The Ricks Report
August 7, 2017
Fixed Indexed Annuities used in the appropriate way can be wonderful additions to a well-rounded retirement plan. These tools give their owners opportunity to capture positive gains in market indexes while having protection from market downturns. I am including in this email a brochure for such a product from Nationwide to give you all a better understanding on how these contracts work. I want to show you these brochures because I believe they clearly display the power of a Fixed Indexed Annuity, when compared to the old “buy and hold” style of investing in the market, during great and terrible periods. I want to be clear in that I am not recommending this specific annuity to the reader, as an in-depth conversation is needed to determine what type of portfolio setup is appropriate for each individual client, but this should give you all a good starting point to understand the basics of how an annuity may benefit your retirement planning. Please give my office a call if you are interested in learning more about how these tools work and how one may benefit you.
Numbers of $ignificance
- TOO MANY IN JUST A SMALL FRACTION – Of the 524 bank failures that have occurred in the USA during the 10 years ending 6/30/17, more than half have occurred in just 4 states. 51% of the total bank failures (269) have taken place in Georgia (92), Florida (72), Illinois (65) and California (40). 9 US states had zero bank failures in the last 10 years (source: Federal Deposit Insurance Corporation).
- LESS THAN HALF IN UNDER A DECADE – There were 98 million out-of-work Americans as of 7/31/17. There were 14.60 million out-of-work Americans as of 7/31/09 (source: Department of Labor).
- LARGE PORTION RECEIVING BENEFITS– 19% of the US population is currently receiving a monthly benefit payment from Social Security, i.e., 61 million out of 326 million Americans (source: Social Security).
Winning at Life with Gregory Ricks
Tune in every weeknight from 7:00 pm to 8:00 pm and every Saturday from 10:00 am to 1:00 pm! We are now on News Talk 99.5 WRNO and News Talk 104.9 WBUV, as well as Facebook LIVE, Periscope (GregoryRicks) and the iHeart app. Gregory Ricks and James Parker will be live in studio talking about some great current events and financial solutions. This week’s guest will be Wes Blanchard, Estate Planning Attorney and member of the Total Wealth Authority. Remember, you can listen from any smartphone or computer through iHeartRadio.
Who’s been buying shares of company stock?
Since the start of the bull market in 2009, U.S. companies have been buying their own stock. Stock buybacks peaked during the first three quarters of 2016 and have dropped off sharply since then, reports Financial Times citing a report from Goldman Sachs.
Companies participate in stock buyback (a.k.a. share repurchase) programs to improve shareholder value. For example, if company management believes a company’s shares are undervalued, it can buy shares on the stock market or offer shareholders a fixed price to purchase their shares. This reduces the number of shares in the marketplace and increases earnings per share, which has the potential to boost the company’s stock price.
The slowdown in stock buybacks hasn’t hurt stock markets. Financial Times reported:
“The slowing pace of companies buying back their own shares has certainly not halted Wall Street’s stellar run so far this year. While there is a reduced tail wind of buybacks helping boost earnings per share via a lower share count, U.S. companies have reported robust year-on-year sales and earnings growth for the recent quarter. That has helped offset the decline in buyback activity, but some warn that the clock is ticking for Wall Street bulls.”
There was no sign of a slowdown in the bull market last week, though. The Department of Labor reported the United States added more new jobs than anyone had expected during July, and the unemployment rate fell to 4.3 percent – the same level as May 2017, which was the lowest in 16 years, according to Barron’s.
Jobs growth was music to many investors’ ears.
Financial Times reported, “U.S. equity indices hovered near record highs – with the Dow Jones Industrial Average touching an all-time peak of 22,089.05 in early trade – with financials bolstered by the rise in yields. European [markets] ended the week on a strong note, helped by a sharp retreat for the euro against the dollar.”
|Data as of 8/4/17||1-Week||Y-T-D||1-Year||3-Year||5-Year||10-Year|
|Standard & Poor’s 500 (Domestic Stocks)||0.2%||10.6%||14.4%||8.5%||12.2%||5.4%|
|Dow Jones Global ex-U.S.||0.6||17.0||17.5||0.8||5.4||-0.4|
|10-year Treasury Note (Yield Only)||2.3||NA||1.5||2.5||1.6||4.7|
|Gold (per ounce)||-0.6||8.5||-7.7||-0.4||-4.8||6.4|
|Bloomberg Commodity Index||-1.4||-4.8||-0.8||-13.3||-10.3||-6.8|
|DJ Equity All REIT Total Return Index||-0.2||6.1||-0.5||9.2||9.6||7.0|
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT Total Return Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance, Barron’s, djindexes.com, London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
Saving Is as Easy As Riding A Bike! If you would like to save more money – for retirement, college tuition, healthcare costs, or some other financial priority – hop on your bike and ride.
As it turns out, riding your bike may help boost your savings. Whether you commute to work on two wheels or cycle around town doing errands, opting for manpower instead of horsepower can help generate some additional savings, according to a source cited by Bankrate.com:
“The average American household spends over $9,000 a year on transportation, making it the second-largest expense after housing…Many families simply take for granted the two-car, driving-to-work arrangement that’s the norm for American households and often don’t consider alternatives like public transportation, carpooling, or biking…That’s a shame, because its status as a major household cost means cutting transportation can radically cut your overall costs and, potentially, increase your ability to save…”
If you are serious about saving, imagine what your finances would look like if you:
- Drove less. AAA reported owning a small car costs about $6,600 a year, while rumbling around in an SUV costs more than $10,000 annually. (The estimate includes fuel, insurance, depreciation, maintenance, fees and licensing, finance charges, and tires.) Eliminating a car could significantly improve your ability to save.
- Cycled more. Not everyone can get by without a car; however, if you bike shorter distances or when the weather is good, then you could qualify for a low mileage discount on your auto insurance.
- Didn’t go to the gym. If you’re riding a bike to work or to run errands, then you probably don’t need spin class. The average gym membership runs $54 a month or almost $650 a year.
- Bought less stuff. Impulse purchases are less tempting when you’re cycling because bike baskets and saddlebags have limited storage space. Who knows how much that could help you save?
In addition to saving money, two-wheeled travel options are likely to improve your fitness and reduce the stress of rush hour driving. Cycling may even eliminate the need for dieting and some medications. Here’s an added bonus: If biking improves your longevity, you may have more time to spend the money you save!
Weekly Focus – Think About It
“Life is like a 10-speed bicycle. Most of us have gears we never use.”
–Charles M. Schultz, Cartoonist
P.S. Please feel free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list, please reply to this e-mail with their e-mail address and we will ask for their permission to be added.
Gregory Ricks & Associates is a Registered Investment Advisor which offers services and charges fees as set forth in Form ADV, a copy of which you should obtain prior to investment. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed herein.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Past performance does not guarantee future results.
* You cannot invest directly in an index
https://www.ft.com/content/c4de73e2-17a1-11e7-9c35-0dd2cb31823a (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/08-07-17_FinancialTimes-Five_Markets_Charts_that_Matter_for_Investors-Footnote_1.pdf)
http://www.barrons.com/articles/july-jobs-report-called-near-perfect-as-payrolls-and-wages-rise-1501850651 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/08-07-17_Barrons-July_Jobs_Report_Called_Near_Perfect_as_Payrolls_and_Wages_Rise-Footnote_4.pdf)
https://www.ft.com/content/b4257d20-78b8-11e7-a3e8-60495fe6ca71 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/08-07-17_FinancialTimes-Dollar_and_Treasury_Yields_Lifted_by_US_Jobs_Data-Footnote_5.pdf)