School (241/300 - 80.3%)
2) North Sydney Boys High School (223/300 - 74.3%)
3) Sydney Boys High School (219/300 - 73%)
4) Baulkham Hills High School (216/300 - 72%)
5) Fort Street High School or Normanhurst Boys High School (213/300 - 71%)

Why choose a Selective High School? For example, 50% of Year 12 students at James Ruse Agricultural High School accept university places for studying medicine and law.

Therefore attending a Selective High School is not a difficult choice to make. It is far cheaper than attending a private high school and your child has a far higher chance of being admitted to an Australian university course with a high cut-off entry mark than if they attended a comprehensive public school.