California EducatorsWeekly Report 

Monday, May 20, 2013Dear Michael,

Our weekly email is aimed at keeping you up to date on important topics and changes. We hope you find these weekly emails informative

and enjoyable. Each week we will bring you important updates and useful information, in an easy to understand format. Enjoy!

W E ’ R E H E R E T O H E L P

Our goal is to provide you with exceptional service. If there is anything we discuss in this week’s email that you would like to visit about, or if

there are any questions you have, please call our office and let us know. We’re here to serve you.

Quote of the week:

“There are no shortcuts to any place worth going.” 

-Beverly Sills

Remember: Please don’t keep us a secret… We’re never too busy to see if we can help your friends or a

family member.

O P E N I N G T H O U G H T S …

In The HeadlinesFortune 500 Shows Changes 

It’s May and time again for one of the great American business rituals, the announcement of the

Fortune 500, which lists the top U.S. companies, ranked in order of their annual revenue.

 

Retail behemoth Wal-Mart Stores Inc. regained the top spot on the list by posting strong sales growth

despite a challenging economy for its shoppers. The company’s revenue grew nearly 6 percent in 2012

to $469.2 billion.

 

Exxon Mobil Inc. dropped to the second spot, with revenue of $449.9 billion, but was still the most

profitable company. Energy companies dominated the top ten slots, with oil and gas producer Chevron

at No. 3 and refiners Valero Energy and Phillips 66, spun off from ConocoPhillips last year, joining the

top 10.

 

Moving up two spots to No. 5 is Warren Buffett’s Berkshire Hathaway Inc., which owns everything from insurers to railroads to newspaper

publishers and is in the process of acquiring Heinz Co. Manufacturing stalwarts General Motors Co., Ford Motor Co. and General Electric

Co. all remained in the top 10.

 

The continuing popularity of the iPad and iPhone helped Apple Inc. jump 11 spots to crack the top 10 for the first time, landing at No. 6. The

company’s soaring stock price also made it one of the most valuable companies by market cap last year, though its shares have since

posted a double-digit decline.

 

Some notable departures from the top 10 included technology bellwether Hewlett-Packard Co. which slipped to No. 15 from No. 10 as the

technology pioneer struggled with a broad consumer shift from PCs to smartphones and tablets, as well as its own management missteps.

Also exiting the top 10 was government mortgage provider Fannie Mae, which dropped four spots to No. 12.

 

One much publicized newcomer to the Fortune 500 was social media powerhouse Facebook, which went public last year.

Michael SnowhiteCalifornia Educators Financial & Insurance Services

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M O N T H LY A R C H I V E S :   J U N E 2 0 1 3

Michael   Snowhite Posted on June 28, 2013

California EducatorsWeekly Report 

Monday, May 20, 2013Dear Michael,

Our weekly email is aimed at keeping you up to date on important topics and changes. We hope you find these weekly emails informative and enjoyable. Each week we will bring you important updates and useful information, in an easy to understand format. Enjoy!

“News And Information To Keep You Informed”

California EducatorsFinancial & Insurance Services

Michael Snowhite16030 Ventura Blvd.Suite 695 Encino, CA 91436O 818-206-1163TF 800-880-4141www.safe403b.com

In This Issue

Opening ThoughtsGood NewsPlanning Tips

W E ’ R E H E R E T O H E L P

Our goal is to provide you with exceptional service. If there is anything we discuss in this week’s email that you would like to visit about, or if there are any questions you have, please call our office and let us know. We’re here to serve you.

Quote of the week:“There are no shortcuts to any place worth going.” -Beverly SillsRemember: Please don’t keep us a secret… We’re never too busy to see if we can help your friends or a family member.

O P E N I N G T H O U G H T S …

In The

HeadlinesFortune 500 Shows Changes It’s May and time again for one of the great American business rituals, the announcement of the Fortune 500, which lists the top U.S. companies, ranked in order of their annual revenue. Retail behemoth Wal-Mart Stores Inc. regained the top spot on the list by posting strong sales growth despite a challenging economy for its shoppers. The company’s revenue grew nearly 6 percent in 2012 to $469.2 billion. Exxon Mobil Inc. dropped to the second spot, with revenue of $449.9 billion, but was still the most profitable company. Energy companies dominated the top ten slots, with oil and gas producer Chevron at No. 3 and refiners Valero Energy and Phillips 66, spun off from ConocoPhillips last year, joining the top 10. Moving up two spots to No. 5 is Warren Buffett’s Berkshire Hathaway Inc., which owns everything from insurers to railroads to newspaper publishers and is in the process of acquiring Heinz Co. Manufacturing stalwarts General Motors Co., Ford Motor Co. and General Electric Co. all remained in the top 10.

 The continuing popularity of the iPad and iPhone helped Apple Inc. jump 11 spots to crack the top 10 for the first time, landing at No. 6. The company’s soaring stock price also made it one of the most valuable companies by market cap last year, though its shares have since posted a double-digit decline. Some notable departures from the top 10 included technology bellwether Hewlett-Packard Co. which slipped to No. 15 from No. 10 as the technology pioneer struggled with a broad consumer shift from PCs to smartphones and tablets, as well as its own management missteps. Also exiting the top 10 was government mortgage provider Fannie Mae, which dropped four spots to No. 12. One much publicized newcomer to the Fortune 500 was social media powerhouse Facebook, which went public last year.  

Surging to the Top – The U.S. Becomes a Global Oil Super Power The boom in North American oil production is reshaping global oil markets and will help satisfy the growing thirst for oil in the developing world, according to a new report prepared by the International Energy Agency (IEA). The result should be an easing of worldwide oil supplies. Increased North American production will also help the U.S. begin to meet its own energy demands and cut back on imports that should now start flowing to emerging markets. The report highlights a staggering transition. The Paris-based IEA forecasts that North America’s oil supply will grow by nearly 4 million barrels per day between 2012 and 2018, amounting to nearly 50% of global output growth over that period. The agency projects that the U.S. will overtake Saudi Arabia to become the worlds biggest oil producer before 2020, and will be energy independent by 2030. The U.S. oil boom has been the result, in large part, of high world prices and new oil drilling technologies, including hydraulic fracking, that have made the extraction of oil and gas from shale rock commercially viable. The new supply surge is timely and comes as developing nations are set to consume more oil than developed countries for the first time. In fact, the IEA predicts the shift will be seen this quarter, as demand for oil from developing countries reaches 50%. By 2018, developing countries will account for 54% of total global oil consumption. China, the world’s second largest oil consumer after the U.S., will use 25% of world oil output by 2018, while U.S. demand will steadily decline. But developing countries and emerging markets will not simply be passive consumers. The IEA says these nations are

investing heavily in oil storage, transportation and refining. In fact, during the next 5 years, according to the agency, virtually all growth in crude oil refining capacity is forecast to take place in the emerging markets and developing economies. In addition to China and India, oil demand from African nations is expected to grow rapidly.  

Canada to U.S. Workers—Go North! The U.S. has traditionally been the land of opportunity for foreign workers looking to use their skills to make a better life for themselves and their families. But now, Canadian companies, with the help of the Canadian government, are turning the tables and attempting to recruit Americans workers. Even though Canada has a high rate of unemployment—12.3 percent in some regions—it also has tens of thousands of open jobs nationwide for plumbers, electricians, and other skilled workers. Canadian employers have experienced difficulty getting potential hires to leave their provinces and go where the work is. So many Canadian firms, particularly in Western Canada, are using headhunters to scour sites like Monster.com, LinkedIn, and Craigslist in search of Americans and other foreigners with the right skills. The Canadian government has launched a fast-track immigration program for 43 trades, promising to process work papers within 12 months for applicants who speak English or French and have two years’ experience in their field. The most sought after workers include ironworkers, welders, oil and gas well drillers, and heavy-duty equipment mechanics. The focus of the Canadian immigration program is in sharp contrast with that of the U.S. government. Canada is opening the door to Americans at the same time the U.S. Congress is battling over whether to let in more skilled workers. In Canada last year, 160,617 immigrants were granted permanent residency because of the economic value they brought, while 64,901 became residents via family ties. In the U.S., 680,799 immigrants became residents through family sponsorships in fiscal 2012, and only 143,998 obtained residency based on their economic value. The shorter timeframe for obtaining permanent residency is also an attraction for skilled workers who want to remain in Canada. It can take a decade for an employed immigrant to get a U.S. green card, whereas in Canada a skilled worker can obtain permanent residency within 18 months. The Canadian government is expecting to benefit from the employment multiplier effect that skilled workers bring to its economy. For example, the hiring of one American John Deere or Caterpillar mechanic with 10 years of experience can result in the direct employment

of eight to nine Canadians that are less skilled. Citations:1. http://www.moneynews.com/Companies/Wal-mart-stores-top-Fortune-500/2013/05/06/id/503077

2. http://money.cnn.com/2013/05/14/news/world/oil-iea-demand/index.html

3. http://www.businessweek.com/articles/2013-05-16/canada-looks-to-lure-away-skilled-u-dot-s-dot-workers#r=nav-f-story

 

S O M E G O O D N E W S

Everywhere you look, you see nothing but doom and gloom in the headlines. So let’s see if we can find any good news out there…Here are a few bits of information…

John Deere, the world’s largest maker of farm equipment reported record first quarter earnings. Deere’s net income rose to $1.65 per share compared to $1.30 per share, last year. Analysts had expected first-quarter earnings of $1.40 per share. The company said its strongest sales growth came from Brazil and other countries in South America.

The National Association of Home Builders/Wells Fargo index of builder confidence improved in May for the first time in five months as buyers rushed to take advantage of near record-low mortgage rates. The index rose to 44 from a revised 41 in April. Analysts’ consensus forecast called for an increase to 43. 

Based on a report this week by the nonpartisan Congressional Budget Office (CBO), it now appears that the government’s annual deficit is shrinking far faster than anyone expected. The agency estimates that the deficit for this fiscal year, which ends onSept. 30, will fall to about $642 billion, or 4 percent of the nation’s annual economic output. This is $200 billion lower than the agency estimated just three months ago. The CBO now expects the deficit to shrink to as little as 2.1 percent of gross domestic product by 2015. The reason? A strengthening economy, combined with

tax hikes and cuts in domestic and military spending. 

Citations:1. http://www.cnbc.com/id/100453363

2. http://www.bloomberg.com/news/2013-05-15/homebuilder-confidence-in-u-s-rose-in-may-on-improving-outlook.html

3. http://www.nytimes.com/2013/05/15/business/cbo-cuts-2013-deficit-estimate-by-24-percent.html?pagewanted=all&_r=0

Don’t you ever wonder why the media can’t spend more time focusing on the good news that happens?

P L A N N I N G T I P S …

Tips for

Paying Off Your Mortgage EarlyFor most people, the mortgage they have on their home is their biggest debt. As you approach retirement, you may want to consider accelerating the repayment of your home loan. If you pay off the principal before the loan term ends, you will reduce the total amount of interest associated with your loan. Below are some tips to help you pay off your mortgage early. Consider using accelerated bi-weekly payments. The accelerated bi-weekly payment is 1/2 of a normal monthly payment, but you end up making 26 payments per year (instead of 24 if you were paying a true semi-monthly payment). This is a convenient way to make extra payments on the principal automatically every time you get your bi-weekly paycheck. The result is that by the end of a year, you will have made roughly the equivalent of 1 extra monthly payment towards the principal. The amount of time you can shave off your mortgage using the accelerated bi-weekly approach depends on the interest rate. If your interest rate is 2.90% you will reduce your mortgage repayment by 3.5 years. At a rate of 3.78% you cut off 4 years. At 6.00%, you will shorten your repayment schedule by 5.5 years. Treat a 30-year mortgage like a 15-year mortgage. If you have a 30-year mortgage you can schedule extra mortgage payments to reduce your repayment time frame based on whatever end-goal you want to achieve. You may not be able to afford to pay off your home in 15 years, but if your financial circumstances permit, perhaps you could try for 20 years. The limit to how fast you can pay off your mortgage will depend on how much extra you can afford to pay each month. Make unscheduled extra principal

payments. Think of these payments as an alternative to investing. If you have a 6% mortgage, and the alternative is to put the money into a 4% CD, the mathematically superior choice is to put the money towards paying off the mortgage. How much time you can knock of your mortgage depends of course on how much and how frequently you can make extra payments. Leverage your mortgage interest deduction. Figure out how much of your tax refund is due to your mortgage interest deduction and then make an extra yearly payment on your mortgage equivalent to that amount. For a 5% rate and a 25% tax bracket, putting the tax return towards the principal each year should reduce a 30-year mortgage by 6.5 years! On the lower extreme, a 4% interest rate for someone in the 15% tax bracket would knock off about 3.5 years. Apply cash flow freed up from other debt repayments.If you have paid off or paid down credit cards and other loans toward a goal of becoming debt-free; apply your extra cash flow towards your mortgage. Refinance for a lower interest rate. If refinancing could lead to a significantly reduced interest rate, it might be worth looking into. With a lower interest rate, your monthly payment would likely go down and therefore you could afford to make a larger extra payment. People usually try to refinance to reduce their monthly payment. If you have already been aggressively paying down a mortgage, you may find that refinancing is not necessarily going to help much. Please don’t hesitate to give us a call if you need help with your mortgage planning needs or any component of your financial planning. Citations:1. http://homeguides.sfgate.com/mortgage-principal-reduction-strategies-9673.html

2. http://www.vertex42.com/blog/money/debt/10-strategies-for-paying-off-your-mortgage-early.html

3. http://www.askandrewconner.com/What-is-the-Right-Mortgage-Strategy.html

 

Y O U R T E A M

Thank you for taking the time to read this week’s issue of “California Educators Weekly Report.” We hope you found it to be insightful as well as entertaining. Please remember that our goal is to provide you with impeccable service. Please feel free to contact anyone on our team should you have questions or would like to discuss your goals or concerns.

We may be reached by using the following:818-206-1163www.safe403b.commichael@safe403b.comdarren@safe403b.comgaby@safe403b.com

Michael Snowhite

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Michael SnowhiteAcme Talent & Literary Agency4727 Wilshire Blvd.Suite 333Los Angeles, CA 90010USA

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