• There are six different energy tax credits available to those who made improvements to their home during 2007. They include insulation credits, replacing windows and skylights, a qualifying water heater or heat pump, qualifying air conditioning, a new furnace or boiler, and a qualifying furnace fan.
  
  
• Educator credits aimed at minimizing the costs that teachers incur while in the classroom
  
  
• There's a credit for hybrid vehicles. The Times outlines the complexity of this credit. You'll want a good understanding when placing it on your tax return.
  
  
• There's a break for those who are over 70 ½ who wish to donate IRA assets to charity. It will count towards your required minimum distribution. This expires on January 1, 2008.
  
  
• The deduction for higher education also expires at year end. It's geared towards middle income earners. You might want to consult your accountant or tax preparer about this. Perhaps you'd want to prepay some of your 2008 tuition this year before the deduction expires.
  
  
• You'll need a receipt for cash contributions made to charity. It is becoming more difficult to deduct cash contributions made to charities.
  
  
• Make sure you talk to you accountant about how the Alternative Minimum Tax might affect your 2007 tax return. The government is looking at modifying it. However, it will likely still affect many people. I suggest you ask your accountant or tax preparer about deductions you may want to take in 2007 to see if they still make sense. This would include prepaying property taxes and state income taxes before the year is over.

Every year at this time, I make a list of things that I need to do before the end of December to better my upcoming tax return. Most of this list pertains to tax planning; you may want to review it to see what would help you and your tax and financial planning.

Here's a short list of things you might consider doing:

1. Pay your entire property tax bill before the end of the year, not just the first installment.

2. If you've reached your 2007 medical deductible, try to have any medical treatments or services done before the year end, including refilling prescriptions. (As you know, you start with new deductibles at the first of the year).

3. Pay any California income taxes due for 2007. (California income taxes are deductible on your Federal tax return).

4. Consult with your financial planner and accountant to make sure there isn't anything you've missed from your 2007 tax planning which needs to be finished prior to the year end.

5. Open your Keogh plan prior to the end of the year. This will allow you to include any contributions you make in 2008 before you file your 2007 return on that return. (Simplified Employee Pension Plans can be opened for the prior year up until you file your tax return.)

6. Make sure to get all of your charitable donations for 2007 fully-planned and completed before year end.

7. Do your 2007 Roth IRA conversions before year end. (You cannot do Roth IRA conversions for 2007 after the first of the year; you can, however, make 2007 Roth IRA contributions until the mid-April tax filing deadline next year).

8. Sell any stocks on which you plan to take a loss or gain, prior to the year end.

9. If you own a business, you can purchase equipment and supplies for next year before the end of this year.

10. When applicable and feasible, push any income or capital gain into 2008 in order to prevent them from ending up on your 2007 return. (Waiting one month will put off the taxes for one year).

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These are some basic issues you would want to consider before paying off your home loan. If you are considering doing so, please don't hesitate to call me at (805) 544-PLAN (7526) to discuss it - David W. Cryden, VP/CFP®

After you go to all the time, trouble, and expense of securing a mortgage, you may have a hard time imagining that you'd ever want to pay off your loan quicker than required. However, years (and sometimes just months) after taking out a mortgage, some people discover that their circumstances have changed.

Here are some things to think about before you decide to prepay your loan:

1) Yes, you do save interest dollars; however, you miss the
     opportunity to invest those dollars…

2) Taxes matter, but…

3) Have you funded your Retirement Savings Plan(s)?

4) Does your mortgage plan have a Prepayment Penalty?

5) Are you an Aggressive or Conservative investor?

6) Consider the psychological and non-financial benefits

7) Are you liquid enough?

8) Does refinancing make sense?

This week's tip is an excerpt from "Mortgages for Dummies" by Eric Tyson and Ray Brown, reprinted by kind permission of Ray Brown. In addition to being a frequent guest and contributor to our show, Ray has authored many books and is a syndicated real estate columnist for the San Francisco Examiner, and has hosted the weekly radio program, "Ray Brown on Real Estate," on KNBR in San Francisco for many years.

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On October 16th, 2007, the first Baby Boomer applied for Social Security. Over the next twenty years, 10,000 people per day (on average) will become eligible to receive benefits from Social Security, Medicare and Medicaid. While Medicare does offer valuable coverage for many Americans, it leaves much to be desired in extent of coverage.

Fortunately, many insurance companies offer products that fill the gaps in Medicare coverage. For a modest premium, you can further cover hospitalization expenses, regular doctor visits and limited long-term care expenses. There are also specific plans that will assist in prescription drug expenses. Many of these plans also pay the deductible for Part A & B, as part of your coverage.

Both David & I are fully licensed and ready to assist you in all your insurance needs. Whether you need to discuss Long-Term Care Insurance or would like to explore the Medicare Supplement plans mentioned, please give us a call at 544-PLAN (7526).

This Weekly Tip was written by Stephen Hiltscher. Stephen is a member of the Cryden Team and is a licensed Life/Health Insurance Agent. If you have any questions about your current policy or need any advice on a new policy, please give us a call.

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On behalf of the Cryden Team (Steve, Stephen, Yaarit & myself), we would like to take the opportunity to wish you and yours a very happy and safe Thanksgiving holiday.

Best wishes,

David W. Cryden, CFP®

Wouldn't you know it; as soon as the financial markets start heading up, and people begin to get comfortable, the financial gods decide it's not yet time to give the "all-clear" sign.

What I'm really saying is that the volatility in the financial markets we've seen this week is part of the process and of long-term cycles.

Right now, there are two primary elements playing on the financial markets:

• The price of oil is at an all-time high; it's nearly hit $100 per barrel. Part of this issue relates to geopolitical issues in the Persian Gulf; the other issue relates to the demand on oil in the emerging markets (i.e. China, India, etc.) as they continue to grow and to be built-out. It takes a lot of energy to build the infrastructures of these countries. I might add that, once they are fully built-out, we'll have several billion more people consuming more energy than today; in other words, the challenges are just beginning. It's possible that we'll see lower prices for oil in the short-term; however, I am not sure that the long-term trend is substantially down.
  
  
• The other issue is that the various financial institutions are taking losses, as a result of the credit crunch and bad real estate loans made over the past few years.

I believe it will take another year or two for the bad loans in the financial system to be worked out of it; until this is done, I think we'll see some continued volatility in the financial and real estate markets. This morning I heard an interesting remark on CNBC about these bad loans, which essentially said that investors have not yet come to grips with the bad loans in the system. We're seeing financial assets being moved around, as a result of the fear that might be related to these loan situations; once people come to grips with these situations, it seems more likely that sound reason will prevail again, as should more market stability.

Finally, try to keep perspective during these more volatile times in the financial markets. If you want to react to something, think in terms of buying when prices are down, as they are generally up more often than they are down. (In fact, we've not had a tough market in five years.) If you are not in a position to be a buyer, then keep your long-term investment plan in mind. The last thing anyone needs to do is react and sell when things are down. Remember the old maxim: Buy low, sell high.

If you have any questions about your account(s) or investments, please feel free to give me a call. That's why we are here.

Also, I wrote another Tip of the Week on August 17, 2007, which addressed the volatility in the financial markets that we saw back then. You can view it by simply clicking on the "Weekly Tip Archives" link below.

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The Weekly Tip has taken a vacation until next week. Please be sure to view our Weekly Tip archives, encompassing over 5 years of Weekly Tips.

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I am regularly asked about college planning. How do we pay for it?

It's not an easy question for many to answer. There are issues relating to affordability, retirement, scholarships, student loans, paying for current expenses, and even estate planning that can be involved.

As with so many things related to financial planning, there generally isn't one specific answer that works best for all of us. Finding the right solution takes time, work, and research; even then, you may not find the perfect answer for your situation.

So, here is a resource that has a lot of information and is free. It's on the American Funds website. You do not need to be a client of the American Funds Group to visit; you can review it, whether you are a client or not. Once there, go to their college planning area.

If you have any questions on this topic before (or after) reviewing the resources on the American Funds website, please give me a call or drop me an email.

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It seems like yesterday that I was writing about reaching the 15-year mark since the stock market crash on October 19, 1987.

Remarkably, today marks the 20th anniversary of the crash of 1987, which was called “Black Monday”. Watching the financial markets that day was nothing short of bizarre. The total value of the Dow Jones 30 Industrials dropped about 22% in a single trading session. My favorite remark, for that day, was that “The economy didn't lose twenty-two percent of its growth or value in a single day…why should we think that the stock market should lose a comparable amount, either?” I thought it was a great day to buy, not to sell.

So, where are we, as we look at the financial markets 20 years later?

Last time I wrote this article, the financial markets had averaged about 10% per year over a 15-year period. Here's what they have averaged per year over the past twenty years:

Isn't it interesting that we're seeing numbers that correspond to the average rate of return for the financial markets over many decades? It just shows that, if you view investing as a long term choice, you're more likely to see good results (rather than viewing them as short-term investments, as the media would prefer you to do).

Long-term investors make money as a result of the growth of the companies they own and their corresponding values; keep that in mind, when viewing tough periods or tough days in the market, like today.

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The Federal Reserve Bank (The Fed) lowered interest rates by one-half of one percent a couple of weeks ago. Why?

The Fed was concerned with the mortgage and real estate problems in the banking system and how they might impact the economy. It seems their infusion of cash into the economy/banking system, and lowering of the Fed Funds rate, has bolstered people's confidence. The infusion of cash gave banks more money to lend, providing some help with the credit crunch where people were having a hard time getting loans. Lowering the interest rate makes money cheaper to borrow.
People with home equity loans should now be seeing a drop by as much as one-half of one percent in the interest rate they are being charged. This should give some people more confidence in spending money.

We're seeing generally decent economic reports from many companies this week. The economy seems to be in pretty good shape with the talk about a recession receding some. If we have a strong economy, will the Federal Reserve Bank lower rates again at their next meeting? The recent ½-percent change was more aggressive then the Fed has been in a long time. I think it's up in the air as to whether or not they will lower rates again; it's not too common that they raise or lower interest rates only one time, but it's possible.

Whatever the Fed does, a solid economy means companies keep making money and growing; this should continue to translate into higher share values over the long term, which is what investing is all about.

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There are three different types of relationships that home buyers and sellers can have with real estate agents. Two are both types of single agency, which is when the agent only represents one of the two parties (buyer or seller) in the transaction.

• Seller's agent: In this form of single agency, the agent works solely for the seller.
• Buyer agent: In this type of single agency, the agent works only for the buyer. A buyer's agent isn't an agent of the seller even if the buyer's agent gets a portion of the commission paid by the seller.

Although single agency is an improvement over the old system, buyer's agents still suffer from all the other conflicts of interest inherent in getting a commission that is a percentage f the amount that a buyer spends for a property.

In rare cases, buyer's agents don't accept money from sellers. Instead, a buyer signs a contract to work exclusively with a buyer's agent, and the buyer pays the agent a retainer that is applied toward the fee owed when the buyer's agent finds the buyer a home. Depending on the contract provisions, the retainer may or may not be returned to the buyer if the buyer's agent fails to find the buyer a satisfactory property to purchase.

Here's a way to have the best of both worlds with a buyer's agent. This technique removes the buyer's agent's incentive to get you to spend more, yet it keeps you from paying a fee, even if you don't buy a home. Offer your buyer's agent a lump-sum commission plus a bonus if, and only if, the agent gets you a better buy. For example, if the agent typically receives 3 percent of a home's sale price and you expect to buy a home for approximately $100,000, offer the agent a flat $2,500 commission plus an additional $100 bonus for every $1,000 below $100,000 the agent reduces the price for you, up to a maximum $3,000 commission.

This week's Weekly Tip Newsletter is from "Home Buying for Dummies" by Eric Tyson and Ray Brown, reprinted by kind permission of San Francisco columnist Ray Brown, a frequent guest on our show.


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This week's tip was written by a client that had an unfortunate lending experience, read on to learn how you can protect yourself.

In early 2005, I received an offer from a well-known bank in the mail for a home equity line of credit. The offer said that there would be no costs to the borrower, no points, no appraisal fees, no document fees, nothing. They offered both fixed and variable loan rate options. The variable loan would start at 2% and would be adjusted to prime +1% after that. Since I only had 2-3 years left on my loan, I decided to use this variable home equity loan to pay off my home loan. I figured that I could save $400-$500 over the next few years, even if rates rose a little. I had to open a checking account and a no-annual-fee credit card account along with my new home equity loan. The bank even offered to lower the loan rate by one-quarter percent if I agreed to have an automatic loan payment from my new checking account.

As time went on, rates slowly were on the rise. The Feds kept raising rates by a quarter-percent. No problem, if rates rose two- or even three-percent over the next three years, the worst that could happen would be to about break even.

Then I got a note from the bank that my checking account was short by $50. I didn't understand how that could be, because I only used this new checking account to pay my home equity loan. Each month, I made a special trip to the grocery store to deposit the payment.

Turns out, there was a $25 monthly charge when the loan balance dropped below $30,000. This wasn't disclosed anywhere that I could find in the loan documents. I guess it was a checking account fee, and didn't need to be in the loan documents.

I called the bank, and they offered to lower the fee to $2.50 per month until the balance reached $10,000. After that, it would go back to $25. If I closed the account before two years, I would be charged the appraisal fees and loan fees. That information could be seen in the loan documents.

I kept the loan balance above $10,000, thanks to a used car purchase, and immediately closed the account after the required two years.

As I sat in the bank, taking care of the paperwork needed to close this account, the loan officer even insulted me further by saying, "There's so much discussed when loans are opened that some people don't listen carefully." I am sure not going to miss that special trip to the grocery store to make my monthly house payments. I hope they listened carefully when I told them why I would never do business with them again.

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Many of my clients balk at having earthquake insurance: They say it's too expensive; they say the deductible is too high, or they claim that the risks of an earthquake doing enough damage to engage the real benefits of the policy are too low to make paying for the insurance worth consideration.

Here's the way I see earthquake insurance:

It's there for you, like a major medical policy: You may not ever need it, or you may not need it for many years; it is essentially catastrophic coverage.

If you can't afford to rebuild your home (or other property) without an insurance company’s help, you need it.

The premiums for earthquake insurance have come down a great deal over the past few years, as there has not been a major earthquake since the Northridge quake in 1994.

The other thing I would suggest is to prepare your home for an earthquake: Bolt down your hot water heater; use museum wax, putty and gel to secure things of value that you don't want broken; secure top-heavy furniture to the walls. Making your home safer by doing these and other things will keep your losses at a minimum.

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Many of us like to collect things; some of the collectibles we have are very valuable and need to be handled like any other investment. What are they worth? How will the IRS view them?

Here's a simple list of what to do when valuing your collectibles:

1. Assemble a listing of your collectibles, including sales receipts for each piece; this helps establish what they were worth at a given time.

2. Hire an appraiser to value them. Use an appraiser who charges by the hour or flat fee. Don't hire one who wants to sell your items as well; they could have a conflict of interest.

3. Request a report of each appraised item for your records.

4. Have the appraisals updated every few years (some experts say that it's a good idea to do this every five years or so, as markets and values change).

If you want to sell any of your collectibles, having the above information is helpful when placing a price on your collectibles or when gifting a collectible to a charity (make sure to talk to your accountant before giving to a charity, as there are complicated rules involved when gifting to charities).

Knowing the value of your collectibles is also helpful if you should ever have an insurance claim or when doing estate planning. Some people have more valuable collectibles than they may realize; this could be critical when making sure you have proper insurance coverage or when doing estate planning.

Finally, if you sell a collectible for a profit, keep in mind that you will be paying ordinary income tax rates - not capital gains rates - on these gains.

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Have you ever wondered how the insurance companies come up with the premium amounts they charge? Does it seem strange that a family of four can be completely covered for exactly $374? Where does this number come from? The simple answer is the insurance actuaries. Who are they, you might ask? Let's explore who they are, what they do and how it affects your insurance premiums.

An insurance actuary specializes in risk and associating costs with those risks. They are the individuals who design the insurance plan, determine the premium and make corrective changes, as risks change over time. It is their job to transfer the risk of the individual to that of the insurance company, while still making it affordable for you and profitable for them. The actuary will evaluate average costs and frequency of claims for a particular age level and apply a dollar amount that strikes the middle ground of affordability and profit.

The reason insurance works is because the companies can spread the risks over a large group of people. Healthy people end up paying more in premiums than they submit in claims; the difference helps to subsidize less healthy people who may have more expensive claims. Healthy people accept the situation because they usually pay lower premiums; plus, they never know when they might become sick themselves. The actuaries work to make sure that the premiums collected are sufficient to pay the claims and still turn a profit in the end.

So, the next time you wonder about those seemingly arbitrary premium amounts, know that there is reason: the actuaries are working to make health insurance effective for everyone involved. If you have any questions regarding health insurance or your current coverage, please feel free to contact me.

This Weekly Tip was written by Stephen Hiltscher. Stephen is a member of the Cryden Team and is a licensed Life/Health Insurance Agent. If you have any questions about your current policy or need any advice on a new policy, please give us a call.

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Wishing you and yours a happy Labor Day holiday and safe travelling,

The Cryden Team (David Cryden, Steve Armas and Stephen Hiltscher)

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Last week, the worldwide financial markets were tremendously volatile. We had (what appeared to be) a day where some investors threw away everything but the kitchen sink, trying to get out of common stocks. Sometimes this type of behavior, where people simply seem to be dumping stocks to get rid of them, is called a "market capitulation"; it's basically where people give up, saying "Uncle!". Market capitulation can be marked by wild volatility, high volume, and people selling anything and everything they own.

In the past, times like this have marked the end of a bear market or market correction. (A market correction is defined as a ten percent drop in the financial markets; we were there last week.) While we don't know if last week's market action marked the end of the correction we're in or not, and we won't for some time to come, we do know that the markets settled down this week and the world economy seems to be on continued good-footing.

My advice is that long-term investors should stay the course. I believe the worst thing people can do is panic and sell at or near the bottom. Additionally, I believe dropping markets are a time to invest; if you've got money, it's not a bad time to add to your portfolio (we added to our portfolio three times last week).

If you have any questions, please give a call; I'd be happy to discuss what's happening and the potential opportunities that may be there for you.

I've included a Tip of the Week that I wrote five-years ago, when the market bottomed in October 2002; it will give you some additional food for thought.
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Tip of the week from October 22, 2002:

Are We Full of Bull?

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.

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Every now and then, the financial system gets a little out of balance; this lack of balance can show itself in many ways.

During 1999 and 2000, we saw stratospheric imbalances in the valuations of many technology stocks; this imbalance was reset during the bear market of 2000 - 2002.

About twenty years ago, there was a savings and loan scandal, which is a little similar situation to what we're seeing today, yet there are also big differences; the savings and loan scandal was a much bigger problem in scale and scope than the issues with sub-prime (lower-rated) mortgages of today.

What's interesting about today's sub-prime situation is that these mortgages are packaged and sold to investors, not only in the United States but also to investors worldwide; this is why you are reading about problems in Europe, rather than just hearing about issues only here in the United States.

Even though sub-prime mortgages have been sold to investors worldwide, they are not selling more of them than they would have, had they only been sold in the United States. We are in a global economy; therefore, we have investors worldwide splitting the pie.

In my opinion, banks and lending institutions got carried away with these risky loans. Like anything else that strays too far from the fundamentals, we are going to see the system cleanse itself, which is part of the mechanism that keeps our financial markets healthy.

I think this situation should pass. It may take a while for the troubled loans to work their way through the system. Undoubtedly, you're going to continue to hear news from all over while these loans work their way through the system. In the long term, I believe these cleansing periods are healthy for our financial markets.

In the meantime, we have not seen a correction in almost five years; this may be the action that facilitates that correction. As of this writing, (Tuesday, August 14, 2007), the Dow Jones 30 Industrials are off approximately 7.7% from its all-time high. Despite the recent volatility, we are not in "official" correction territory yet; by definition, a correction is a drop of 10% in a financial market, which we may see before this cycle is done. In addition, keep in mind that, if there are "seasons" in the financial markets, the summer and early fall historically tend to be the toughest times of the calendar year.

Personally, I have added money to my accounts by buying during the down markets and I will continue to do so, if we correct more. I think we should be fine in the long-term.


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The Chinese have an expression, "From Chaos Comes Opportunity".

We've seen more volatility in the financial markets over the past few weeks than we've seen in almost five years. So what do we make of it?

• Before the volatility began, we were getting stock market returns on our portfolios with bank account volatility or almost no volatility. Conclusion: That's not normal.
  
  
• The degree of volatility we're seeing now is not normal, either. A case can be made that it's something we might expect for a bit, after almost five years of nothing but “up” markets with almost no volatility.
  
  
• Will either of these two situations continue indefinitely? I think the answer is, no; like many other situations, this will play itself out.
  
  
• Will the volatility present us a buying opportunity? I think we're seeing some opportunities to buy now. Keep in mind that the Dow is only six percent (6%) off its all-time high that it reached earlier this summer, so we're not even in a correction, at this point. I do think it makes sense to add money every time the financial markets drop five percent (5%), which is something we'll see from time to time; if we don't ever see it, we should indeed worry.

Remember: "From Chaos Comes Opportunity".

If you have any questions, please don't hesitate to give me a call.

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Continued from last week's tip

There are worries in the United States that the slower real estate markets will affect the economy. Some of my reading indicates that, while real estate is an important part of the economy, it is not a huge part of the economy. So what are the financial markets worried about? There are loan problems in the real estate markets (which we've written about before): Lenders became too easy with their loans, and these loans were dangerous to the borrowers and the lenders (in other words, they made risky loans that potentially could default on them); hence, the highest foreclosure rates in years. The second issue worrying the economy is the price of energy. We've enjoyed low energy prices for many years. It's not at all out of the question to think that we'll continue to see higher energy prices, given all of the growth in China and the rest of the world.

Personally, I think that we'll see higher energy prices for some time to come. Between the build-out of many emerging market economies, and the subsequent emergence of their people as mature market consumers, we're likely to continue to see higher demand for energy and natural resources.

Conversely, I believe that the real estate troubles are a short- to intermediate-term lived set of problems. The loan situation will run it course, though it may take a while for all of the loans to be washed out of the system. The real estate market saw a huge run for many years; it's only natural that it would take a break. Incomes and rents were not keeping up with real estate values; this ultimately leads to too much of a gap between these key figures - income, rents and real estate valuations. If a person's income doesn't go up as much as the price of real estate, they're not going to be able to afford more expensive homes. If rents don't go up as much as the value of investment properties, you can't justify the prices people are asking for them. Why buy income property if there's a negative cash flow?

I've heard a number of times over the years that there's a theory in real estate called, "the Greater Fool Theory," which says (basically) that, no matter what you pay for a piece of property, there will be someone else who comes along and is willing to pay more. Of course, there is no reference made to reasonable valuations in this theory - just higher prices no matter what. I've never subscribed to it; I don't suggest you do, either. Someone will eventually be the last fool, not the greater fool.

So how should we handle these various situations?

First, there hasn't been a correction in the financial markets since 2002. That's a long time to go without some adjusting in the markets. In general, I do not believe that the financial markets go only one direction - up or down. They generally trend up with the economy and improvements in the values of individual companies over the long term. I think we are overdue for a correction because it tends to tidy things up some. (While this isn't economic speak, it makes a point that corrections are a natural part of market and life cycles.) Don't be surprised by them. I suggest we'll see many more over our investment lifetimes.

I suggest that any market correction or bear market is a time to buy, not a time to do panic selling. Those who have subscribed to this concept tend to weather tough times much better than those who try to time the markets or sell just because they are fearful.

It's important to adjust your portfolio as you age. I don't think a person should wake up one day and radically change their investment strategy, simple because they are older; you don't get older overnight, and you shouldn't totally change your portfolio overnight, either. If you haven't been in for a review in the past couple of years, it's time to meet. Spending thirty- to sixty-minutes a year is a great thing to do to keep up with what's happening with your portfolio and your life.

Finally, if you have money to invest, buy on the dips. I used to write that you should invest every time the market drops five percent (5%).

If you have any questions, make sure to give me a call so we can discuss them.

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We've seen more volatility in the financial markets over the past few weeks than we have in quite a long time. What should we make of it? How should we deal with it?

First and foremost, the world economy seems to continue to plug away. Countries all over the planet are enjoying solid economic growth; in China alone, the world's most populous country, they experienced economic growth in excess of 11% in the second quarter of this year - a continuation of the build-out of their economy, which has been on-going for several years now.

There are worries in the United States that the slower real estate markets will affect the economy. Some of my reading indicates that, while real estate is an important part of the economy, it is not a huge part of the economy. So what are the financial markets worried about? There are loan problems in the real estate markets (which we've written about before): Lenders became too easy with their loans, and these loans were dangerous to the borrowers and the lenders (in other words, they made risky loans that potentially could default on them); hence, the highest foreclosure rates in years. The second issue worrying the economy is the price of energy. We've enjoyed low energy prices for many years. It's not at all out of the question to think that we'll continue to see higher energy prices, given all of the growth in China and the rest of the world.

Personally, I think that we'll see higher energy prices for some time to come. Between the build-out of many emerging market economies, and the subsequent emergence of their people as mature market consumers, we're likely to continue to see higher demand for energy and natural resources.

To be continued next Friday, August 3, 2007

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Many of us have set up a "living trust" or a "family trust." One of the things you did when you established the trust was to name a trustee or trustees who are able to act on behalf of the trust; nearly one hundred percent (100%) of the time, you and your spouse are the trustees of your family trust.

Eventually, there will come a day when one or both of you are unable to act as trustee; the most common causes for a change in trustee are either due to death or an inability to manage your finances or trust.

If a trustee was to pass away or become unable to act, your financial professionals will need to know who is legally able to act on behalf of the trust as successor trustee. Your trust document should have a provision stating who will act as successor trustee(s).

When a change in trustee occurs, it is common for a mutual fund company, financial planning firm, or any other financial institution involved with your trust's assets, to require an Assignment of Successor Trustee document and a Certification of Trust document. You will need your attorney to provide these documents to your successor trustee; without them, he or she may not be able to successfully act on the trust's behalf.

It is important to keep your intended successor trustee up-to-date about your financial matters; they will need to know what you have and who to go to in order to get things done. Knowing that you will need an Assignment of Successor Trustee document and a Certification of Trust document for the successor trustee - and who can provide those for them - is a very important fact.

Note: If you have non-retirement assets and have established a trust, it is important to have those assets registered into the name of your trust. Many companies will require that the trust documentation be submitted along with either a Letter of Instruction and/or a new application; please contact our office to assist with updating your trust information on your accounts.

As with all legal and accounting issues, make sure to consult your accountant or attorney before acting; it is always best to take action after getting professional advice.

This week's tip was written by Steve Armas, Senior Team Member and Registered Representative.

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Here's a list of ten things people can find out about you. It's a little scary to see how easy it is to find personal information these days.

(The following provides what can be found and the source of the information.)

1. Your current and previous address
Source: US Postal Service and Credit Bureaus

2. Any criminal convictions
Source: Court records

3. Whether you have a professional license
Source: Licensing agencies

4. If you've been involved in a law suit as a defendant or plaintiff
Source: Court records

5. If you have any infractions while driving a car; including DUI or DWI convictions
Source: DMV

6. What vehicles you own
Source: DMV

7. If you've filed bankruptcy or have liens on your property
Source: Court Records

8. What you've pledged as collateral for bank loans
Source: County records or Universal Commercial Code filings

9. What pieces of real estate you own and how much you paid for them
Source: County tax records

10. Whether there's a warrant out for your arrest
Source: Court records or police agencies

In this day and age of privacy, there sure is a lot of valuable information at one's fingertips. The lesson here is to be careful with your information. As sad as it is to say, identity theft is here to stay.

One of the simple things you can do to help yourself is to simply shred things you are going to throw away. This would include credit card applications that come with your name on it.

It's great to build up assets and income. It's work to keep it.

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One of the most widely quoted housing statistics is the median sale price, which is simply the midpoint in a range of all house sales in an area during a specific reporting period, such as a month or a year. Half the sales during the reporting period are above the median, and half fall below it.

The median-priced house, in other words, is the one exactly in the middle of the prices of all houses that sold during the specified reporting period.

Just because the median sale price of a house in your area went up 25 percent doesn't mean that the house you paid $150,000 for five years ago is worth $187, 500 today. Median sale price statistics aren't any more accurate for determining your house's value than median income statistics are for calculating your paycheck. You need more precise information to establish the fair market value of the house you're about to sell.

This week's Weekly Tip Newsletter is from "House Selling for Dummies" by Eric Tyson and Ray Brown, reprinted by kind permission of San Francisco columnist Ray Brown, a frequent guest on our show.


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Many of us have seen our net worth increase significantly over the past few years. The reasons for this, in most cases, are simple:

1. We've had a Bull Market in the financial markets that will be five years old this coming October.
2. If you own real estate, the value of real estate today is much higher than it was just a few years ago.

If you are someone who will pay an estate tax, do not forget to be proactive to reduce or eliminate that tax. This is a process that can often take years to be effective.

One of the simplest things you can do is to make annual gifts to family or friends. You can give up to $12,000 per person per year. A couple could give up to $24, 000 to an individual in a single year. If that couple makes those gifts to ten family members, they can give up to $240,000 in a single year. That means they could give nearly $1 million ($960,000) away in just four years. The savings in estate taxes alone could be nearly $500,000. In addition, this gifting program, if done properly, does not require a gift tax return to be filed.

Just like income tax planning, estate planning takes work and can be complicated. It pays to hire a professional to help you.

You've worked a lifetime to build your estate. I advise that you take the time to save and preserve it.

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When planning for a long-term care insurance policy, there are a few key features that you need to pay special attention to. The goal of all insurance is to protect yourself and your pocketbook. Because long-term care insurance can be very expensive, it is important to take the appropriate planning measures to ensure that you are getting the best policy for your circumstance. There are ways to provide adequate coverage and still keep the premium prices down.

Maximum Daily Benefit – In California, the average cost of a nursing home is $190 per day. If you feel you can pay more out-of-pocket, you can get away with lowering your Daily Benefit. Even small decreases to, say, $170 per day, will significantly lower your premium.

Elimination Period – This is the time between which you are first deemed eligible for care and when the benefits begin to payout. Typically, these are between 30-90 days. The longer the Elimination Period, the lower your premiums will be.

Benefit Period – This is the amount of time (in years) that your policy will pay benefits. While one can elect to have a lifetime benefit, the average is 2-3 years. Typically, a stay in a nursing facility either lasts less than 2 years or over 5 years. The longer the Benefit Period, the higher the premiums.

Inflation Protection – Protecting your policy against a rise in inflation is incredibly important. Today’s dollar will not purchase the same care ten-years down the road. You can choose: No, an Equal Increase or Compound Increase inflation protection. Compounding your protection is the most expensive but, in many cases, the best option. (See my Weekly Tip “A COLA on the Side” from 5/18/07).

Purchasing a long-term care policy with all the bells and whistles will get expensive. Finding the right combination of options allows you to customize your policy to your specific needs and tolerances and affords you the opportunity to keep your premiums affordable.

This Weekly Tip was written by Stephen Hiltscher. Stephen is a member of the Cryden Team and is a licensed Life/Health Insurance Agent. If you have any questions about your current policy or need any advice on a new policy, please give us a call.


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A client called this week, wondering if he should sell investments to pay off his home. The home has a six and three-quarter percent (6-¾%) interest rate; by all accounts, most people would find a 6-¾% mortgage rate to be very moderate.

My thinking is that, if your investments can make at least what your loans are costing you, why pay off the loan early? By keeping your money in more liquid investments, you have access to the money in the future. If you pay off the home loan, you would have to sell the home, arrange for a reverse mortgage or get another loan down the road, and you would have no idea what the interest rate would be; however, you have an exact idea of what your interest rate is now.

His investments have been earning much more than 6-¾% over their lifetimes; in fact, they are all over 20 years old (some are over thirty years old) and each investment has come close to doubling the cost of the loan over its lifetime. This means that not paying off the loan would make sense economically, if the investments performed only a little better than half as well as their lifetime averages.

A person should pay off their loan and sell their investments only if the interest rate on their loan is too high to reasonably match or beat their investments (for example, when home mortgages were over ten percent); another reason to pay off a loan would be if you simply have to do it for your own comfort (most people don't choose this route; however, for a select few, it's the best choice).

Before you pay off your home loan by selling your investments, give me a call to discuss the pros and cons of the decision and your level of comfort.


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It's always interesting for me to re-read some of the Tips of the Week that I wrote in prior years. When I do, I am looking for thoughts that might still be relevant messages to convey today as well as how I approached topics in the past.

The following is something I wrote on October 15, 2002. Please take a couple minutes to re-read it. I'll give you a few thoughts about it from today's perspective.

"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 it 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 that the new period of economic expansion will be a barnburner; more so, I expect that 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 your 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."

Here are a few thoughts, using my 2007 perspective:

1. It is interesting to note that the financial markets really did bottom out around October 9, 2002.
2. We have experienced a four-and-one-half-year bull market ever since.
3. There have been no real corrections during the past four-and-one-half years. This is a very rare occurrence, given market history; it will not last forever.
4. The real driver of this bull market has been strong worldwide economic growth.

As a financial planner and investment counselor, it's always nice when you get the timing of the financial markets ups or downs right; however, I am not a “market-timing” kind of advisor. I think there are too many unforeseen chances to get things wrong, which inevitably can leave investors vulnerable to loss.

The more important message here is that real economic growth should provide stronger profits for companies worldwide which, in turn, should produce higher share values. These basic investment concepts are quite contrary to “dot.com boom” thinking, which drove up market prices to levels beyond greed in the late 1990's and early 2000; many of those stocks had no income, profits, sales, or business model and, with nothing to stand behind them, their prices eventually declined, some never to be seen again.

The moral of today's story is that real economic growth is ultimately what makes businesses grow in value. That was the message in 2002 and the same message is still valid, five years later, in 2007.

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A new client recently commented that they liked our website, which has grown and improved every single week since our initial launch over five years ago.

I thought this would be an opportune time to remind you about some of the free tools and information available on our website, SmartMoneyTalks.com:

David's Radio Show Archives - Free

• Listen to over 120 of David's previous radio interviews while online at our website
• Download them to your computer to listen at your ease or burn them to a CD
• Download them to your iPod or other portable media player

Weekly Financial Planning and Investment Tips - Current and Archived

• Over 260 timely and topical financial planning tips
  
• Arranged by year of publication

Website Search Function
Can't remember when a particular Good Life guest was on or what Weekly Tip was about the Federal Reserve Board? Use our new "Search Website" tool, located on the left-hand side of each webpage, to search by keyword.

Your Account

• Links to mutual fund companies' websites
  
• Email a request for account servicing to our office

Contact Us

• Send a direct email to David Cryden or to any Cryden Team member

Please let us know if you have any suggestions for improving our website or if you have any questions about using any of the available tools.

This week's tip was written by Steve Armas, Senior Team Member and Registered Representative.

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We would like to take this opportunity to wish you and yours a very happy Memorial Day. On this high travel weekend, we hope that you all remain safe along your journey.

The Cryden Team - David, Steve & Stephen

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How do you know that the money you invest today will be able to cover your needs tomorrow? This becomes increasingly important as you prepare for your retirement years. When it comes to your investments, you want to stay ahead of inflation; doing so helps keep your purchasing power current.

What can you do when you are buying a Long-Term Care (LTC) insurance policy to help protect you against the rising costs of health care? The simple answer is adding a COLA (Cost of Living Adjustment) rider.

The COLA rider is designed to provide protection against inflation and increases in the cost of in-home or convalescent care. Anyone considering a LTC policy, especially those under 70-years old, should review the benefits that a COLA rider offers, simply because the longer period between when the policy is established and when claims might be made on it greatly increases your exposure to inflationary pressures.

Much like investment planning, when preparing for long-term care insurance, you want to make sure you are prepared for inflation's effect on your dollar and your purchasing power. The COLA rider helps you with peace of mind when it comes to ensuring the services you may need are more adequately covered by your LTC policy.

This Weekly Tip was written by Stephen Hiltscher. Stephen is a member of the Cryden Team and is a licensed Life/Health Insurance Agent. If you have any questions regarding your coverage please give us a call.

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Everyone needs some form of health insurance. Whether you are expecting a new addition to the family or exploring the coverage of Medicare, we should all take a little extra time to make sure our
insurance coverage is sufficient for our needs. With more and more employers ceasing to offer a medical plan, the task of self insurance is falling increasingly on the individual. How does one go about determining the best plan? Here are a few items to help determine the best plan for you:

• Income - Budgeting a portion of your income will help you determine the amount you can afford to pay out-of-pocket and help you decide your deductible/premium amounts.
  
  
• Need - Do you want a catastrophic policy with a high deductible? Do you need a plan that offers Doctor and Emergency Room visits without paying the deductible?
  
  
• Lifestyle - Understanding your own susceptibility to risk will greatly narrow your coverage options.
  
  
• Deductible - Active people tend to seek a plan with a lower deductible or included Emergency Room care, while less risky people seek a plan with a high deductible to cover major injuries or illnesses.

Medical insurance can be very confusing, but when you begin your search with a clear view of your needs, your lifestyle, your preferred deductible and what you can afford, you will quickly remove some of the guesswork; the help of a professional will resolve any remaining questions. If you have any questions regarding your current coverage or your options when establishing a new health plan, please feel free to contact David or myself to discuss your insurance needs.

This Weekly Tip was written by Stephen Hiltscher. Stephen is a member of the Cryden Team and is a licensed Life/Health Insurance Agent. If you have any questions regarding your coverage please give us a call.

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A client recently asked me about how to go about taking money out of their mutual fund account on a regular basis. I thought this might be a good opportunity to discuss setting up systematized distributions that provide the specified income desired. These systematized distributions are commonplace in retirement and are a terrific method of generating cash flow.

Mutual funds allow you to set up regularly scheduled distributions, either by specified dollar amount or as a percentage of the account's value. (David usually recommends a maximum annual withdrawal of 4% to 6% of the account value, which should still allow for growth of the account, even while taking money out of it.)

These systematized withdrawals can be done monthly, quarterly, semi-annually or annually on the date you specify. They can be sent to your home by check, to your bank account by electronic deposit, or they can be deposited directly into your money-market fund. There is a great deal of flexibility in how, when, and where you take your distributions. Once established, your choices can easily be changed over time.

Please be aware that distributions from Traditional IRA accounts are taxable and reportable in the calendar year in which they are taken; there may be additional penalties for taking distributions prior to age 59-1/2. In addition, if you are taking money out of a non-retirement account (i.e., your trust or joint account), there will likely be taxable income or capital gains, as well. In either instance, please make sure to consult your tax professional or David prior to setting up systematic distributions, in order to avoid any unpleasant tax surprises.

If you would like to discuss setting up systematized withdrawals from your mutual fund accounts, please contact me for the necessary paperwork; I would be happy to help.

This week's tip is from Steve Armas, Senior Team Member and Registered Representative, Cryden Financial Planning Team.

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Many people who work do not have disability insurance. If you're working and you can't afford to retire on your assets, you need disability insurance.

One of the most uninsured or underinsured areas of financial planning is the protection of your income. If you don't protect your lifetime income, you're potentially exposing yourself to a huge financial hardship.

Studies I've read indicate that there may be as many people in America without disability insurance as there are without medical insurance. If you're working and you can't afford to retire upon a disability, you need disability insurance.

If you have any questions about disability insurance, give me a call; I'd be happy to discuss your insurance needs with you.

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