The Compass A QUARTERLY NEWSLETTER BY SCREAMING EAGLE WEALTH MANAGEMENT // SUMMER 2019
Wealth Manager | CERTIFIED FINANCIAL PLANNERâ&#x201E;¢ PROFESSIONAL CA INSURANCE LICENSE #0F97513
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NOTE FROM ERIK Hopefully you all are having a nice summer so far. I know many of you have already squeezed in some vacation travel. My wife, Jordan, and I just returned from a trip to an all-inclusive resort outside Cancun, Mexico where we met up with my brother-in-lawâ&#x20AC;&#x2122;s family from Chicago. It was a very special to see our 15 month old son, Douglas, swimming and playing with his 9, 10, and 11 year old cousins. The year is already half over and surprise, surprise the world around us has brought plenty of excitement for investors and retirement planners to contemplate. All in all, last quarter was positive for the U.S. economy. Despite concerns over international trade, the economy continues to grow at a solid clip. Consumers continue to show that they are willing and able to spend, and businesses are doing the same. Earnings declined in the first quarter and will likely do so again in the second quarter, but a return to growth by yearend should help support long-term
performance. Lower interest rates should support faster growth going forward, as lowered borrowing costs spur economic activity. We saw a surge in mortgage applications once rates fell in June. If rates remain low, there is a possibility that we could see housing growth return in the second half of the year. Despite the very real political risks, the U.S. economy continues to grow. Markets have had a great start to 2019. Equities saw positive returns in five of the first six months of the year. These strong returns led all three major indices to double-digit year-to-date returns. There is a good chance that trend will continue. That said, the declines in May show that despite the positive tailwind from a growing economy, market volatility can come at any time. Thus, a well-diversified portfolio that matches your goals and risk tolerance remains the best way forward in a volatile world. I hope you find the following articles interesting.
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DO I NEED TO GET A REAL ID WHEN I RENEW MY LICENSE? If you need to renew your driver’s license, you may want to get a REAL ID. The REAL ID Act, passed by Congress in 2005, enacts the 9/11 Commission’s recommendation that the federal government set minimum security standards for state-issued driver’s licenses and identification cards.
EXAMPLE OF CALIFORNIA READ ID
Beginning October 1, 2020, residents of every state and territory will need to present a REAL ID-compliant license/identification card, or another acceptable form of identification (such as a passport), to access federal facilities, enter nuclear power plants, and board commercial aircraft. Although implementation has been slow, states have made progress in meeting the REAL ID Act’s recommendations. A majority of states and territories, along with the District of Columbia, have complied with all REAL ID requirements. The remaining non-compliant jurisdictions have been granted a temporary extension from the Department of Homeland Security.1
lawful presence (e.g., U.S. passport, birth certificate), state residency (e.g., mortgage statement, utility bill), and Social Security number (e.g., Social Security card, pay stub). In addition, if your current name doesn’t match the one on your proof of identity document, you must prove your legal name change (e.g., marriage certificate). When states first implemented REAL ID recommendations, applicants were faced with delays and long wait times. However, many states have since streamlined the process by allowing applicants to start the application process online. For more information on applying for a REAL ID, you can visit your state’s department of motor vehicles website ordhs.gov/real-id.
To obtain a REAL ID, you must apply in person at your state’s department of motor vehicles (or other approved service center). Your picture will be taken and signature captured electronically. You must provide more documentation than
FOR CALIFORNIA RESIDENTS, CHECKLIST AVAILABLE ONLINE AT DMV.CA.GOV 1Department of Homeland Security, REAL ID Compliance Extension Updates, October 2018
you would normally need for a standard driver’s license or identification card. A REAL ID requires that you show (in original or certified form) proof of identity and
The accompanying pages have been developed by an independent third party. Commonwealth Financial Network is not responsible for their content and does not guarantee their accuracy or completeness, and they should not be relied upon as such. These materials are general in nature and do not address your specific situation. For your specific investment needs, please discuss your individual circumstances with your representative. Commonwealth does not provide tax or legal advice, and nothing in the accompanying pages should be construed as specific tax or legal advice. Securities offered through Commonwealth Financial Network, Member FINRA/SIPC.
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EMBRACING A GLOBAL STOCK MARKET U.S. stocks have significantly outperformed international stocks in recent years. And U.S.-based multinations are major players in the world economy. Does that make international stock diversification unnecessary? Not at all. Sources: Thomson Reuters Datastream, Factset, and MSCI, as of September 30,2018
International stocks represent 44.9% of the global market -- a figure too large to ignore. So by owning international stock investments, you can diversify your portfolio and take advantage of opportunities by leading companies in emerging and other developed stock markets.
THREE REASONS TO INVEST INTERNATIONALLY:
All investing is subject to risk, including the possible loss of the money you invest. Diversification does not ensure a profit or protect against a loss. Investments in stocks issued by non-U.S... information generated by the Vanguard Capital Markets Model regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and ar may behave differently from the historical patterns captured in the VCMM. More important, the VCMM may be underestimating extreme negatives scenarios unobserved in the historical perio forecasts distributions of future returns for a wide array of broad asset classes. Those asset classes include U.S. and international equity markets, several maturities of the U.S. Treasury and corp foundation of the he Vanguard Capital Markets Model is that the returns, obtained from statistical analysis based on available monthly financial and economic data from as early as 1960. Using as uncertainty and randomness over time. The model generates a large set of simulated outcomes for each asset class over several time horizons. Forecasts are obtained by computing measures
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1. CHANGING MARKET LEADERSHIP
2. POSITIVE INTERNATIONAL OUTLOOK
The rationale for diversification is clear. U.S. and international stocks often swap positions as performacne leaders. It wasn’t that long ago that international stocks led the way over domestic stocks as shown in the figure below. What might the future hold as leaders potentially turn to laggards? Global diversification gives you a chance to participate in whatever region is outperforming at a given time.
U.S. stocks have had a great run, but will that continue? From a U.S. investors perspective, the expected return outlook for non-U.S. stock markets over the next 10 years is 8.4%, higher than that of U.S. stocks (5.1%).
TRAILING 12 MONTH RETURN DIFFERENTIAL BETWEEN U.S. & NON-U.S. STOCKS
IMPORTANT: The projections and other information generated by the VCMM regarding the likelihood of various investment outcomes are hypothetical in nuture, do not reflect actual investment results, and are note guarantees of future results. Distribution of return outcomes from the VCMM are derived from 10,000 simulations for each modeled asset class. Simulations are as of September 30,2018. Results from the model may vary with each use and over time. Sources: Vanguard, Dimson-Marsh-Staunton Global Returns Dataset, FactSet, Morningstar Direct, and Thomson Reuters Datastream. Notes: All returns are nominal and unhedged. Data for the last 30 years are from January 1987 to December 2016, in U.S. dollars. Data for the next ten years are based on the median of 10,000 simulations from VCMM as of September 30, 2018, is U.S. dollars. Historical returns were computed using indexes defined in “Indexes used in our historical calculations” on page 5 of Vanguard economic and market outlook for 2019: Down but not out. Historical cash returns from Dimson-Marsh-Staunton Global Returns data.
Sources: Vanguard & FactSet Notes: U.S. equities are represented by the MSCI USA Index; non-U.S. equities are represented by the MSCI World Index ex USA from January 1, 1970, through May 1987, and MSCI All Country World Index ex USA thereafter. Data are through September 20,2018.
3. VOLATILITY REDUCTION Having a mix of international and U.S. stocks has historically tamped down the volatility in portfolios, as shown in the figure at right. Of course, it’s natural to be concerned about geopolitical risk, but having a mix of U.S. and international can actually reduce portfolio risk. It’s true that correlations have increased between U.S. and international markets as globalization has taken hold, but including international stocks in your portfolio still carries diversification benefits because less-thanperfect correlations due to differences in economic cycles, fiscal and monetary policies, currencies, and sector weighting.
TEN-YEAR EXPECTED REDUCTION IN MARKET VOLATILITY- UNITED STATES headquarters outside the United States. You may also lose the potential diversification benefit of foreign exchange. That’s because many U.S. multinational firms seek to smooth their revenues by hedging their foreigncurrency exposures.
U.S.-headquartered multinational corporations alone don’t provide enough exposure because a big chunk of the world economy is still driven by companies with
ed by non-U.S... Companies are subject to risks including country/regional risk and currency risk. these risks are especially high in emerging markets. IMPORTANT: The projections or other nt results, and are not guarantees of future results. VCMM results will vary with each use and over time. The VCMM projections are based on a statistical analysis of historical data. Future returns e historical period on which the model estimation is based. The VCMM is a proprietary financial simulation tool developed and maintained by Vanguard Investment Strategy Group. The model easury and corporate fixed income markets, international fixed income markets, U.S. money markets, commodities, and certain alternative investment strategies. The theoretical and empirical y as 1960. Using a system of estimated equations, the model then applies a Monte Carlo simulation method to project the estimated interrelationships among risk factors and asset classes as well uting measures of central tendency in these simulations. Results produced by the tool will vary with each use and over time.
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FIVE QUESTIONS ABOU 1. WHAT IS LONG-TERM CARE?
The cost of long-term care can be expensive:
Long-term care refers to the ongoing services and support needed by people who have chronic health conditions or disabilities. There are three levels of longterm care:
For many, the cost of long-term care can be expensive, absorbing income and depleting savings. Some of the average costs in the United States for long-term care* include:
• Skilled care: Generally round-the-clock care that’s given by professional health care providers such as nurses, therapists, or aides under a doctor’s supervision.
• $6,844 per month, or $82,128 per year for a semiprivate room in a nursing home • $7,698 per month, or $92,376 per year for a private room in a nursing home
• Intermediate care: Also provided by professional health care providers but on a less frequent basis than skilled care.
• $3,628 per month for a one-bedroom unit in an assisted living facility • $68 per day for services in an adult day health-care center
• Custodial care: Personal care that’s often given by family caregivers, nurses’ aides, or home health workers who provide assistance with what are called “activities of daily living” such as bathing, eating, and dressing.
*U.S. Department of Health and Human Services, October10, 2017
3. DOESN’T MEDICARE PAY FOR LONG-TERM CARE?
Long-term care is not just provided in nursing homes-in fact, the most common type of long-term care is home-based care. Long-term care services may also be provided in a variety of other settings, such as assisted living facilities and adult day care centers.
Many people mistakenly believe that Medicare, the federal health insurance program for older Americans, will pay for long-term care. But Medicare provides only limited coverage for long-term care services such as skilled nursing care or physical therapy. And although Medicare provides some home health care benefits, it doesn’t cover custodial care, the type of care older individuals most often need.
2. WHY IS IT IMPORTANT TO PLAN FOR LONG-TERM CARE? No one expects to need long-term care, but it’s important to plan for it nonetheless. Here are two important reasons why:
Medicaid, which is often confused with Medicare, is the joint federal-state program that two-thirds of nursing home residents currently rely on to pay some of their long-term care expenses. But to qualify for Medicaid, you must have limited income and assets, and although Medicaid generally covers nursing home care, it provides only limited coverage for home health care in certain states.
The odds of needing long-term care are high: • Approximately 52% of people will need long-term care at some point during their lifetimes after reaching age 65* • Approximately 8% of people between ages 40 and 50 will have a disability that may require long-term care services*
4. CAN’T I PAY FOR CARE OUT OF POCKET? The major advantage to using income, savings, investments, and assets (such as your home) to pay for
*U.S. Department of Health and Human Services, November 14, 2017
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BOUT LONG TERM CARE long-term care is that you have Long-term care is not just provided in nursing homes the most control over where --in fact, the most common type of long-term care is and how you receive care. But home-based care. because the cost of long-term care is high, you may have the key features to consider: trouble affording extended care if you need it. • Benefit amount: The daily benefit amount is the 5. SHOULD I BUY LONG-TERM CARE INSURANCE? maximum your policy will pay for your care each day, and generally ranges from $50 to $350 or more. Like other types of insurance, long-term care insurance protects you against a specific financial risk--in this case, • Benefit period: The length of time your policy will the chance that long-term care will cost more than you pay benefits (e.g., 2 years, 4 years, lifetime). can afford. In exchange for your premium payments, the insurance company promises to cover part of your future • Elimination period: The number of days you must long-term care costs. Long-term care insurance can help pay for your own care before the policy begins you preserve your assets and guarantee that you’ll paying benefits (e.g., 20 days, 90 days).
DEDUCTIONS FOR LONG-TERM CARE INSURANCE PREMIUMS: 2018 & 2019 Age
40 or under
• Types of facilities included: Many policies cover care in a variety of settings including your own home, assisted living facilities, adult day care centers, and nursing homes. • Inflation protection: With inflation protection, your benefit will increase by a certain percentage each year. It’s an optional feature available at additional cost, but having it will enable your coverage to keep pace with rising prices. The accompanying pages have been developed by an independent third party. Commonwealth Financial Network is not responsible for their content and does not guarantee their accuracy or completeness, and they should not be relied upon as such. These materials are general in nature and do not address your specific situation. For your specific investment needs, please discuss your individual circumstances with your representative. Commonwealth does not provide tax or legal advice, and nothing in the accompanying pages should be construed as specific tax or legal advice. Securities offered through Commonwealth Financial Network, Member FINRA/SIPC.
have access to a range of care options. However, it can be expensive, so before you purchase a policy, make sure you can afford the premiums both now and in the future.
Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2019.
The cost of a long-term care policy depends primarily on your age (in general, the younger you are when you purchase a policy, the lower your premium will be), but it also depends on the benefits you choose. If you decide to purchase long-term care insurance, here are some of 7 2019_ScreamingEagleNewsletter_Q3V3.indd 7
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SUMMER EVENT SCHEDULE VENTURA COUNTY EVENTS
KERN COUNTY EVENTS
VENTURA COUNTY FAIR JULY 31ST - AUGUST 11TH VENTURA COUNTY FAIRGROUNDS
BAKERSFIELD’S FOOD TRUCK FESTIVAL JULY 27TH KERN COUNTY FAIRGROUNDS
CAMARILLO AIR SHOW AUGUST 17TH - AUGUST 18TH CAMARILLO AIRPORT
25TH ANNUAL BAKERSFIELD VILLAGEFEST SEPTEMBER 7TH KERN COUNTY MUSEUM
FIRST SUNDAY AT SANTA PAULA AIRPORT AUGUST 4TH SANTA PAULA AIRPORT
KERN COUNTY FAIR SEPTEMBER 18TH - SEPTEMBER 29TH KERN COUNTY FAIRGROUNDS
TEQUILA & TACO MUSIC FESTIVAL JULY 20TH - JULY 21ST PLAZA PARK, VENTURA
ABBEY ROAD, A TRIBUTE TO THE BEATLES JULY 18TH BAKERSFIELD MUSIC HALL OF FAME
SAN LUIS OBISPO COUNTY EVENTS BREWS & BITES BEER AND FOOD FESTIVAL AUGUST 31ST MISSION PLAZA, DOWNTOWN SLO
BOOTS & BREWS COUNTRY MUSIC FESTIVAL SEPTEMBER 28TH MADONNA INN
CALIFORNIA MID STATE FAIR JULY 17TH - JULY 28TH PASO ROBLES EVENT CENTER Screaming Eagle Wealth Management P: 805.643.7700
305 S. Kalorama Street, Suite F, Ventura, CA 93001 | E: firstname.lastname@example.org | W: www.screamingeaglewm.com
Erik P. Dullenkopf, CFP® (CA Insurance license #0F97513) is a Registered Representative and Investment Adviser Representative with/and offers securities and advisory services through Commonwealth Financial Network®, member FINRA/SIPC, a Registered Investment Adviser. Fixed insurance products and services offered through CES Insurance Agency or Screaming Eagle Wealth Management.
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