Kansas City Southern – A Prime Target for Takeover

Kansas City Southern Inc (KSU) is the smallest of the North American railroad companies operating approximately 6,500 miles of rail network, serving business centers in south central US and Mexico.

The railroad industry is facing pressure to collapse in traffic in coal and petroleum products. This has caused companies to entertain the thought of M&A. KSU remains uniquely positioned with a great rail network and seamless access to the Mexican market – a region seeing higher industrial/manufacturing activity over the years in North America. A smaller company with a market cap of under $10B, makes KSU a great takeover target from any of the larger railroad operators. With a low starting yield of 1.5% and low payout ratio of 27%, there is plenty of room for those dividends to grow. Is this company a buy now?

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Alternative Investments – Supplemental Pension Plan

Alternative Investments can provide lucrative returns that are unavailable by investing in the stock or bond market. In earlier posts, I profiled alternative investments in the following categories: farmland, rooftop solar system, private equity, collectibles, real estate, gold and P2P lending. In this article I profile a different form of alternative investment – Supplemental Pension Plans.

Note that a popular alternative to buying supplemental pension plan is to buy annuities from private companies – most likely insurance companies. Most private insurance companies have annuity products that may suit your needs. Of course, the setup is slightly different (otherwise it would simply be called a ‘pension plan’). With annuities, you deposit a lump sum of money and the insurance company agrees to pay you a guaranteed income for a set period of time or life. But in this article, we look at supplemental pension plans instead – as an alternative investment.

This blog is dedicated to achieving financial freedom that is achieved by saving regularly and investing in appreciating assets to generate passive income. This is done by investing in companies (equities), government bonds (fixed income) and other forms available. In essence, my plan is to build my own pension to fund my retirement. However, there may be other options available depending on your country of residence.

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Don’t Focus on Net Worth

As part of personal development and financial education, one of my long term goals is to learn constantly and make better decisions as I mature. As investors, we all strive to take emotion out of our decisions, yet most of us fail and panic when there is a market crash eroding our wealth. Over the course of last six years, we have had an amazing bull market run and it has been extremely easy to make great investment returns. While this is all well and good, we need to take a pause from patting ourselves on the back and prepare for the next downturn.

The Net Worth

The market always moves in cycles. A downturn is around the corner and sooner or later, we will hit a new recession and the economic cycle will have come a full circle since the financial crisis of 2008/09. Preparing emotionally and financially are key to surviving the market turmoils. One key area that I have been thinking more about is the total net worth. My total net worth is something that I have never shared on this blog, and dont intend to – as it changes on a day to day basis considering most of my wealth is tied to the stock, bond, commodity, forex and housing markets. I do share a breakdown of how my net worth is divided and is represented in the chart below.

Net Worth - Oct 2015

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Chatter Around the World – 122

Chatter Around the World is a curated weekly update of articles related to economics, investing, dividends and personal finance. In these weekly updates, I also capture my blog updates and news related to my portfolio holdings.

China-5yrPlans

China’s Five Year Plans

Image Source: Bloomberg

Let’s dive into the links that caught my attention this week.

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A Closer Look at Apple Services

Apple

Apple Inc (AAPL) is a global behemoth. In true tech-industry fashion, Apple has grown by leaps and bounds over the course of last few years and is now the most valuable company in the world. Much has been written about the legendary design and the Apple products – but one segment that does not get a lot of love from investors, although it might turn out to be one of the most important ones in the future – Apple Services segment. As technological revolution in hardware appearing to plateau, some authors and analysts have hinted at Apple looking to turn into a service-based software company rather than the hardware focus that it now remains. This article takes a closer look at Apple Services.

Apple’s Business Segments

The major business segments as of today are listed below. The major reported segments change over time as products rise and fall due to demand.

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