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 President's Corner
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First there was Grexit. Now there is Brexit. I feel one of my responsibilities of running a financial institution is to keep up with the current Wall Street lingo. It reminds me of one of Robin Williams' lines in "Good Morning Vietnam" referring to then-Vice President Richard Nixon, "Seeing as how the VP is such a VIP, shouldn't we keep the PC on the QT? 'Cause if it leaks to the VC he could end up MIA, and then we'd all be put on KP."
Grexit and Brexit are word mashups meaning Greece's and Great Britain's exit from the European Union (EU), which was known as the European Economic Community (EEC) and European Community (EC) in previous decades. Greece wanted to leave the EU because they didn't like outsiders telling them how to finance their country. Of course, the EU didn't like Greece's escalating debt and growing entitlement payments.
Great Britain, also known as the United Kingdom (UK), has always had one foot in and one foot out of the EU. While they allowed the group trade agreements and free travel of their EU partners in and out of the island country, they insisted on keeping their own currency, the Pound, and eschewing the one-continent legal tender, the Euro.
The EU is not that much different from a bank or credit union. They have good members who pay their bills and balance their budgets and not-so-good members who are delinquent on their loan payments and have increasing debt. The EU's bad members were not so sensitively known as the PIIGS (Portugal, Ireland, Italy, Greece and Spain). Essentially, the good members have had to subsidize the PIIGS since at least the Great Recession began in 2008. All of the PIIGS are still having severe financial difficulties.
Needless to say, the British vote shook up a lot of people, primarily the political elite who have been living off the taxpayer trough and speculative investors whose financial bets sunk into the North Sea. The political elites in both Europe and the United States have been trying to smear the British who voted to leave the EU, but the fact remains that it's about the economy. If people are unemployed or feel their salaries are stagnant, they will vote to replace the status quo every time. Besides, if it were just a trade issue, there is nothing stopping the UK from having separate trade deals with the EU and other countries. The one-world economy was tried, and it failed.
What the recent vote means to our economy and economies around the world won't be known for at least a few years. The UK will feel some pain in the short term, and it will be interesting to watch what happens in the long term. The U.S. will have to renegotiate their trade pacts with the UK, but our economy should not be significantly affected either positively or negatively.
Now that the British have spoken, I guess we can start expecting Frexit (France), Hollexit (Holland), Scotlexit (Scotland), and Swedexit (Sweden) but hope the word mashup experts can come up with something that is easier to say.
David M. Green
President/CEO
(925) 335-3802
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Stat-of-the-Month
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For some perspective on all-important long-term interest rates, this chart illustrates the 43-year trend of 30-year mortgage rates (thick blue line). Ongoing concerns over a sluggish global economy in addition to geopolitical concerns (e.g. Brexit, Middle East, etc.), institutions and governments alike to move a portion of their investment dollars to the relative safety of US bonds. This has resulted in a significant decline in the yield of long-term debt instruments. This decline has brought 30-year mortgage rates down to three-year lows -- a level rarely seen over the past four decades.
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In Memoriam
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Long-time Board Member Alfred P. Lomeli passed away on June 26th. Al served on the Board from 1978 through 2005, including three terms each as Chairman and Treasurer. Al insisted that our Credit Union stay true to its roots and not operate as a commercial bank.
Al was known to many of our members as the Contra Costa County Treasurer-Tax Collector from 1978 until 1999. He served as president of the National Association of County Treasurers and Finance Officers and the California Association of County Treasurers and Tax Collectors.
Before his career with the county, Al served in the United States Marine Corps during World War II in the Pacific Theater. After his discharge, he started working as a carpenter, but at the urging of a fellow Marine, took a job at a bank which led him into the finance world.
Al recognized the challenges of operating a credit union in a volatile economy while at the same time ensured through his leadership the Credit Union paid the highest possible dividend rates on share accounts and charged the lowest possible interest rates on loans.
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*Referred person must be 15 years of age or older, eligible for membership with 1st Northern California Credit Union, present a completed referral form when they apply, and become a member for referring member to receive the $25 deposit into their share account. Current members may refer up to 4 new members. Offer ends September 30, 2016.
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Tips for Teens
Going Out Without Killing Your Wallet
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I hope everyone is enjoying their summer. I know I am!
One of my absolute favorite snacks is movie theater popcorn, but it's expensive! Last I checked, a medium popcorn at the theater costs around $6. The price of the movie isn't that cheap either starting at around $12 dollars. So, how can you save money when going out?
Gas: Before you set out on your journey, you're going to need gas. While gas stations don't tend to offer discounts on their gas, you may be able to find gas gift cards at a discounted rate. Sometimes Safeway offers gas gift card discounts that change periodically, so check back often. Speaking of Safeway, you can earn discounts on gas by shopping at Safeway and earning points to use at specified gas stations.
Movies: There are a few ways you can save when going to the theaters. Costco sells discount tickets in sets of two that will save you a few dollars per ticket. The best part is that you don't need to drive all the way to Costco; they will email you the tickets! All you do is show up to the box office with your email conformation and tell them the movie you want to see and they will give you your movie ticket. As for the popcorn, get a large. Usually, the large comes with a free refill which can be used when your bucket is empty or right then and there; they will give you a smaller large bag. This is perfect if you are going out with a large group of friends or with your family. You may also receive discounts for signing up for enewsletters or for downloading an app.
Museums: If movies aren't your thing and you prefer going to a museum, then head over to the Contra Costa County Library website and look for the Discover & Go tab. The library offers discounts or free tickets to certain museums and other venues. All you have to do is reserve your spot ahead of time. You're allowed two reservations per year. You will have to print a confirmation page and take it to the venue to obtain your free or discounted ticket.
Parks: If you prefer spending time outdoors, the National Park Service will be waiving their entrance fees August 25-28, 2016 as they celebrate their 100th birthday. Remember, the National Park Service is different from the East Bay Parks. So, even though you won't be able to get into Mt. Diablo for free, you will be able to go to Muir Woods/Beach, the Point Reyes National Seashore, Yosemite, and John Muir's House for free, to name a few. Of course, the National Park's entrance fees have always been relatively affordable, so go and have some fun regardless of the date!
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Theme Parks: If Six Flags Discovery Kingdom, Great America, or Waterworld is your destination of choice, remember that you can receive discounted tickets to many entertainment venues just for being a member of 1st Nor Cal. Learn more here: www.1stnorcalcu.org/member-discounts
I wish you all a fantastic summer, or whatever is left of it anyway!
Luis Dominguez
Student Social Media Intern
1st Nor Cal Credit Union
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Retirement Solutions
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Understanding the role of cash in your
investment portfolio and your financial plan.
By Jason Vitucci, CFP & Gene A Schnabel
Perhaps no other asset class elicits such mixed feelings among investors as cash. In bull markets, cash is shunned. In bear markets, it's embraced. Having a better understanding of the role cash plays in your financial plan and its relationship to stocks and bonds is a critical step toward reaching your financial goals.
The dual roles of cash in your financial program
Cash pays for your short- to intermediate-term spending needs. But cash also plays two critical roles within your overall financial program.
1. A stable defense against the unexpected. A cash reserve cushions the blow of financial setbacks, such as unexpected expenses, a pay cut or a job loss. Without the liquidity of cash, emergency spending needs could force the sale of your stock and bond holdings at precisely the wrong time. A cash reserve equal to 6 to 12 months of income is typically recommended; for retirees, the recommended amount is two years of income depending on your specific requirements.
2. The flexibility to pursue new opportunities. In your portfolio, cash can help cushion against volatility and enable you to take advantage of attractive investment opportunities as they arise.
The risks associated with too much cash
Investors who are approaching retirement turn their focus to preserving their savings the closer they get to their retirement day. And while it may make sense to pursue a more conservative asset allocation as you approach retirement, "more conservative" doesn't necessarily equal 100% cash. Investors who shift to cash may be putting their future buying power - and their future goals - in jeopardy by abandoning their portfolios' growth potential. While cash provides liquidity and stability, it's not intended to be the primary holding within your investment portfolio because of low returns.
A November 2013 survey by Citi found that wealthy families had 39% of their assets in cash.
Investors are especially prone to maximizing cash allocations - and consequently limiting growth potential - during volatile bear markets when stock and bond prices are low. All-cash portfolios could be particularly vulnerable in times of deflation and inflation.
Cash plays a critical role in a financial plan and is a key building block of a well-constructed investment portfolio. But holding too much cash in your portfolio simply replaces the risk of principal loss with the risk of not achieving your financial goals.
Before you increase your portfolio's cash level, talk to a financial advisor about your current cash exposure from all sources (including cash inside mutual funds), as well as your tax concerns, financial goals, and cash flow and liquidity needs. Having a full picture of your current cash exposure, investment market exposure and your income requirements is the first step toward building a full financial plan that's intentionally structured to meet your needs.
At Bay Area Retirement Solutions, we are happy to take a look at your current financial plan. As a valued credit union member, we invite you to contact us for a complimentary financial planning meeting. We also invite you to attend any of our Retirement Planning workshops that we hold. For more information about our practice, our workshops, or to make an appointment, please call us at (925) 370-3750 or visit our website www.bayarearetirementsolutions.com.
Bay Area Retirement Solutions
1330 Arnold Drive, Suite 249
Martinez, CA 94553
Securities through First Allied Securities, a registered broker dealer, member FINRA/SIPC. Advisory services offered through First Allied Advisory Services, Inc. Registered Investment Advisor. Investments not FDIC or NCUA/NCUSIF insured, not insured by Credit Union, may lose value. Products offered are not guarantees or obligations of the Credit Union, and may involve investment risk including possible loss of principal.
1st Northern California Credit Union, Bay Area Retirement Solutions and First Allied are all separate entities.
Gene A. Schnabel CA Insurance Lic.: 0663016, Jason Vitucci CA Insurance Lic.: 0F59894
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FREE Financial Counseling
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Are you in need of financial counseling?
1st Nor Cal is here to help. Timely and honest debt advice is available to our members at no cost or obligation. Learn how to manage your finances.
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Make your appointment TODAY!
Just a reminder, you can annually request FREE Credit Reports from all 3 credit reporting agencies online by going to:
For FREE Financial Counseling, don't hesitate to contact:
Shelley Murphy
Senior Vice President of Lending & Collections
(925) 228-7550 Ext.824
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New Video - Godfather
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