The Ricks Report
July 24, 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
PROJECTIONS ON SOCIAL SECURITY INCOME – There were 61 million Americans who received Social Security benefits (retirement or disability) in 2016. Social Security’s total income (payroll taxes collected plus interest earnings) amounted to $957 billion last year, $35 billion more than the $922 billion of program expenditures and outlays. Social Security actuaries project the program will have just 5 more years (2017-2021) where total income will exceed expenditures and outlays (source: 2017 Social Security Trustees Report).
- CONSUMERISM AT ITS FINEST – Americans who are at least age 55 account for 42% of consumer spending in the United States today (source: Moody’s Analytics).
- CAREGIVING IS IMMINENT – An estimated 17% of American adults will provide some level of care to their aging parents (e.g., dressing, bathing, feeding or shopping) at some point in their lives (source: Health and Retirement Study).
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. Remember, you can listen from any smartphone or computer through iHeartRadio.
Do we have central banks to thank?
Low interest rates, accommodative monetary policy, and improving economic growth have helped stock markets around the world reach record highs, reports Barron’s:
“…a look around the globe shows the surge of the U.S. market to new peaks to be anything but unique. Major [markets] in Europe and Asia also have been setting records. Even in South Korea, the Kospi closed at a new peak and is up 25 percent from its 52-week low last year, as the global technology rally has proved to be more powerful than the threat of a nuclear-missile launch from North Korea. Last week also saw a record close in the S&P BSE Sensex in India. Japan’s Nikkei is up 25 percent from last August and near a 52-week high (albeit still down 48 percent from its 1989 bubble peak). The Shanghai Composite is a relative laggard, with a 9.6 percent gain from its August lows, bolstered by a 3.7 percent jump over the past five weeks.”
Eventually, central banks are expected to tighten monetary policy by raising interest rates and reducing the size of their balance sheets and that could affect markets. The U.S. Federal Reserve released its Policy Normalization Principles and Plans back in 2014. Last month, Chair Janet Yellen indicated the Fed currently intends to begin normalizing policy during 2017.
U.S. monetary policy isn’t the only phenomenon investors may want to keep an eye on.
Fiscal policy (the steps a government takes to influence its country’s economy) deserves some attention, too. The United States will, once again, hit its legal spending limit (the debt ceiling) this fall. U.S. News reported, “Were the United States to hit its borrowing limit – and thus have to start missing payments and stiffing creditors – there’s no telling the exact consequences, but they wouldn’t be good.”
The bond market does not appear to be confident fiscal policy will proceed smoothly. Barron’s reported, “Yields on T-bills that mature in mid-to-late October jumped relative to surrounding maturities, a sign that the money market saw a risk – however slight – of not getting paid on time.”
|Data as of 7/21/17||1-Week||Y-T-D||1-Year||3-Year||5-Year||10-Year|
|Standard & Poor’s 500 (Domestic Stocks)||0.5%||10.4%||14.2%||7.8%||12.9%||4.8%|
|Dow Jones Global ex-U.S.||0.8||16.0||17.2||0.1||6.5||-1.2|
|10-year Treasury Note (Yield Only)||2.2||NA||1.6||2.5||1.4||5.0|
|Gold (per ounce)||1.5||7.7||-5.5||-1.6||-4.5||6.2|
|Bloomberg Commodity Index||0.4||-5.2||-2.3||-13.8||-10.4||-6.9|
|DJ Equity All REIT Total Return Index||0.7||5.9||-1.4||8.7||10.1||6.4|
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.
So, here’s another college conundrum: College is a hot topic. College is a hot topic. In recent years, pundits have debated whether students should attend college or skip it and start their own companies. The Thiel Fellowship, founded by tech entrepreneur Peter Thiel, offers students $100,000 to do just that.
For students who choose college, much has been made about which degrees will pay off. Some argue liberal arts degrees lack value, and technical instruction is the real ticket to success. Meanwhile, technology company leaders have reported liberal arts are essential because “they train students to thrive in subjectivity and ambiguity, a necessary skill in the tech world where few things are black and white.”
College is also known for changing the way students think. A new survey indicates it may alter their culinary perspectives. The Economist commissioned a poll to see if residence, income, education, or political affiliation has an effect on food preferences and, guess what? College and post graduate work may expand students’ gustatory preferences and change their eating habits! No, they don’t develop an unhealthy obsession with ramen noodles, boxed mac and cheese, or free food (usually). The survey found:
- People with post graduate degrees dine out more frequently – often weekly – than people with high school diplomas.
- Post grads also tend to eat Indian foods, like curries, more often than people with high school diplomas.
- College grads are more likely than non-college grads to have eaten sushi within the past year.
- College grads are also more likely than non-college grads to know what prosciutto is and to have eaten it recently.
As it turns out, the great equalizer was Mexican food. A majority of Americans have eaten Mexican food during the past year, regardless of educational attainment.
Weekly Focus – Think About It
“Peanut butter and jelly in the same jar. I don’t understand that. I mean, I’m lazy but I’d like to meet the guy that needs that. This guy must be thinking, “I could go for a sandwich, but I’m not gonna open TWO jars. I can’t be opening and closing all kinds of jars and cleaning WHO KNOWS how many knives.”
–Brian Regan, American comedian
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 email with their email 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 & The ricks 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
http://www.barrons.com/articles/t-bill-yields-edge-up-on-debt-ceiling-anxieties-1500703751 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/07-24-17_Barrons-T-Bill_Yields_Edge_Up_on_Debt-Ceiling_Anxieties-Footnote_1.pdf)
https://www.economist.com/blogs/graphicdetail/2017/07/daily-chart-12 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/07-24-17_TheEconomist-In_America_You_are_What_You_Eat-Footnote_8.pdf)