This one is going to sound cliché, but here you go anyway. We begin 2003 tomorrow. I think many of us will be thankful to put 2002 to rest and move onward with hopes for better things ahead. In keeping with the tradition of making New Year's Resolutions, I would propose a resolution to review your financial well-being.

Here's a shopping list of things to consider reviewing:

· Have you had your estate plan updated or reviewed in the past five years or so? Perhaps 2003 is the year to do it.

· When is the last time you had an accounting of how you spend your money? For most people, control of their cash flow is a primary key to financial success.

· It's time to take a look at your portfolio to see where you stand. I suggest maintaining that long term perspective while doing so. If you haven't been in to see me in more than a year, maybe we should have a review appointment.

· Have you done a review of all your insurance policies to make sure they still serve you they way they were originally written? Perhaps you need more coverage in some areas and less in others?

· Now is the time to do tax planning. I say it over and over again; however, tax planning is a year-round issue, not just an April 15th issue.

· It's time to review your debts. If they are not paid in full, each one should be reviewed to determine if it's being handled in the best possible way.

· Lastly, it's time to make some short, intermediate, and long-term financial goals that can be worked on during 2003.

Ultimately, it's up to you to be responsible for your financial security. I am here to help and do all that I can; however, the more involved you are in the process, and working towards your financial goals on a consistent basis, the better the results can be. You need a good financial team to be successful, and I believe that you are a part of it.

Happy New Year! I look forward to seeing you all in 2003.

It's the last week to do tax planning while still in 2002. Make sure you leave no stone unturned. In addition to my previous suggestions, here's a quick reminder of a few things you can do:

1. Call your tax preparer to check for any last minute ideas he or she may have for you.

2. Do any tax-loss selling you can to offset any potential gains or the $3,000 of ordinary income the IRS allows annually.

3. Pay any California State income tax you may owe before the New Year. (In most cases, it applies to your 2002 federal tax return as a deduction).

4. If you didn't pay the second installment of your property taxes, you might consider paying by December 31st to get the deduction on this year's return, instead of waiting until 2003.

5. If you are self-employed, I suggest making any business expenses that you can before year-end.

6. Keogh plans have to be established prior to year-end. (This includes profit-sharing plans).

7. Charitable contributions need to be made prior to year end.

8. Defer any income you can, if it makes sense.

Consider how your actions will affect your taxes for 2002 versus 2003. Sometimes it's best to take or use tax benefits in the upcoming year.

You've got one week left; make the most of it. Remember to consult with the appropriate experts before you act.

Most of all, I wish you and your family a wonderful Christmas.

It's wet, windy, and dangerous out there on the roads these days. We've got a moderate El Nino weather pattern with us this winter. I suspect we'll see more than our share of stronger than normal storms this winter. There could be a few just like the one we experienced the past few days.

This is a good time to spend an hour with your insurance agent to review your automobile coverage. Just like everything else in the financial world, it needs to be current, too. Things change in your life that can affect the type of coverage you carry.

Here are a few areas you want to review to make sure your coverage is still right for you. They include, but are not limited to, the following:

· Collision coverage
· Comprehensive coverage
· Liability coverage
· Rental Car coverage
· Correct deductible amount for you
· Medical coverage
· Towing coverage

Each of the above policy areas is an important component of your coverage. In particular, I suggest that you review your overall liability coverage relative to your net worth. It should be more than your present net worth. Some of you may use a combination of an umbrella liability policy and an automobile policy to provide adequate liability coverage.

Before you have a fender bender or worse, take a few minutes to review your present coverage with your agent. Make sure you are in good hands. (Pun intended).

Happy holidays to you and yours!

Awhile ago, I wrote a little bit about there being down days in any financial market; well, last week marked the first down week after a long run of eight straight "up" weeks. Here are a couple of simple thoughts on this:

1. The run of eight straight "up" weeks was the longest in years. Even great bull markets have down weeks or months (just remember all the down weeks and months during the 1990's).

2. It isn't healthy for any investment to simply go "up," or without some adjustments; I consider the current adjustments as a healthy sign for the financial markets.

3. There are still things that can create short-term problems; there have always been potential issues, and there will always be the potential for issues to arise.

4. Keep your focus on the long term, not the short term.

5. The growth of the economy is what matters in the long term; therefore, the best things to watch (as a long term investor) are the long term trends of the economy.

Happy holidays to you and yours,

David

When you open your year-end statements or review your accounts it pays to focus on the total shares you own as opposed to your total account value. That's because the total value can change a great deal from quarter to quarter. However, that can become a pretty meaningless number over short periods of time, such as a couple years or so.

Successful long-term investors focus on building asset bases. The old adage that building wealth is based on assets, assets and more assets, refers to the accumulation of positions of value, that over long periods of time, can grow or appreciate in value.

Most all of us have benefited from buying more shares at lower values over the past three years through dividend and capital gains reinvestment programs, and by adding to your accounts. If you focus on how many more shares you are accumulating, you'll see that there is great benefit in buying low. Though it may not feel good, this is what buying low is like. The irony is that making money means being able to buy low and sell higher in the long term.

As I've said so many times before, the markets don't just go up. They also don't just go down. So, try to remember, "it pays to share."

Happy holidays to you and yours.

You still have time to make an annual gift to a relative, friend, or anyone else to reduce the size of your estate for estate planning purposes.

For the first time in many years, the amount you can gift someone without gift taxes has increased. The old amount you could give was $10,000 per year, per person. The new increased limit is $11,000 per year, per person. Therefore, a husband and wife could give an individual a combined $22,000 without gift tax consequences. (The gifts are not deductible to those making them.) You have until December 31, 2002 to make your gift. It can be cash, securities, real estate, or other items of value.

Each type of asset gifted has differing tax consequences to the person who receives the gift. Cash is generally the easiest and cleanest gift to make in terms of taxes. It may not be the best gift to make in terms of estate planning. The gifts are not income to the person receiving them. However, the earnings over time from the gift is taxable to the person receiving the gifts.

Time is running out on gifts for the 2002. I suggest you make your plans now before it's too late. Often, it's difficult to make a gift last minute. I also suggest you consult your tax advisor and estate planning attorney before making any 2002 gifts.

On a personal note, happy Thanksgiving to you and yours.

Now's the time to save money on your 2002 tax returns by making smart tax planning moves. You only have forty three days left for last-minute 2002 tax savings. Here are five things you can do prior to January 1, 2003, that could save big tax dollars:

1. Pay any California income taxes owed.

2. Pay both installments of your real estate taxes, instead of waiting to pay the second installment in April 2003.

3. If you are self employed, I suggest making any business expenses that you can before year-end.

4. If you are self-employed and do not have a retirement plan, I suggest looking into setting up a Keogh plan before year-end.

5. If you are charitably inclined, make sure your charitable contributions are made prior to year-end to get the benefit of the deductions.

Naturally, I encourage active tax planning. I would also suggest that you consult me or your tax advisor before making any move, as not everyone will be eligible for all of the above suggestions.

When short-term interest rates are at 41-year lows, the message from the Federal Reserve Board cannot be to expect to make anything in CDs, savings accounts, or money market accounts.

Their message is that you need to take a little risk to make a decent return. When you take into account taxes and inflation, you are not making any real return at 1.25%. Some money market accounts are paying even less than one percent.

You can now invest in moderate mutual funds called balanced funds or equity income funds. They buy blue-chip, dividend-paying common stocks and bonds. In these balanced funds, you'll likely see dividends in the 4% to 5% range, with the potential for appreciation.

In addition, high-yield corporate bond funds are paying dividends around 10%. That's approximately 8 times the current Federal funds rate.

The issue is not "will things ever get better," it's a matter of "when." As I've said for years, buying low makes for better returns when you sell high.

If you want more information about the above ideas, please give me a call before investing.

More from the American Funds Advanced Advisors Forum.

The junk bond market garnered a terrible reputation during the Michael Milikin leveraged buy out days a dozen years ago. Is it time to reconsider junk bonds for your portfolio again?

Junk bonds are also known as discount corporate bonds. They are a fundamental and essential part of the economy. Discount corporate bonds are a way for many different corporations to finance themselves without borrowing from a bank or issuing more stock. As a result of this fundamental economic need, they are not going away or to be considered an economic anomaly or fluke.

Why would you invest in discount corporate bonds? Generally, discount corporate bonds perform poorly when the economy is not doing well. As such, they are essentially the only part of the bond market that has not done reasonably well during the past couple of years. In fact, they have lost value while many other types of bonds, particularly government bonds, have gained in value. In many cases, they also represent an opportunity to get a double digit yield. Right now, the difference(or spread) between the yield you can get with a junk bond fund and a government fund is at historic levels.

As the economy improves, the junk bond market should see price appreciation. In addition, you're getting a high dividend payout. The combination of the two is called total return. In this case, it could be quite attractive going forward.

I believe the best way to invest in discount corporate bonds is through a mutual fund. Before doing so, I suggest you give me a call to discuss the risks and opportunities available. Investing in a discount corporate bonds or junk bond fund may not be right for everyone.

At an Advanced Advisors Forum presented by The American Funds Group last week, Jim Dunton, a senior portfolio counselor of 40 years, made a couple of very interesting points about the economy and the financial markets of today.

1. During the first two quarters of the recovery from the 1990 Recession, the rate of economic growth was one- to two-percent (1% - 2%).

2. The rate of recovery during the first two quarters of this most recent recession has been three percent (3%).

Perspective: While this recession may have felt as tough as the 1990 Recession, it wasn't nearly as deep. In addition, the recovery rate has been two- to three-times stronger. Sometimes you don't believe things are getting any better because it doesn't feel as though that's what is really happening. Point in fact, many professionals I have spoken with continue to say that people may be surprised to find that the economy is stronger than they may believe.

While I certainly can't predict the future, I do know it's important to keep focused on the underlying longer-term economic trends and not short-term news and fluctuations.

More from the American Funds Advanced Advisors Forum next week.

Asset protection comes in many sizes, shapes, and forms. With fall and winter upon us, here are a few thoughts about protecting your home:

· Check your drains for clogs by running water through them.

· Check your roof for leaks.

· Clear debris away from the pathways where water runs through your property so it doesn't dam up during heavy storms.

· Have your chimney inspected for dangerous deposits that could cause blockage of smoke leaving the house or even a chimney fire.

· Make sure your heater has a safety inspection and that its air filters are clean.

· Since real estate has had such an unusually strong run, I suggest you go over your policy with your agent to make sure it still covers the current value of your home and the costs of potential repairs or replacement.

Remember, it's an El Nino year which can bring heavier than normal rains. Staying one step ahead of problems can save you thousands of dollars and hours of stressful work.

The financial markets have come roaring back from their bottoms over the past week. Does this mean we have the beginnings of a new bull market? Will it mean the end of down days? Are we off to the races? The answers to these are pretty simple; maybe, no, and probably not.

Does this mean we have the beginnings of a new bull market?

This could be the end of the two and a half year old bear market. Only after a clear pattern of growth has re-established itself will become clear that a new bull market has arrived. So, interestingly enough, we won't even know the bull has arrived until we are well in it again.

Will it mean the end of down days?

There will be down days in any market, bull or bear. Therefore, you can't or shouldn't try to interpret too much in any short term move, i.e., sell-offs after huge runs to the plus side like the past week are not always indications of anything in the bigger picture.

Are we off to the races?

Since the recession we experienced was the weakest in decades, it's not likely the new period of economic expansion will be a barnburner. More so, I expect we could see more moderate sustainable growth. In my opinion, this is healthier for long term growth. I believe this should also result in moderate more average returns in the financial markets.

Whether we are in a new bull market now or not, keep you ears and eyes tuned to the signs of continued economic growth. This is what should lead the way to better days ahead. Many economists believe we are getting very close, I agree.

The last three months of the year afford a nice opportunity to do tax planning. Use the fourth quarter to determine where you stand with respect to your 2002 tax situation. In doing so, you'll be able to identify any needs or actions that you might address prior to year-end.

One thing some people are able to do is to either accelerate or defer income. Choosing to take a distribution from your retirement account after the end of the year is one example of this. By waiting less than 90 days to take a distribution from your retirement account, you've moved the income from your tax 2002 return to your 2003 tax return. This action will put off the taxation of this money for an entire year. It might also reduce the estimated quarterly taxes you have to pay for 2003.

On the other hand, some people will have a lower income in 2002 than 2003. Their best choice could be to take the distribution in 2002 using or benefiting from the lower tax bracket.

Whenever you have the opportunity to choose the timing of income you will be receiving, it's always best to take a little time to consider the tax choices available to you. With 2003 less than 90 days away, this is prime time to make income and tax planning decisions.

As always, make sure to consult your tax advisor before acting.

This September capped off the worst quarter since The 1987 Stock Market Crash. As I mentioned in two of my recent Tip of the Week E-mails, September has historically been the worst month of the year for the financial markets.

Today, October 1st, started out with a bang - no pun intended. They say Iraq agreed to arms inspections terms. Of course, only time will tell here. The stock markets liked this news by staging huge rallies across the board.

The bigger news might be that corporate insiders have been net buyers of their company stocks. During the heydays of the Bull Market of the 1990s corporate insiders were net sellers of their own company stock. In addition, I read recently that more and more companies are winding up on buy lists of various brokerage firms. While these messages may not tell us where the market is headed short-term, they could indicate signs of a long term improvement in the financial markets.

I like to practice what I preach. I have sent in two retirement plan investments in the past week. I don't know for sure if this is the bottom yet. However, I do know it's nowhere near the top.

On The Financial Markets

In following up last week's Tip Of The Week, you can see that corporate pre-announcements, mutual fund window dressing, and the Federal Reserve Bank's decision to keep rates steady with a bias towards easing has created the expected retesting of the July market lows. (Remember, last week I mentioned that September is historically the toughest month for the financial markets.)

I remain committed to the idea of seeing better times in the financial markets in the future. As such, yesterday I sent in a contribution to my retirement account to take advantage of the current environment.

On the Local Real Estate Market

Some of you may have seen the recent article in The Tribune stating that we have vacancies in our local rental market for the first time in a long time. There is no doubt that vacancies can have an affect on the rents landlords receive. Rent restraint can have a direct relationship to real estate prices. If you can't increase the rents enough, you'll end up with pretty difficult cash flow conditions to justify.

In addition, I've been told that homes selling in the $500,000 - $700,000+ are seeing softness and price reductions.

If we see an increase in interest rates in the future, this too will soften the price of real estate as I mentioned in a Tip Of The Week not too long ago.

Final Thought

Investing is about looking to the future. Real estate has been hot and the stock markets have been cold.

Look to take advantage of lower prices and weaknesses when investing. This sometimes means not following the crowd. Buy low - sell high.

Historically, the month of September has been the worst month of the year for the financial markets. It is difficult to say why September has been such a tough month for the stock markets - it just is that way.

The next couple of weeks are a time when some companies might pre-announce any changes in their guidance or financial expectations. So, it could be a period when we see some market volatility.

In addition, some portfolio managers do what's called "window dressing" at the end of a calendar quarter. This is where they sell holdings they don't want the public to see in their portfolios at the end of a quarter. Window dressing can also create short term market volatility.

If you're a long term investor, my suggestion is not to consider a tough September anything more than another buying opportunity in a long bear market.

Keep your mind on your long-term goals while continuing to take advantage of short-term volatility.

There's nothing fancy about this week's tip. Simply put, too many people do their tax planning after the end of the year or in late December. The secret to good tax planning is to do it now and not when it's too late.

Here are a few simple things to keep in mind for 2002:

1. Review this year's income as opposed to what you made last year. See if there are any large differences. If so, it's time to consider how this will affect your 2002 tax liability.

2. Did you refinance your home? If so, call your tax preparer to see how the new interest deductions and deductible costs will affect this year's income tax return. Many people will end up with lower annual home interest deductions accompanying their lower payments. The end result will likely be a higher tax burden.

3. Did you increase your retirement plan contributions as a result of the higher contribution limits under the new tax law? If so, you want to make sure that you are properly withholding taxes on your paychecks. Perhaps you can increase your take home pay.

4. Did anything in your life change that will affect your income or tax return during 2002? If so, it's time to do some additional tax planning.

These are just a few of many things that could affect your 2002 tax planning. The best time to be prepared for those affects is mid-year, not year-end. Do yourself and your family a favor by taking an hour or so to review these issues. If necessary, give me or your tax preparer a call to see about making any adjustments to this year's tax plan.

During the 1970s people grew accustomed to high interest rates on their short term investments, i.e. CDs, savings accounts, and money market funds. The reason for these abnormally high interest rates was very high inflation.

When it comes to the rates your short term accounts pay, it's the Federal Reserve Bank that is ultimately controlling them. The basis for the short term rates the Federal Reserve Bank sets is determined by the strengths or weaknesses in the economy. Here's how it generally works:

· The stronger the economy, the more inclined the Federal Reserve Bank is to raise interest rates. This can help keep inflation and the pace of the economy from ultimately getting out of control.

· The weaker the economy the more inclined the Federal Reserve Bank is to reduce short term interest rates to induce more economic activity.

· If the economy is moving along at a pace which the Federal Reserve Bank deems to be about right, it generally takes a neutral bias and does not change short term interest rates.

At present, the Federal Reserve Bank is leaving short term interest rates alone. They have a bias towards weakening. This means that they would be inclined to reduce rates again should the economy weaken any further. It's important to note that a bias towards weakness is not a move as a result of weakness. It merely means caution. They may not decrease rates again during this cycle.

I believe we will see interest rates increase over the next year or so as the economy improves. This should in turn increase the rate of return you are getting on your CDs, savings accounts, and money market funds. However, I do not think we'll see a strong recovery. Therefore, I believe the increases in interest rates will be slow and mild.

Of course, the above is not withstanding any unexpected event, economic or otherwise, that could change the course of the economic direction without warning.

If you're holding any stocks or securities that you might want to sell at a loss, you should consider doing so before the year is over so you can take advantage of it during 2002.

If you have capital gains that will apply to 2002, often the losses can be used to help offset the gains, reducing or even eliminating taxation.

If you end up with no capital gains for 2002, you can use up to $3,000 in capital losses per year to offset up to $3,000 in ordinary income. In doing this, any extra or unused capital losses can be carried over to the following year.

The reason to think of this now is that it's always easier to do tax planning during the year as opposed to rushing at year end.

Please call me or consult your tax consultant before selling securities or implementing the tax strategies above to make sure to get the most from your decisions and actions.

What in the world could ever slow down the hot real estate market?

Clearly many things can slow or stop a hot real estate market. Here are three issues to consider:

· An absence of qualified buyers as prices escalate.

· Competition from other investment opportunities that display more acceptable valuations.

· Higher interest rates.

The argument for higher interest rates is very plausible. Interest rates will most likely increase some as the economy improves. Higher interest rates should mean higher mortgage rates. More costly mortgages inevitably make real estate more expensive, without seeing another penny increase in prices.

Combining higher mortgage rates with the already higher real estate prices may be the double whammy that slows, what some consider to be, a real estate market that's already too hot.

A couple of weeks ago, a client said he was getting "a solid two percent" in his cash or money market account. At the time, I couldn't help but think that no one would have said that a few years ago; in fact, with interest rates at 40-year lows, most people probably won't even keep money in these accounts once the stock markets begin to improve.

Keep in mind that the financial markets have historically tended to move quickly, or in spurts, at the beginning of a new Bull market. On a day when the stock market is up by 6%, missing that one day is like losing three years' worth of interest in your cash or money market account. If you miss just a few big days during a Bull market, you can end up dramatically impacting your long-term results.

We never know what the future holds - nor can we guarantee it. We can, however, learn something from history.

Here are a couple of tips that may protect you financially when booking a trip:

1. Sometimes, travel vendors (such as cruise lines or airlines) go out of business after you've booked your trip but before you actually take it. Travel experts always advise that you pay for your trip with your credit card - never with checks or cash.

Travel experts also advise paying with your credit card no earlier than 60 days prior to the departure. Generally, the 60-day window is the period of protection provided by credit cards. (Of course, it's important to note that every credit card has varying rules regarding consumer protection; therefore, I suggest that you call your credit card company to see what protection they may or may not offer you).

2. If you are going to purchase travel insurance, it is advisable to purchase travel insurance privately. Many people purchase their travel insurance directly through a cruise line or travel agent; however, if these companies were to go out of business while holding your premium money, you wouldn't have the coverage - or get your premium money back. The travel experts I've spoken with recommend that you go directly to travel insurance companies for coverage. (You may want to search the Web for more information on direct purchase of travel insurance.)

Like anything else in life, it's the little things that can make a big difference. Take the time to protect your investment when preparing for your trip.

According to Michael Johnston, Executive Vice President of the Capital Group (the company that manages the $300 billion American Funds Group), our current Bear market is very similar to one the country experienced in 1962.

Here's what happened during that period:

• The stock markets were coming out of a time of high valuations - like today.
• The country experienced a mild recession followed by a steady recovery -like today.
• We had low inflation and low interest rates - like today.

The end result was a healthy sustained economic expansion, accompanied by a sustained positive move up in the financial markets.

Michael made a point of saying that today's environment is very much like 1962. While no one can predict the future, it is clear that we can learn from the past.

As I've said before, try to keep a long-term view when it comes to investing. Keep your wits - and perspective - about you.

I heard a great statement on CNBC yesterday morning as I was getting ready for work. It goes something like this: "Don't do something that will make you feel good for the next few weeks and bad for the next few years."

I believe we are in a panic-driven sell-off. As you know, I've been advising people that I don't believe selling into a panic will serve any good. If you can, buying low is what you want to try to do. My wife, Allyson, and I have continued to invest throughout this period into our American Funds retirement accounts.

The economy is getting stronger, and interest rates are at 40-year lows. There are good prices popping up throughout this period, and I am sure the American Funds and other investment managers are snapping them up.

The First Rule of Investing is: "Buy low, Sell high." The second rule: "Don't forget Rule #1."

I wanted to write a quick note to remind people that investing in long Bear Markets can be very beneficial to building portfolios.

An old Asian proverb says, "Look for opportunity in crisis or chaos."

It's not often that you'll be able to build your assets over a two-year-plus period at such low prices. In fact, the last time the financial markets experienced a two-year Bear Market was from 1973 to 1974, and we may not see this again in our lifetimes.

As I've said before, if your long-term plans haven't changed, buying low generally can help the overall success of your portfolio.

Try to keep in mind that most investments - including stocks or real estate - don't only go up in value. Nor do they only go down. It's investing over the long-term that generally makes people financially successful.

Are the guardians named in your wills current?

One of the most simple but memorable things my father used to say is that, "Time sure flies." When parents do their estate plans, they should be reminded that this isn't a one time action. Over time, life and people change.

If you still have dependent minor children, I suggest you take a few minutes to think about who would be acting as their guardians should you pass on. Sometimes, the guardians you originally named in your estate plan are no longer appropriate today; they may no longer have the desire to serve as guardian, or perhaps they have moved or have become ill.

Do yourself and your children a favor: Take a few minutes to make sure the guardians named in your wills are right for today. It is an exercise you won't regret; neither will your children.

The greatest asset most Americans will ever have is their ability to earn a living. Using the income created by their abilities, Americans pay for day-to-day living, put their children through school, and invest for their short-, intermediate- and long-term needs.

If a person averaged $45,000 per year over a 45-year career, they would earn a total of $2,025,000. That is a lot of money. Earning potential of this kind needs protection, and the best way to do that is to buy disability insurance.

Disability insurance is a type of health insurance that provides periodic payments when the insured is unable to work, due to illness or injury, as verified by a medical doctor.

Simply put, many Americans do not have any disability insurance - or very little. Is it really worth risking everything you could earn over your lifetime in order to save a few insurance premium dollars?

You protect your car, home and health with insurance. There is no reason in the world not to protect your lifetime-income earning potential, as well.

My wife and I have a habit of buying fun stuff while relaxed and away on vacation. Often, this can include picking up a piece of art or a collectible for our home or the office.

Of all the collectibles experts I've interviewed over the years on my radio show, there is one theme that stands common among them; buying art and other collectibles is about having fun. They are things you should want to have in your home.

If you buy them as investments, you take the chance of not being successful. Art and collectibles lack an efficient market for buying and selling. They are also non-essential items that can be out of favor in difficult economic times.

Finally, unless you buy the really high end items, you take a greater risk of having something people might not want years down the road. There are many examples of this throughout time.

The bottom line is to collect for fun above anything else. If you happen to get lucky and someday make money on it, more power to you. Good luck, and good collecting!

Rental Car Damage Waivers - June 18, 2002

Summer vacations are upon us. Many of us rent cars while away on a trip. Did you know that rental car agencies make a pretty fair profit on the money they charge you for their insurance in case you are in an accident?

Before you go on vacation, make sure to ask your insurance agent if you would be covered by your present automobile policy, should you damage a rented vehicle. Even if you are covered by your present automobile policy, make sure you understand the limits of your policy.

If your agent says you're in good shape and don't need the rental car agency's coverage, sign the waiver - but don't sign the waiver before you know. It can be a very expensive way to save a few dollars a day, otherwise.

As the price of housing increases on the Central Coast, the need to stay current with your homeowner's insurance policy increases, too.

The cost of purchasing or building a home on the Central Coast has risen quite a bit over the past few years. A common mistake is not regularly staying in touch with your insurance agent. As a result of the increase in the costs of building or buying locally, it's possible that your coverage could be inadequate.

I strongly urge that you review your policy with your agent to make sure you are adequately protected.

Insurance coverage is not something that you can go back and re-do once you have a claim. Do it right beforehand.

During the last ten years, investors have gotten away from dividend-paying common stocks to more aggressive types of stock. If we see lower rates of appreciation over the next few years, dividends will again play an important role in total return, as part of a balanced, diversified portfolio.

What are some of the demographics of victims of identity theft? According to the Federal Trade Commission Identity Theft Hotline and Data Clearinghouse, most identity theft happens to people between the ages of 19 - 60. The average age of a complaint was a 41 year old. In fact, those between the ages of 19 - 50 years of age represent approximately 76.8% of all identity theft.

Logically, those age groups represent the majority of the working population of our country. They also suggest that identity thieves prefer stealing from people who are financially very active with respect to spending, earning power, and investing.

The first thing you can do to protect yourself from identity theft is to be aware of who is most likely to become a victim and be more alert.

· Credit Card Theft / Fraudulent Credit Card Usage

· Unauthorized Phone, Cell Phone or Utility Service Theft

· Bank Fraud

· Fraudulent Loans

· Government Documents or Benefits Theft

· Using your personal information to gain employment, obtain medical records, evade legal sanctions or criminal records, obtain tax refunds, open or access Internet accounts, declare bankruptcy, lease residences, and purchase or trade in securities

I personally know someone who had their identity stolen. She had to close all of her accounts, get a new Social Security number, obtain new IDs, change her phone numbers, and even move to a new home.

During this short series, I will try to educate you on different types of identity theft and give you a few ideas on how to better protect yourself.

Many insurance policies have changed over the years. The type of coverage and amount may not be what you need. Given the changes in policies themselves, and the high costs of rebuilding, I strongly suggest that you contact your insurance agent to make sure you have the right kind and adequate amount of homeowner's insurance.

Ever get an important piece of financial mail? How about getting that important piece of financial mail late? In either case, it's possible that (by getting it late) you could end up with a problem relating to your taxes, insurances, investments, or loans and credit ratings.

Here's the tip:

Keep the envelope that was used to mail you the letter or information. It's postmark may help you prove when it was mailed and when you might have received it.

Long-term investing will include Bear Markets and market fluctuations. That should have been a given, going into the planning and implementation process.

Has your level of comfort or ability to tolerate market fluctuations changed? Many people are finding that they handled the Bear Market pretty well. Others have had a more difficult time with the duration and movement of the financial markets.

If you have learned through this Bear Market that the fluctuation was more than you'd like to withstand again, you should consider changing your long-term investment planning to reduce risk and volatility.

If nothing has changed in this regard, it is reasonable to suggest that you keep to your long-term financial plan. In fact, Bear Markets provide an opportunity for you to buy low, using dollar-cost-averaging to keep your average share prices down.

Long-term investing will include Bear Markets and market fluctuations. That should have been a given, going into the planning and implementation process.

Has anything changed in your immediate family or personal situation? Many people will need to change their long-term financial planning if something has changed at home.

If nothing has changed, it is reasonable to suggest that you keep to your long-term financial plan. In fact, Bear Markets provide an opportunity for you to buy low, using dollar-cost-averaging to keep your average share prices down.

You should always re-evaluate your long-term financial plans if your personal situation changes.

Long-term investing will include Bear Markets and market fluctuations. That should have been a given, going into the planning and implementation process.

If your time horizon for your long-term financial plan has not significantly changed, remember the reasons you made this long-term investment and stick to the plan. In fact, if the investment is down, you might even consider adding to it.

You should always re-evaluate your long-term financial plans if your time horizon changes.

If you just refinanced your home to lower your monthly mortgage payment, why not take those dollars you are saving and put them into your retirement account pre-tax?

You could use these extra dollars you're saving on the mortgage payments to maximize your IRA contributions. An additional $83.33 per month would increase your contribution by $1,000 annually.

Before you end up spending the money you've saved when you refinanced your mortgage, put it in your IRA or retirement plan. Pay yourself first!

· How much will it cost you to refinance your current loan?

· Based upon the original loan amount, how much per month will you be saving with the new loan? (This needs to be an apples-to-apples comparison. Therefore, you need to base your savings upon the original amount of your loan to have a valid comparison. Clearly, the new loan will most likely be smaller.)

· By dividing the loan costs by the true monthly savings, you'll see how long it will take to pay-back the costs.

Your conclusion should be based upon how long you'll keep your home, and how many years it will take you to pass the pay-back or breakeven period. If it's less than four years, I feel you should strongly consider refinancing.

Low turnover (generally less than 30% or 40% annually) means you have managers who behave like investors. These managers buy common stocks and allow time for the companies to grow their business.

High turnover means that the managers are trading more than they are investing. I consider this to be a much more aggressive style with inherently higher risk. Many mutual fund portfolio managers trade 80% - 300% per year. In my opinion, the higher the turnover ratio, the less correlation there is to the actual underlying businesses of the common stocks being bought.

You can find mutual funds turnover ratio figures in many places, including the mutual fund's prospectus.

By simply looking at the past two years of Bear Financial Markets, it might make sense to consider investing not only your 2001, but also your 2002 IRA contribution early. Because we are beginning to see indications of the economy showing a bottom, recovery may be on the horizon. The stock markets tend to be forward looking, therefore, better times may be ahead. Investing in your IRA contribution early could be beneficial to you in early 2002.

Contributions to your Traditional and Roth IRAs are still allowed up until April 15th. (Some IRA trustees may require that they have your money by April 15th for it to be allowed for 2001.)

If you are self employed, you can still open a SEP-IRA. You can contribute up to $25,500 given certain restrictions. You can even extend your return to allow more time to make the 2001 contributions.

Please consult your accountant or financial planner before contributing to make sure you are eligible.