The Ricks Report
July 31, 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
- MORE BENEFICIARIES TO WORKERS IN UNDER TWENTY YEARS – There are 2.8 workers (paying payroll taxes) for every one Social Security beneficiary in 2017, i.e., there are 36 beneficiaries for every 100 covered workers There will be an estimated 2.2 workers for every one Social Security beneficiary in 2035, i.e., there will be 46 beneficiaries for every 100 covered workers in 2035 (source: Social Security Trustees 2017 Report).
- DRAMATIC DECREASE OF UNDERWATER HOMEOWNERS– There are 7 million homeowners in the USA. Of the 75.7 million, 30.6 million homeowners have no housing debt, i.e., they are mortgage-debt free. Of the 45.1 million homeowners that have debt on their homes, just 1.8 million homeowners have mortgage debt that exceeds the value of their homes. The number of “underwater” homeowners peaked at 15.1 million in 2010 (source: Census Bureau, Black Knight).
- COLLEGE TOO EXPENSIVE FOR MANY – 31% of 1,828 Americans surveyed indicated that the reason they did not attend college was that it was “too expensive” (source: Federal Reserve).
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 Dwell NOLA Realty. Remember, you can listen from any smartphone or computer through iHeartRadio.
There was some good news and some bad news last week.
First, the good news: Thanks to consumer spending and an upturn in federal government spending, the U.S. economy grew faster from April through June this year. Gross domestic product (GDP) grew by 2.6 percent during the period, according to the advance estimate for economic growth. This was an improvement over growth from January through March, when GDP increased by 1.2 percent.
Now, the bad news: Personal income did not grow as fast from April through June as it did from January through March. Wages and salaries grew at a slower pace, as did government social benefits and other sources of income. The New York Times wrote:
“Wage growth, however, decelerated despite an unemployment rate that averaged 4.4 percent in the second quarter. Inflation also retreated, appearing to weaken the case for the Federal Reserve to raise interest rates again this year.
‘Although growth is solid, the lack of wage pressure buys the Fed plenty of time, and works with a very ‘gradual’ tightening cycle,’ said Alan Ruskin, global head of G10 FX strategy at Deutsche Bank in New York. ‘There is more here for the Fed doves than the hawks.’”
The Federal Reserve Open Market Committee left rates unchanged at its meeting last week, commenting, “The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labor market conditions and a sustained return to 2 percent inflation.”
The Standard & Poor’s 500 Index finished the week flat. Yields on 10-year Treasury bonds moved slightly higher.
|Data as of 7/28/17||1-Week||Y-T-D||1-Year||3-Year||5-Year||10-Year|
|Standard & Poor’s 500 (Domestic Stocks)||0.0%||10.4%||13.9%||7.7%||12.3%||5.3%|
|Dow Jones Global ex-U.S.||0.2||16.3||17.1||-0.1||5.6||-0.6|
|10-year Treasury Note (Yield Only)||2.3||NA||1.5||2.5||1.5||4.8|
|Gold (per ounce)||1.3||9.1||-5.7||-1.0||-4.8||6.7|
|Bloomberg Commodity Index||1.8||-3.5||1.3||-13.2||-10.3||-6.8|
|DJ Equity All REIT Total Return Index||0.4||6.3||-1.2||8.7||9.8||7.2|
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.
Cooking illiteracy could improve happiness…What does heavy cream become when you whip it? If you answered ‘whipped cream,’ try this one: What does whipped cream become when you whip it a little longer? If you said, ‘butter,’ congratulations! You may possess above average knowledge of cooking.
You may have heard about the death of the culinary arts. According to various surveys and news reports, few people today possess the skills required to boil an egg. In 2014, The Seattle Times reported:
“As cooking has been rendered optional – the victim of rising restaurant culture, myriad takeout options, and supermarket sections packed with pre-cut vegetables, shredded cheese, and prepared foods – [cooking instructors] say cooks are increasingly losing touch with skills considered basic, or even essential, just a generation or two ago. And that is changing the way…recipes are developed and written.”
It’s also changing the restaurant industry. An April 2017 survey from Morgan Stanley found demand for online order and delivery from restaurants is growing rapidly. By 2020, digital food delivery may comprise “…40 percent of total restaurant sales – or $220 billion…compared with current sales of around $30 billion.”
Before you lament the ignorance of today’s youth, consider the results of seven surveys, completed by Harvard University and the University of British Columbia, encompassing more than 6,000 respondents in four countries. The Washington Post reported:
“Across all surveys, life satisfaction was typically higher for people who regularly spend money to save time. This was true regardless of household income, hours worked per week, marital status, and number of children living at home…working adults in the United States reported higher life satisfaction if they regularly paid to outsource household tasks such as cooking, shopping, and general maintenance.”
This may be the new math. Spending money to increase ‘free’ time equals improved happiness.
Weekly Focus – Think About It
“Cooking with kids is not just about ingredients, recipes, and cooking…it’s about harnessing imagination, empowerment, and creativity.”
–Guy Fieri, Founder of Cooking with Kids Foundation
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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