What is Estate Planning?

Estate planning is one of the most important steps any person can take to make sure that their final property and health care wishes are honored, and that loved ones are provided for in their absence. Though often overlooked or put off in favor of more immediate concerns, a comprehensive estate plan can resolve a number of legal questions that arise whenever anyone dies: What is the state of their financial affairs? What real and personal property do they own? Who gets what? Does a personal guardian need to be appointed to care for minor children? How much tax will need to be paid in order to transfer property ownership? What funeral arrangements are appropriate?

What is an "Estate"?

Your "estate" consists of all property owned by you at the time of your death, including:

# Real estate
# Bank accounts
# Stocks and other securities,
# Life insurance policies,
# Personal property such as automobiles, jewelry, and artwork.

How Can an Estate Plan Help?

Regardless of your age, or the size and complexity of your estate, an estate plan can accomplish the following:

Identify the family members and other loved ones that you wish to receive your property after your death.

Ensure that your property will be transferred to those you have identified, as quickly and with as few legal hurdles as possible.

Minimize the amount of taxes that will need to be paid in order for your property to pass to others after your death.

Avoid the time and costs associated with the probate process by utilizing estate planning devices like living trusts and "payable on death" bank accounts.

Dictate the kinds of life-prolonging medical care you wish to receive should you be unable to make your wishes known when the time comes.

Set forth the kind of funeral arrangements you would like, and how related expenses are to be paid.

Brian Townley-Money Tips

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Tips on Buying Life Insurance

Know what you need:
The classic and best reason for an individual to buy life insurance is for protection against dying too soon. The person buying life insurance should be primarily concerned with seeing that his or her survivors do not face a financial handicap. There may be other reasons that apply: Life insurance is also purchased to pay estate taxes. Business relationships often require life insurance or can benefit from it, for example. Annuities offer a secure way for consumers to make sure they don't outlive their money. Beware of anyone who tries to sell you life insurance as an "investment." Life insurance should be purchased for the protection it will give you.

Term life insurance:
Most consumer advocates feel that term insurance is the best life insurance buy. Term is different from "whole life" or "ordinary life" in that you build up no equity, or cash value. In term, you pay each year for the cost of insurance, which typically increases annually as your chances of being alive the next year decline. Most term policies are renewable on an annual basis, and some have level premiums or a decreasing death benefit for a stated period -- one, five or ten years, or even to a specified age.

Whole life insurance:
Whole, or "ordinary," life insurance is usually sold with a level premium. In the early years of the policy, the annual premium will be higher than comparable term insurance. (But because its premiums are level, whole life's annual premiums may eventually be less than term.) Whole life policies build up a cash value that consumers can withdraw or borrow against. There are many variations of whole life. Premiums may be payable for a specified number of years on a limited-payment basis. Consumers also may have the option of a single premium — paying all of the premiums at once with a single lump sum.

Know the company you are buying from:

You can check the financial stability of any life insurance company through several reputable national rating companies. Some ratings are available at websites.

Shop around for rates:
Life insurance is a competitive marketplace, and much of the competition focuses on price. Don't hesitate to seek premium quotes from several different companies.

Shop for your own needs:
If term insurance fits, that's what you should shop for. If you want to lower your premium at all costs, you may want to consider using a direct writer — a company that cuts costs by operating without agents. Consider your own convenience, however: Do you want personal contact with an agent? Or if you buy an annuity, how fast can you get to your money in case of an emergency? If you are buying whole life, how fast does your money accumulate? What will the cash value be in one year? Three years? Ten years?

Update your coverage as your circumstances change:
Don't be misled by someone who tells you you should buy additional policies for children as they are born. Children rarely have an income and seldom require life insurance. But your situation may change dramatically from year to year. Review your net worth every few years and reconsider the prospects your survivors may face if you die.

Don't let yourself get fast-talked into changes:
Some life insurance policyholders in recent years have fallen victim to a practice called "twisting" or "churning." Churning occurs when your coverage is changed only to benefit the seller even though you may suffer a loss in the process. Churning often happens when people with cash-value policies are persuaded to convert their coverage to another policy, often one with a promise of better benefits. The problem is that the cash value of the original policy is raided in order to pay for the new policy. Luckless consumers may not realize until years later that the "higher" benefit policy is actually worth only a fraction of the value of the original policy.
Never buy a policy you don't understand:
If you are given illustrations or booklets, save that material with your policy. If your agent or company cannot explain the policy terms to your satisfaction, shop elsewhere. Make sure you understand the guarantees in your policy (not just the agent's promises of returns) and the surrender penalties if you choose to drop the policy at any time. These costs are often hidden in a life insurance or annuity policy.

Mutual Funds

Deflation ??

by: Lou Stanasolovich, CFP. CEO & President of Legend Financial

Deflation, although uncommon since the Great Depression, normally occurs because there are too few customers chasing too many goods and services resulting in competitive price cutting that leads to layoffs, falling wages, and a decline in b usiness investment and consumer spending. Consumers and businesses project that prices will be lower in the future, therefore; they delay their purchases making the economic climate worse and driving prices and wages down further.

Households (decreasing wages) and companies (decreasing revenues) with extensive debt are still forced to meet their fixed monthly expenses. Often, bankruptcies result or spending is cut to meet their obligations. This is what happened in the early 1930ês triggering the Great Depression. Japan has faced for the past twelve years and continues to experience deflationary pressures as prices are falling. The forecast for 2003 is expected to be a decrease of approximately one percent per year.

This type of deflation is charac terized as –bad deflation.” On the other hand, price declines may occur when companies find ways to produce goods and services more cheaply. These productivity gains are passed onto consumers in the form of lower prices, onto workers as higher wages as well as onto shareholders as higher profits. This mild deflation may be considered –good deflation.” Some see a strong possibility of mild deflation developing in 2003, as the lackluster U.S. economy continues to face concerns over excess capacity, weak employment growth, high levels of consumer debt, and deflation being exported from the Pacific Rim countries. The combination of these factors could lead to mild deflation in 2003.

However, historically mild deflation alone has not been a negative to either the stock or bond markets. The last time that the year over year rate of change for the Consumer Price Index (CPI) ended down was in 1954 (-0.7%). If we face mild deflation (CPI flat to down 2.4%), have no fear. The 24 years of mild deflation since 1872 saw the stock market rise on average by 14.6%. When significant deflation occurred (CPI down 2.5% or more) stocks performed poorly with av erage total returns of just 3.9%. Periods of significant deflation are accompanied by a better –real return,” because the high deflation rate is added to the stockês performance. All deflation is perceived to be bad because it has been associated with past economic downturns. However, not all deflation occurs during economic weakness. Deflation may occur during the early stages of an economic rebound, particularly when b usiness confidence and inventory rebuilding advances ahead of consumer demand.

As the economy reverts back to equilibrium, these deflationary pressures typically ease. Stock market performance tends to be better during non-recession years when mild defl ation exists. Long-term interest rates are typically higher during high deflation periods due to weak economic conditions. Periods of deflation, whether mild or significant, usually tend to cause short-term interest rates to rise to levels somewhat higher than long-term average interest rates. In summary, while serious deflation is always of concern to everyone, historically, mild deflation will not necessarily prevent stocks from rising. However, not all periods achieve average returns either.

Buffett's Words of Wisdom

When you mention Benjamin Graham, Warren Buffett, and value investing in the same conversation, you're likely to get everyone nodding and going along with what you say. That's because agreeing with a philosophy is the easy part. But actually understanding and applying the approach of that philosophy is another story.

Aside from what he's currently buying and selling, Buffett has no investment-related secrets. It is my sincere belief that if you read Graham's The Intelligent Investor and Security Analysis, along with everything Buffett has written, and then work on truly understanding and applying their principles to investing, you will outperform 75% of investors.

Graham sums up how to invest intelligently when he says, "Investment is most prudent when it is most businesslike." Apply that reasoning to your investment considerations, and you will already have a head start. But to elaborate on that idea, let's turn to some words of wisdom from the Oracle of Omaha himself.

"I am a better investor because I am a businessman and a better businessman because I am an investor."

Running a business and making an investment go hand in hand. It's that simple. You wouldn't buy a business based only on rapidly increasing profits, nor should you invest in a company on that one metric. Instead, the prudent businessperson and the intelligent investor would scrutinize the balance sheet and determine, for example, whether earnings growth has been coming at the expense of increased receivables as a result of poor credit policy. Furthermore, as any businessperson realizes, earnings are easily manufactured, whereas cash is real.

Buffett's 1973 investment in the Washington Post (NYSE: WPO) is a wonderful example of a businesslike approach to investing. The idea was simple. The Post owned a wonderful collection of media assets that Buffett concluded were worth about $400 million. The company, meanwhile, was selling for just $80 million. Was it a great business? Yes. Was there a satisfactory margin of safety? Yes. Case closed.

"Never ask a barber if you need a haircut."

Here, Buffett was alluding to investment bankers and analysts. Let's face it: These folks get paid when you buy what they're selling. To be fair, there are many excellent investment bankers and analysts who truly offer a valuable service. Buffett's illuminating point was that you already know the answer you're going to get, and it will be determined by everything but rationality.

"I don't try to jump over 7-foot hurdles: I look for 1-foot hurdles that I can step over."

Buffett's critical advantage over the pack is that he focuses on the boundaries of his circle of competence rather than the size of his circle -- although his is still probably bigger than most. It's illuminating that one of the most talented investment minds of our time made the bulk of his fortune through businesses such as insurance via GEICO, soft drinks via Coca-Cola (NYSE: KO), candy, razor blades, and a host of others that are simple to understand.

"We don't get paid for activity, just for being right. As to how long we will wait, we'll wait indefinitely."

Buffett has always said you should never allow the stock markets to guide you, because the market is really there to serve you. One of Buffett's greatest attributes is that he can be patient about investments until the time is right, regardless of how long that time may be. In one case, Buffett waited nearly four years to make a significant move -- in 1970, he folded his partnership and made virtually no public-market investments until 1974, when the price-to-earnings ratio of the S&P went from around 20 to 7. At that point, Buffett began buying all over the place.

During that time, Buffett became famous for saying, "I was selling stocks at three times earnings to buy stocks at two times earnings." The approach worked: Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) shares rose from $40 to $420 per share from 1975 to 1980, for about a 57% annual rate of return!

"When a management team with a reputation for brilliance joins a business with poor fundamental economics, it is the reputation of the business that remains intact."

A truly great business can survive with mediocre management. You should always consider that at some point, less-than-stellar management will find its way to the helm of any business.
Words to invest by From just these few simple words, you can develop a good framework for successful investing. Simply focus on investing in great businesses that you can understand, and then be patient. Do what Warren would do.

By Sham Gad, September 14, 2007

Identity Thefft

Video
A 10-minute educational video that provides an overview of identity theft and outlines the steps consumers can take

Holiday $ales Fail to Get $hoppers to $plurge

By Parija B. Kavilanz, CNNMoney.com senior writer
November 25 2007: 4:20 PM EST

NEW YORK (CNNMoney.com ) -- Although deep discounts brought out much bigger crowds of holiday bargain hunters, a major retail trade group said Sunday that shoppers actually spent less money this year over the crucial Thanksgiving weekend. The National Retail Foundation's (NRF's) 2007 Black Friday Weekend Survey said more than 147 million shoppers hit the stores over the Black Friday weekend, up 4.8 percent from last year. However, the trade group said consumers, on average, spent an estimated $347.44 in total on Thursday, Friday, Saturday and Sunday, down 3.5 percent from the previous year.

The world shops America
The NRF's projection put a damper on some earlier estimates, including one from MasterCard Advisors on Friday that estimated Black Friday purchases to hit $20 billion this year, up from $19.1 billion last year. Also, ShopperTrak RCT Corp., which tracks sales at more than 50,000 retail outlets, said Saturday that total sales rose 8.3 percent to about $10.3 billion on Black Friday, compared with $9.5 billion on the same day a year ago. "While last year showed a greater emphasis on high-definition televisions, this year consumers were focused on lower-priced doorbusters like digital photo frames, laptops and cashmere sweaters," NRF CEO Tracy Mullin said in a statement. Industry analysts said retailers this year are especially challenged to drive sales in the coming weeks as many Americans struggle to find spending money amid the ongoing housing downturn and other economic pressures. "Though Black Friday weekend was a complete success for many retailers, the results of the holiday season won't be determined until the last two weeks of December," Mullin said. While many malls opened their doors to throngs of discount shoppers at midnight, several retailers, including J.C. Penney (Charts, Fortune 500) and Kohl's (Charts, Fortune 500), kicked off Black Friday as early as 4 a.m. this year.

http://money.cnn.com/2007/11/25/news/economy/nrf_blackfridayweekendsales/index.htm

Home Buying

The homebuying process can seem complicated, but if you take things step-by-step, you will soon be holding the keys to your own home!

Step 1: Figure out how much you can afford
What you can afford depends on your income, credit rating, current monthly expenses, downpayment and the interest rate.

# How much home can you afford?
# Buying vs. Renting

Step 2: Know your rights
# Fair Housing: Equal Opportunity for All - brochure
# Borrower's rights
# Predatory lending

Step 3: Shop for a loan
Save money by doing your homework. Talk to several lenders, compare costs and interest rates, negotiate to get a better deal. Consider getting pre-approved for a loan.

# Looking for the best mortgage: shop, compare, negotiate - brochure

Step 4: Learn about homebuying programs
# Good Neighbor Next Door (formerly known as Teacher/Officer/Firefighter Next Door)
# Homeownership for public housing residents

Step 5: Shop for a home
# Choose a real estate agent
# Wish list - what features do you want?
# Home-shopping checklist – take this list with you when comparing homes

Step 6: Make an offer
Discuss the process with your real estate agent. If the seller counters your offer, you may need to negotiate until you both agree to the terms of the sale.

Step 7: Get a home inspection
Make your offer contingent on a home inspection. An inspection will tell you about the condition of the home, and can help you avoid buying a home that needs major repairs.

Step 8: Shop for homeowners insurance
Lenders require that you have homeowners insurance. Be sure to shop around.

Step 9: Sign papers
You're finally ready to go to "settlement" or "closing." Be sure to read everything before you sign!

Investing Books

The Intelligent Asset Allocator, by William Bernstein

William Bernstein is one of today's most unlikely financial heroes. A practicing neurologist, he used his self-taught investment knowledge and research to build a popular investor's website. Now, in the plain-spoken The Intelligent Asset Allocator, he shows independent investors how to build a diversified portfolio-without the help of a financial advisor.

A breath of fresh air for investors tired of overly technical investment tomes, this book will help investors:

Learn the risk/reward characteristics of various investment types.
Understand and apply portfolio theory for an improved risk/reward ratio.
Sharpen their focus, and take control of their investment programs.
William Bernstein (North Bend, OR) runs a website-www.efficientfrontier.com-known for its quarterly journal of asset allocation and portfolio theory, Efficient Frontier.

Eat the Rich, by P. J. O'Rourke

The best investing book in the marketplace on how the world works. It's so entertaining, that it's usually found in the humor section, not the economics section, of the bookstore. Disguised in all the fun is a powerful dissertation on why freedom creates incredible wealth. When you're done, do your part to save the future of the world - give it to your favorite bleeding-heart college kid.