Mountain Views News          Saturday, September 13, 2014

B3

 

BUSINESS NEWS & TRENDS

 Mountain Views News Saturday, September 13, 2014 

FAMILY MATTERS By Marc Garlett


GET THE CREDIT 

YOU DESERVE 

 Mortgage applications are being reviewed far 
more thoroughly now than in the past, and your 
credit score should be 680 or higher to qualify for 
the best interest rates. So how do you determine 
your score, and know you�re getting the credit you 
deserve? 

 Everyone is allowed one free credit report per 
year from the three reporting agencies (Experian, 
Equifax and TransUnion). Review the reports for 
accuracy and act quickly to correct any errors or 
omissions. 

 Approximately 35% of your credit score is based 
on the timeliness of your payments. Make sure that 
no late payments older than seven years are still on 
your report. 

 If you have paid off loans or credit cards, a 
zero balance should appear on those accounts. 
Sometimes, agencies don�t properly update those 
balances after settlement. 

 15% of your credit score is based on the length of 
your credit history, so make sure that the opening 
dates of all your accounts are accurate. Also make 
sure that the limits on your credit cards are correct, 
and keep the balances under 50% of those limits. 
Total debt accounts for 30% of your credit score. 

 Finally, think twice about closing credit card 
accounts with zero balances, because this negatively 
reduces your ratio of �available credit� to your debt. 
First, get the facts. Then, make corrections. Finally, 
apply for home financing with confidence!

WHY INHERITING IN TRUST IS A MUST

IS ACTIVE INVESTMENT MANAGEMENT GOOD?

By Greg Welborn

 You bring your children into the world with love. 
You raise them with love. If you�re going all the way as 
a parent, you also create an estate plan to safely pass 
on your legacy of love as well as your assets. But does 
your plan simply leave your assets outright, so they 
pass directly to your children all at once? Or are they 
protected via a trust?

 A trust is a must if you�re looking for true protection 
when passing on assets. Just as you protect your 
children from harm while you raise them, you can 
also protect them from any threat that could come 
from irresponsible behavior or external risk. The 
safest choice is to place the inheritance in a trust.

 Trusts can be designed to protect assets from things 
like bankruptcy, creditors, lawsuits and even divorce. 
No one is immune from making a few mistakes during 
their lifetime, but that shouldn�t have to cost them 
their inheritance. If your child has a marriage that 
dissolves, for example, their future inheritance can be 
safely tucked into a trust, separating those assets from 
marital property and rendering them untouchable by 
an ex-spouse.

 You can also set up a trust to distribute an 
inheritance according to your own wishes and for 
specific purposes, such as education, starting a 
business, maintaining a family vacation home, or 
whatever will benefit your children the most. 

 Gifting a large sum of cash to a 21-year-old is not 
usually considered the best practice. Many parents 
leaving assets in trust choose to stagger distributions 
at certain age milestones, which helps children learn 
to manage their assets over time with the help of 
a trustee. Then, at a later age, the child can become 
the trustee with full control when they have the 
knowledge to make better financial decisions.

 If your child is still a minor or has special needs, 
a trust is even more critical. Under the law, minors 
cannot inherit outright, so a trust is necessary to 
safeguard the assets for their benefit until they reach 
the age of maturity. The trust preserves assets for 
their benefit, names a trustee to oversee distributions, 
and does not disqualify them from receiving special 
government benefits like an outright inheritance 
would.

 Inheriting in trust provides substantial benefits 
that an outright inheritance does not. Look into the 
benefits of setting up a trust for your children. It can 
be one of the best things you do for them as a parent.

All the best to you and your family,



Marc, a local attorney, father, and CASA volunteer 
(Court Appointed Special Advocate for Children) is on 
a mission to help parents protect what they love most. 
His office is located at 49 S. Baldwin Ave., Ste. G, Sierra 
Madre, CA 91024. Call 626.355.4000 to schedule an 
appointment to sit down and talk about ensuring a 
legacy of love and financial support for your family, or 
visit www.GarlettLaw.com for more information.


One of the biggest investment debates is whether 
�active� management is a good thing. Active 
management is the attempt to pick a small number 
of stocks (or bonds) and beat the index. �Passive� 
management, on the other hand, is the attempt to 
match the index by simply using index funds which 
reflect the composition of an actual index. There are 
solid arguments on both sides, and, we believe, there 
is a good compromise between the two competing 
philosophies.

 On the passive side of the argument, advocates 
would tell you that the vast majority of all money 
managers fail to beat the index over the long-term. 
They would also argue that the transaction costs of 
trying to buy and sell individual stocks and bonds 
in an average investor�s portfolio will be prohibitive 
and further reduce returns. Passive management 
advocates would be correct in all those statements.

 On the active side of the argument, advocates 
would tell you that stock and bond markets are not 
perfect, that there are inefficiencies which a skillful 
manager can exploit to earn more than the index 
would return. Further, they would argue that there 
are a solid minority of excellent money managers 
who have beaten the index over reasonable periods of 
time and that the costs of using them are warranted 
by the extra return they earn for the investor. Active 
management advocates would be correct in all those 
statements.

 So both sides are correct; case closed, right? No. 
The fact that both sides have valid points only leaves 
us further confused. Here�s how to reconcile the 
competing claims. Passive and Active management 
are not mutually exclusive. You can use both. For 
some investment categories, it might make sense to 
use an active money manager with a solid long-term 
record that exceeds that category�s index. In other 
categories, it might make sense to simply use an index 
fund which matches that category�s index. 

 To make this work, a couple of things have to be 
present. First, you have to be able to use the cheapest 
share class of the active managers� mutual funds by 
avoiding commissions. Second, you have to be able 
to switch between managers or index funds without 
excessive costs by using a discount brokerage firm. 
Third, you have to be able to objectively determine 
which active managers are worth their cost. And 
fourth, you have to be able to measure performance 
against the indexes to determine when to change to or 
from any given money manager.

 By logically and objectively combining a bit of 
both strategies, you can have the best of both worlds. 
The goal in all cases is to identify your objectives and 
make sure your portfolio is consistently working 
toward them.

 

About the author: Gregory J. Welborn is the Managing 
Partner of First Financial Consulting, a fee-only 
advisory firm. He has worked with The Today Show, 
Kiplinger�s Magazine, and USA Today to provide 
objective financial advice to their readers and listeners. 
He has 3 grown children and is honored to be married 
to his wife of 25 years. He can be reached at gwelborn@
ffconsult.net


THE BENEFITS OF FACEBOOK LISTS

 If you have friends on Facebook that fall into 
different categories of your life: business, personal, 
service clubs, school chums etc., building lists will 
help you organize them. 

 To build your lists go to: www.facebook.com/
bookmarks/lists 

 Your lists will show up in several areas of 
Facebook and you will be allowed to selectively 
share to different lists. For example, if you create 
a photo album from a family vacation, you can 
choose your family list and only the people on 
that list can see your album. I you make a post 
about a work related event, you can set it so it just 
publishes to your business list. 

 Your lists will also show up in the news feed 
area so that you can selectively listen and filter out 
the noise you don�t want. If you click on one of 
your lists in the news feed, you will just get the 
recent posts from those people on the list. 

 About MJ: MJ and her brother David own 
HUTdogs, a creative services business that 
specializes in Internet Marketing strategies 
and Social Media. They offer social media 
management services and help their clients 
build a strong on-line presence. �Like� them 
on Facebook for trending news in social media, 
internet marketing and other helpful tips, www.
facebook.com/hutdogs.

 Sign up for their upcoming classes, webinars and 
presentations at: www.hutdogs.com/workshops/
schedule 


F.E.A.R. = FALSE EVIDENCE APPEARING REAL

 For the entrepreneur, fear shows up in many ways. We 
worry about losing clients. We�re afraid of not meeting 
the rent. We are scared our products won�t sell. Fear lurks 
wherever the unknown hangs out. 

 The feeling of fear is created by fearful thoughts. The 
amygdala part of our brain sends messages designed to help 
us survive. Its threatening words, however, are loud and 
scary. Then our imagination joins in. Anything outside the 
status quo is reason for concern.

 These thoughts trigger the body. I know you have felt that 
surge of fear! In this state, we cannot access peace. Or our 
innate creativity and problem solving abilities. Our options 
close, and we are in fight or flight� known as survival mode.

 Never make a decision when you are here, unless it�s a true 
issue of life or death! Wait until you return to peace. Peace is 
critical for wise, authentic decisions. Journal. Go for a walk. 
Talk to a trusted friend. Do some deep breathing. Change 
your thoughts. Do whatever it takes to return to calm and 
your imagination will open. In the right brain, you have 
access to your tru self and your best strategies. 

 Maybe that�s why they say �don�t worry!�

LORI KOOP, helping creative entrepreneurs succeed. Schedule 
a complimentary session: www.LORIKOOP.com or call 626-
836-1667. (Location: 47 E. Montecito Avenue, Sierra Madre 
91024) I�m here every other week.