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December Message to the Military Health System Team from the Assistant Secretary of Defense for Health Affairs, HON Thomas McCaffery
MHS Team:
Earlier this month, I joined many of you at the annual convening of AMSUS (the Society of Federal Health Professionals) at National Harbor, Maryland, to discuss the status of the Military Health System: what we’ve achieved, where we’re going as an organization, and how we will get there. Directly following AMSUS, I testified before the House Armed Services Committee alongside the Military Department Surgeons General, Joint Staff Surgeon, and the Director of the Defense Health Agency. Each engagement provided an important opportunity – and critical audiences – to share our steps in carrying out reform across the military medical enterprise to better meet the Department’s needs, and to reaffirm the MHS’s collective vision for the future.
I underscored the new challenges an ever-changing security environment presents to our military and, more specifically, to military medicine – challenges requiring our organization to adapt and evolve to best serve the combatant commands and the Military Departments as we together advance the National Defense Strategy. This period of MHS reform is a time to embrace change and forge an improved system of military health that delivers on our readiness mission to ensure that troops are fit to fight, and that medical professionals are ready to support them in training and on the battlefield.
To better deliver on our mission, the MHS is laser focused on three key areas of organizational reform. First, consolidated management of the direct care and purchased care systems. Second, a reinvigorated focus on readiness within the direct care system. And third, optimizing the size and composition of the military medical force, including the recruitment, education and training, and sustainment of skills to deliver on our readiness mission. For the most current updates on our MHS reform areas of focus, I’m attaching the prepared statement that the DHA Director LTG Place and I provided to the HASC at the recent hearings.
I would like to thank Army Surgeon General LTG Dingle for inviting me to speak at the MEDCOM Leadership Lecture Series on 10 December. This event afforded me the opportunity not only to speak about my leadership philosophy and approach, but also to hear MEDCOM leaders’ thoughts and perspectives on the various changes underway in the MHS.
In the weeks ahead, I hope many of you are able to enjoy some well-deserved time with friends and families over the holidays. For those deployed or unable to take R&R due to serving our warfighters and patients: thank you for your selfless service to the Nation. Each of you across the MHS is playing a part in significant change in our enterprise – helping to inform those changes, making them real, and dedicating your talent and expertise to our mission. I am grateful for your contributions and look forward to our continued work together in the New Year.
Tom
Should You Invest in Real Estate?
Just about everyone who invests does so in major asset classes including stocks, bonds, and cash equivalents. When it comes to real estate, though, you’ll find widely divergent opinions about its importance in an investment portfolio. There are some well-respected people and institutions who say that real estate investing is unnecessary, and there are others who will tell you it should be your primary asset class. I’ve recently debated whether I should start investing more heavily in real estate, so I wanted to lay out the basic arguments for and against real estate investing.
What is Real Estate?
The answer to this question is not simple because real estate investing comes in many forms. There are relatively passive ways of investing in real estate, such as Real Estate Investment Trusts (REITs). According to Investopedia, a REIT is “a type of security that invests in real estate through property or mortgages and often trades on major exchanges like a stock.” In other words, you can simply invest in a REIT like you do any other stock, mutual fund, or exchange-traded fund (ETF). Just send your money to your investment company, and you own a little slice of passive real estate.
There are more active methods of investing in real estate, such as fixing and flipping. You purchase a property, you make improvements to it, and then you sell it to someone, hopefully for a profit. As you can imagine, this would take quite a bit more work than investing in a REIT.
There are probably over 100 other ways you can invest in real estate. If you’re interested, I’d check out an article on Bigger Pockets, one of the largest websites about real estate investing, entitled “The Top 100 Ways to Make Money in Real Estate.”
Arguments Against Investing in Real Estate
Regular readers know that Vanguard is my go-to source for both advice and my own investments. Vanguard considers real estate an alternative investment, and according to them “alternatives usually come with more risks and higher costs.” They believe that a diversified portfolio of stocks and bonds provides enough diversification and that alternative investments are unnecessary. Only “sophisticated investors” should consider alternatives, and they see direct real estate investment as “expensive and time-consuming.” Most people have exposure to real estate in the equity in their house and diversified stock/bond funds that often include REITs, real estate companies, and mortgage-backed securities. For these reasons, Vanguard doesn’t think additional investment in real estate is necessary.
Another argument against real estate investing is that it can quickly become a second job. While you can hire property managers, they are probably not going to provide the level of service that the owner would provide. Most of us are already fully employed and don’t need a second job. In addition, owning investment properties can create additional legal risk.
When you purchase an individual property, it is like buying a single stock. You are taking what is called an uncompensated risk. Larry Swedroe defines an uncompensated risk as, “Risk – that is, the risk of owning single stock or sector of the market – that can be diversified away. Since the risk can be diversified away, investors are not rewarded with a risk premium (higher expected return) for accepting this type of risk.” Essentially, you are putting all your eggs in one basket that is not diversified by location or property type. Investing in real estate via a REIT can avoid this problem because REITs invest in properties that are diversified.
Real estate is an illiquid asset class with high transaction fees. While I can sell my stock or bond mutual funds or ETFs in seconds on-line and pay extremely low expenses to do so, it will take me weeks or months to buy or sell a property. In addition, I’ll likely pay 5-10 percent of the price in transaction costs.
Arguments for Real Estate Investing
Real estate is easily acquired, most often by purchasing your own single family house or condominium. You have to live somewhere, and there are several tax advantages to owning where you live. Interest payments on your mortgage and property taxes are probably tax deductible. If you sell your property, capital gains of up to $250,000 if you’re single or $500,000 for couples are tax-free. In addition, paying a mortgage forces you to save by making regular payments, some of which pay off the principle balance of your loan. That is money you’ll get back when you sell.
When compared to stocks or bonds, which have a global, efficient market, real estate often has a local, inefficient market. This means that if you are willing to look, you can probably find some bargains out there much more easily than you can find a bargain stock. Here’s a review of a good book on real estate investing for physicians.
One of the goals of diversification is to have investments that are not correlated with each other. In other words, when investment A drops in price you have investment B that does not. When compared to stocks and bonds, real estate is not perfectly correlated with other investments and therefore provides diversification. An article about the diversification benefit of REITs makes for an interesting read, if you’re interested, although it is a little old. Vanguard came to the conclusion that over-weighting REITs in a target date fund was not worth it. And this very well regarded guy doesn’t believe in over-weighting REITs either.
You can use leverage or “other people’s money” to increase investment returns. Instead of buying a property for $120,000, you could buy three $160,000 properties with a $40,000 down payment on each. This can increase your returns, but in a down market it can also dramatically increase your losses. As many found out during the housing market crash, leverage is a double-edged sword.
Real estate is an inflation hedge. Burton Malkiel says, “A good house on good land keeps its value no matter what happens to money.” Rents and property values tend to rise as prices rise, preserving your purchasing power. Since your mortgage payment doesn’t change with inflation, while rents are going up your mortgage payment remains the same. Stocks do hedge inflation somewhat, but the companies they represent and the stocks themselves tend to get hurt as the prices of raw materials rise.
The Bottom Line
There are a lot of different ways to invest in real estate, passively investing in REITs, fixing and flipping, owning rental properties, and all sorts of other investment opportunities. Like Vanguard, I don’t think it is necessary to invest in real estate, but it is something to consider if you think you will either enjoy it or believe the value it adds to your investment portfolio is worth the effort.
Intermediate and Senior Leadership Courses Available in the DC Area (Local Attendees Only)
Navy Medicine Professional Development Center (NMPDC) in Bethesda will be hosting facilitators from the Navy Leadership and Ethics Center (NLEC) for the instructing of two separate leader development courses in the coming months. Courses are as follows:
- Intermediate Leadership Course (ILC)
- 3-7 February 2020
- O4s (to include O4 selects)
- Senior Leadership Course (SLC)
- 6-10 April 2020
- O5s (to include O5 selects)
These are great opportunities for Navy Medicine officers local to the DC area to attend leader development courses while being offered locally. Currently these classes are only being offered to local attendees.
The point of contact for registering for the courses is LT Ryan Rigby (contact is in the global).
If you want to read how to get into these courses, you can read about them in this document.
Two MOAA Articles About the NDAA
Here are two articles about the FY20 NDAA:
US News & World Report: Military Health System in the Crosshairs
Here’s a link to the article:
Acting SECNAV Modly Orders $100M Shifted Toward Navy Education Effort
Here’s a link to this article that perhaps will increase the opportunity to receive education like Joint Professional Military Education and the Naval Postgraduate School Executive MBA:
Acting SECNAV Modly Orders $100M Shifted Toward Navy Education Effort
2020 BAH/BAS/Basic Pay Rates and Finance Friday Articles
The DoD released the 2020 pay info:
Here are my favorite articles this week:
9 Practical Tips to Find Contentment
Overweighting REITs: Why Don’t More Experts Recommend It?
Riding Out Private Real Estate Deals
Here are the rest of this week’s articles:
10 Guiding Principles for Physician Debt Management
Durn Furriners – A Discussion of Foreign Stock Allocation
Owning Oddities – Factor Investing
Spend Money On Experiences… And Some Things, Too
Supersavers and the Roth vs Tax-deferred 401(k) Dilemma
WCI vs PoF: A Pro/Con on Donor Advised Funds
What’s the Best Age to Take Social Security?
While On International Travel, Always Transact In Local Currency
Summary of Changes to New Navy Fitrep Instruction
The Navy recently updated its fitrep instruction. Here it is:
BUPERSINST 1610.10E – NAVY PERFORMANCE EVALUATION SYSTEM
The changes are not very relevant to this audience unless you are a reporting senior, but for those that are here is the summary:
The updated instruction is attached. Below is the NAVADMIN but here is a summary of changes:
This revision incorporates policy guidance contained in NAVADMINs 141/17 (Physical Readiness Program Policy Changes), 304/17 (Physical Readiness Program Policy Change), and 193/19 (Active Component LDO and CWO Fitness Report Officer Summary Groups). In addition, the following new guidance applies with the updated instruction:
- Incorporating reference (a) guidance when a member willfully does not meet deployability standards and authorizing the submission of a Special Report when a member willfully does not meet deployability standards.
- Requiring reports for Navy reservists who perform active-duty periods that are greater than 90 days and prohibiting reports for Navy reservists who perform active-duty periods that are less than 90 days.
- Assigning September 30 as the periodic report date for Chief Warrant Officer-1.
- Prohibiting delegation of reports on members in the grades of E5 through E9, including members frocked to E5, below the grade of lieutenant designated department heads.
- Prohibiting reporting seniors, raters and senior raters from evaluating members who have filed an accusation of sexual misconduct against the reporting senior, rater or senior rater while an investigation is pending to reflect the requirements of reference (b).
- Incorporating changes to flag officer reporting requirements, including changes to blocks 14-15 (Period of Report Table 19-1), requiring submission 15 days sooner and changing the verbiage for blocks 10-13 (Occasion of Report) to read, Special Reports will be selected for Concurrent or Operational Commander report.
- Adding billet specific language to the instruction requiring reporting seniors evaluating Navy Installation Commanding Officers (CO) to document in block 41 (comments on performance) their performance in managing family and unaccompanied housing programs. Additionally, reporting seniors evaluating Naval Facilities Engineering Command COs are required to document in block 41 (comments on performance) their performance in facility management of family and unaccompanied housing and enforcement of Public Private Venture business agreements.
Throwback Thursday Classic Post – Deployment Gear Lists
The gear you need for a deployment will obviously depend on the type of deployment, but every time I deploy I take a look at the gear lists I have to see what I might need to bring that I’m forgetting. Some of the gear lists and deployment checklists I have are old and I don’t even know who created them, but I wanted to post them so people could use them if they so desired. Here they are:
CDR Temerlin’s Gear Organization
Recommended Blackhawk Stomp II Load
Thanks to Steve Temerlin and whoever else created these, and if you have any gear/deployment lists you’d like to share just use the Contact Me tab and you’ll then be able to send them to me over e-mail once I reply.
Joel Schofer's Career Planning Blog 