We've dreaded it foryears, and now it'sfinally here. Thebaby boomers, perhapsthe most demandinggeneration in history, arereaching their retirement years. Manyare getting health savings accounts sothat they can self-direct their care.They're out to get the maximum servicesfor the minimum price. Are we in forit, or what? For the benefit of said babyboomers, I've developed a proposed feeschedule for the typical basket of servicesthat Constan Medical Corporationprovides now that patients can self-directthat money set aside for theircare. The following is an excerpt fromour services menu:

Complete traditional examinationwith prescription.

Advice on how to take care ofyour problem using all-natural herbalremedies, because you don't believe inall that scientific stuff corporateAmerica is foisting on you for profit.

Pharmacy consultation. We'llmaximize your prescriptions and minimizeyour copays through our patented"creative prescribing" protocols.

A review of Web printouts—notwritten by doctors—about your disease.

Discuss that drug ad you justheard—and diagnosed yourself from—on television.

In our practice you will be able toreceive services when and where youwish. In addition to a traditional officevisit, the following is a list of prices foryour other options:

$2 per mile and $2 per minute fora house call. (This can get expensive if Ihave to wait for you to get off your cell.)

$7 per minute for a telephone consultduring regular office hours.

50% surcharge for a telephoneconsult after hours.

100% surcharge for a telephoneconsult after 11 PM.

$1000 one-time fee to receive mycell phone number, plus $250 each yearfor the first 100 minutes of talk time.

Because baby boomers love discounts,we have developed the followingprograms to help them get a deal;we know that each of our patientswants to feel special:

10% off your next blood pressurefollow-up visit, if you can get yourblood pressure to 120/80 or below.

1% off your visit for each poundyou've lost since the last visit.

50% off a Friday afternoon visit ifit is the beginning of a 3-day weekend.Please note that the office closes at 5 PM.

5% off your visit if you've broughtin all your prescription bottles so I don'thave to figure out what you're referringto when you ask for a refill on that littlegreen pill I prescribed 2 years ago.

One free cappuccino as youleave if you don't whine—evenonce—during the visit.

As a special service, we are willing toprovide sympathy to our patients,because the world is just not fair. Pleasenote the following percentages that willserve as surcharges in addition to theregular service:

10% surcharge if you want tojust talk and have no intention of followingmy advice or changing yourhealth behaviors.

20% surcharge if you want tocomplain about something your otherdoctor did or said.

30% surcharge if you want tocomplain about how terrible your parentstreated you as a child.

50% surcharge if you cry anytimeduring the visit. Crying in frontof a professional is really never fair,and I deserve appropriate combatpay in these circumstances.

Please stop at the desk on the wayout. Complete payment is due at thetime of service. 

, a family practice physicianin Saginaw, Mich, is the editor of theSaginaw County Medical Society Bulletinand Michigan Family Practice. He welcomesquestions or comments at 3350 ShattuckRoad, Saginaw, MI 48603, 989-792-1899, or louisconstan@hotmail.com.

Articles

Saving & Spending

Take a Look at a Baby Boomer's Super Bill

Knowledge is power, and two new online simulatorsare providing consumers with the knowledgeand the power to take better control oftheir finances. In the past, credit scores—those all-importantnumbers that indicate a person's creditworthiness—were kept secret from consumers. But withonline simulators created by organizations such as FairIsaac Corporation (FICO) and CreditXpert, consumersare now armed with the tools to help them make better,more informed decisions by knowing their score.

report, the onlinesimulators enable consumers to hypothetically adjusttheir credit scores. In other words, what would happenif an individual paid off all of their credit card balanceseach month, or applied for an auto loan? For individualsseeking to purchase a home, knowing how toimprove their credit score before applying for a loan isvaluable information—credit scores can directly affectinterest rates on loans.

Credit scores range from a low of 300 to a high of850, and the higher the number the better. Accordingto the article, an individual's credit score is based onthat person's payment record, how much money theyowe, how long the person has used credit, the characteristicsof the newest credit (eg, credit limit), and thetypes of credit being used. Owning too many creditcards, for example, can lower an individual's score, butso can owning too few.

FICO offers the myFICO Score Simulator (www.myfico.com). The site offers consumers the opportunityto explore hypothetical situations, such as transferringcredit card balances, increasing credit card spendinglimits, or missing a few payments.

Why is it important to know the results of yourfinancial actions? In an example in the 

article, achiropractor in Virginia learned that his credit scorewould double if he made a sizable payment on one particularcredit card vs another. He also found out thattaking a loan to remodel his kitchen had little effect onhis credit score. This particular example illustrates thatfinding out this projected information can providepeace of mind when shopping for a loan or looking torefinance an existing home mortgage.

What can make a credit score rise or fall? Assume anindividual has a solid credit score of 707 and threecredit cards. According to the 

article, which usedthe myFICO simulator, if they paid off a third of thebalance on each of their three cards, they could add asmany as 20 points to their score. Failing to make thecurrent month's payments could cause their score todrop between 75 and 125 points. In addition, using allof the credit available on the three cards could droptheir score by another 20 to 70 points.

article also examines various scenariosusing the What-If Simulator offered by CreditXpert fora consumer with a credit score of 727 points. Forexample, every time they applied for a loan—whetherit was for a home mortgage, auto, or even a new creditcard—their credit score would drop five points.

That's because lenders believe that taking on new loansmay make borrowers less likely to repay current debts.Experts suggest using the same method collegestudents practice in order to raise their College Boardtest scores—use simulators to analyze the steps theyneed to take in order to raise their credit scores. Inessence, the lower your credit score, the lower theinterest rate you might qualify for when taking out ahome mortgage.

Improve Finances with a Lower Credit Score

This special feature is to serve as a forum for our physician-readers to

share their stories. Oftentimes, we find that some of the most inspirational

and informative articles we print come from doctors in the field who invite

us to share their experiences. For this reason, we dedicate this page to the

We welcome doctors to send us tales from their practice (eg, a unique patient,

a staff crisis, etc), their financial planning (eg, handling a

windfall, surviving a scam, etc), their personal life (eg, family stories, interesting

hobbies, etc), and their adventures (eg, an exotic trip, a personal discovery, etc).

Please limit articles to 1000 words and share photos if possible. Send submissions

to Attn: Lisa A. Tomaszewski, Ascend Media Healthcare, 103 College

Road East, Princeton, NJ 08540 or ltomaszewski@ascendmedia.com.

With its many elaboratetemples and palaces,crowded streets, andexotic neighborhoods,Bangkok is a unique cosmopolitanworld visited and enjoyed by an ever-increasingamount of tourists—nearly8 million in the past year. But when theintrepid traveler needs a breath of freshair, they can take an easy yet rewardingtrip out of the city to a much differentside of Thailand.

About 400 miles north of Bangkoklies the ancient city of Chiang Mai,Thailand's "rose of the north," onetimeroyal capital, and present-daygateway to the many attractions ofnorthern Thailand. Modern ChiangMai is perfect for walking or cycling. Itis a relatively small old town about 2square miles, with numerous ancienttemples and teak houses, and ofcourse, a sprawling bazaar areabetween the city walls and the PingRiver, where contemporary Thais marketan endless cascade of merchandise.

Chiang Mai seems to be the regionalcenter for the full outdoor menu ofjungle trekking, bungee jumping, handgliding, and ballooning over the surroundingfoothills, paddies, andorchards. Excursions can be arrangedto visit the local hill tribe villages of theindigenous Hmong, Karen, or Kayahpeoples. You can even stay overnightin their primitive huts. Not surprisingly,Chiang Mai also serves as a departurepoint for excursions into themountainous "golden triangle" to thenorth, where Laos, Thailand, andCambodia border each other along theupper Mekong River.

One mandatory day trip beyondChiang Mai takes you north a dozenmiles in the National Park on SuthepMountain, to the unusually ornateBuddhist temple complex called WatPhra That Doi Suthep. If your armsand legs are covered and your shoesare off, you may ring the temple bellsor rub gold leaf on the statues ofBuddha that fill the courtyards, all forgood luck. A few miles up the roadpast the temple lies the royal family'swinter residence, Phuping Palace,sometimes open to visitors.

One day my wife and I drove 2 hoursnorth of Chiang Mai to the elephantpreserve on Chiang Dao Mountain. Forcenturies, elephants were the backboneof Thailand's logging industry, butwhen the government sharply curtailedlogging in 1989, thousands of elephantsand their keepers, or mahouts, foundthemselves out of work. For a warm-bloodedmachine that consumes hundredsof pounds of food each day,unemployment can be a problem. Onesolution was the establishment of semiofficialelephant preserves in the sameteak forests where logging originallytook place. The elephant show atChiang Dao features elephants bathingin the river, feeding on bananas andbamboo shoots, parading in formations,dragging and piling logs, liftingmahouts, throwing hats, taking bows—everything but elephants singing "OneNight in Bangkok." 

Then we saddled up for a ride overthe river and through the jungle, ultimatelyto a small Hmong village wheremany of the mahouts lived with theirfamilies. Our mahout rode bareback,feet hooked behind his elephant's ears,while behind him my wife and I enjoyedall the comfort and stability of yourbasic carnival ride, sitting in a largewooden bucket strapped to a gentlegiant. At first you wonder how you canendure more than a few minutes rockingup and down the jungle trail, but intime you get used to the rhythm and theoccasional awkward lurch, and youactually come to enjoy the bully pulpitfor what it is—the best jungle transportationaround. Look at the blue vineblossoms way down on the ground,take in the teak trees stretching upwards80 feet, and watch out for the really,really big spider webs.

After the elephant ride, and a bit of astretch on terra firma, we enjoyed a typicalThai lunch of fruits and spicedsoup, after which we drifted down theTaeng River for an hour on a bambooraft, past fishermen, villagers, and, ofcourse, elephants. Our escort met us atthe riverside miles below the camp anddrove us back to Chiang Mai, this timeinside an SUV.

Physician's LifeStyle

Perspectives from the office & beyond: OUT OF BANGKOK—A JOURNEY TO AND BEYOND CHIANG MAI

We doctors comfortably discussmany intimate subjectsas part of our daily work.But when it comes to discussing ourown finances, we get a little squeamish.So when we are advised to confideall our personal monetary details tosomeone else, even an expert in thefinancial field trained to help us, ittends to creep us out.

And to make the hypocrisy worse,we, without hesitation, refer and deferto other specialists who know morethan we do about a given area ofknowledge. But still it is just basichuman nature that we are uncomfortablewith the idea of exposing ourselvesfinancially.

We rationalize: "I'm smart, so I cando money management, tax planning,and investing myself." Never mindthat we don't have any training tospeak of in these areas or won't admitthat we have inadequate objectivityabout ourselves to make the best possiblefinancial decisions. Every studythat I've seen shows that very few of ushave the preparation, objectivity, anddiscipline to do it well without help.

We know how hard it is to find theright doctor for ourselves, even withobjective reassurances like licensure andboard certification and our inside experiencewith the lay of the land. So when itactually comes to finding a team withsay, a CPA, a lawyer, and a financial advisor,we're out of our element. And that'snot a comfortable feeling. Maybe thatserves us right, our patients might say.

So how do you find a knowledgeable,proven, and compatible person ineach of these fields to help you helpyourself? Based on my personal experienceit isn't easy, but 

can help. Just take a look at thismonth's featured article.

The traditional route is to ask aroundand then engage in trial and error. Thepitfall with this approach is that it ispotentially very expensive—in time,fees, and possible investment losses.Personally, not one of the folks I havemet through doctor referrals has pannedout for me. I've had my best results fromdoing my homework to get the rightquestions ready, consulting wealthy non-MD friends, checking the recommendedadvisor list in 

magazine and othersources, and interviewing, interviewing,and interviewing. Look at your notesand listen to your gut.

Be of good cheer. In the end, if youhave kept your wits about you, you'lllearn a lot, meet some interesting people,and feel that you have made somegood choices. And you will find somecomfort in knowing that you havedone the wise thing for you and yourfamily. It may also pleasantly surpriseyou when you have found the rightpeople for your team how it is just a biteasier than you expected to actuallyshare your personal financial secrets.So read on and happy hunting. 

Editorial

You Have to Be a Team Player to Win

For those of you who are fans of adventure travel,you are probably very familiar with the importanceof teamwork when it comes to risky activities. Rockor ice climbers often work in pairs, and whitewaterrafters often take on the river in groups. One memberof the team might have an understanding of thelandscape, while another may be depended upon fortheir knowledge of the equipment. The purpose ofthis joint effort is preparedness and safety whilereaching a difficult goal.

A physician's personal finance team can face a similarlytreacherous terrain. The market is always in flux, andtheir personal needs might change as the years go by. Ateam of professionals, including accountants, attorneys,and financial advisors, are brought together to provideadvice that is unbiased and uniquely tailored to a doctor'sneedsâ€”thus creating a diverse team ready to conquerthe financial goals placed before them.

"It is important to have the right person for the rightjob," says Michael Reiman, a certified fund specialistand coauthor of 

(HeliographicaPress; 2005). "When you assemble a team, eachmember of the team stays on top of their field of expertise.This pays off for the client in a full education programwithout having to learn all the particulars of anyone area." Selecting the right members for your financialteam is not an easy process, but doing so will pay dividendsdown the road.

Each member of a financial team is integral. However,most busy physicians lack the time or the inclination todirect the management of the financial team. Accordingto the experts at Enterprise Bank & Trust, physiciansmust take the time to understand the tax ramificationsand costs associated with each financial decision. Aphysician should, therefore, appoint a leader to guidetheir financial team, ensuring that all financial decisionsare made with a complete understanding of the wholefinancial picture. That leader is, in effect, your financialquarterback. In many cases, Reiman explains, the role ofthe quarterback is filled by a financial advisor. But that'snot always the case.

"I have seen active CPAs and attorneys play the roleof the quarterback," Reiman says. "There should alwaysbe a quarterback, but unfortunately, this is rare. In a lotof instances, a client has a CPA, an investment advisor,and an insurance agent all working independently. Thesynchronization between these individuals is a must,because if there is no communication or lack of communicationbetween the team [members], then big mistakescan take place. As a result, the team [members] can beworking against each other and the client instead of forthe client. The quarterback is usually the advisor that theclient trusts most with their financial goals." 

Once you have selected a financial quarterback foryour team, it's critical to sit down and discuss your goalsand objectives. Diana Compardo, principal, CPA,CFP

, of the Moneta Group, explains that sitting downand discussing a physician's goals and objectives providesthe much-needed insight to prepare a financialaction plan for that physician and to lay out the strategiesfor accomplishing those goals and objectives.Without knowing the physician's needs and wants first,there is no way to determine and plan for what thosefinancial goals are and how to accomplish them.

The make-up of a financial team can vary dependingon the needs of the physician. There can also be keymembers as well as secondary membersâ€”specialistswithin an area, such as an insurance agent who specializesin long-term care.

But experts agree that every financial team shouldinclude some key mainstays: a financial advisor, aninsurance agent, an attorney, and a CPA. The secondarymembers are usually real estate agents/attorneys,mortgage brokers, bankers, practice management personnel,and human resources experts.

"The key members should be those involved in theday-to-day contact with the physician," Compardosuggests. "These should be the people who the physicianhas hired and entrusted with their financial goalsand objectives and the people who can provide themwith the financial advice they need to make logical,well-educated decisions. The secondary members arethose who help with the implementation of the financialaction plan and generally would consist of estateplanning attorneys, life and medical insurance experts,and long-term care experts." 

Edmond Walters, CEO and founder of eMoneyAdvisor (www.emoneyadvisor.com), suggests that theaccountant or CPA is typically the historian for thephysician and their family, having a detailed record ofthe family's complete financial history. If there's nofinancial advisor, the accountant will take that role. Thefinancial advisor should integrate the financial plan,pulling the team together. The lawyer is typically theproblem solver, putting strategies in place. The investmentadvisor is responsible for formulating the investmentpolicy statement, balancing the degree of riskwith the client's assets. The insurance advisor is responsiblefor maximizing the client's protection needs in theevent of a negative life event.

Matt Wagner, president of Enterprise Bank &Trust's Trust Advisory Group, says that his organization'sin-house team includes accountants, attorneys,tax planners, and financial advisors.

"Their job is to coordinate the implementation ofthe client's financial plan," Wagner explains. "Internaland external specialists are freely brought into clientmeetings when needed and perform work behind thescenes to implement the financial action plan." 

Compardo explains that the Moneta Group, actingas the CFO of the physician's family, first completes ananalysis of the physician's financial situation to determinewhere there are weaknesses and the strategiesneeded to turn those weak spots into strengths."For example, if a physician needs estate planning,we would advise them on the estate planningstrategy and also get an estate planning attorney involvedto draft quality documents," she explains. "Wethen would make sure all assets are titled properlyso that we are obtaining the maximum benefit fromthose documents." 

Reiman echoes those thoughts, noting that it's criticalto understand the physician's experiences, needs,and wants for short-term and long-term goals. Thisprocess involves specific detailed questions by the advisorand candid responses from the physician. Byunderstanding the physician's wants and needs, theadvisor can help them implement a team of qualifiedadvisors to improve and protect their financial goals.

"An illustration of this is if the physician's mainobjective is for multigeneration wealth, then an estateattorney is a must," Reiman says. "If the physician isconcerned about asset protection, then an asset protectionattorney is needed." 

The financial team, however, must have its own setof goals. Reiman believes that the goals of the teamare to have unique knowledge in their field that willadd value to the physician's situation. The financialteam also needs to be able to create a specific gameplan for the physician that is based on their individualgoals. For example, the financial advisor is lookinginto different types of tax strategies, while the CPA islooking at the actual calculations. It is imperative thatthe team is on the same page and working towardachieving the physician's specific goals. It is also criticalthat there is communication between the teammembers to make sure the strategies are working inalignment. With this constant communication, potentialmistakes could be averted.

Another example, Reiman notes, is if the CPA orfinancial advisor recommends a specific retirement planfor the physician and there is no communicationbetween the advisors, deadlines can be missed andincorrect paperwork can be filed with the IRS. A lot ofthe time, the physician is not aware of which advisorsneed to be in the loop.

"Just like in medicine, a team of advisors needsto understand the client's goals and issues," Reiman says. "This is what I look at as the â€˜diagnosticstage.'If a doctor did not ask the correctquestions, more than likely, they are not providingthe correct remedy. This is no different when workingwith your advisors. This diagnostic stage is oneof the most critical steps in the planning process.Without assessing the physician's current situationand goals for the future, the recommendationsmight not be in alignment." 

Physicians of high net worth, or those who arebuilding their net worth, may have a greater needfor a financial team as their situations are generallymore complicated. But asset management, riskmanagement, taxes, and estate planning are areasof financial concern that affect everybody.

"A financial team is essential for any physicianor group of physicians wanting to maximize theirpractice and increase their net worth," explainsJoseph Walker, MD, neurosurgeon and managingpartner of the Reno, Nev-based Sierra NeurosurgeryGroup. "Most physicians are not in a practicelarge enough to have in-house advisors to handleall their financial needs, and no physician hasthe background to do everything effectively withouthelp. Therefore, putting together a financialteam is essential." 

Reiman points out that a financial team shouldbe there to assist you not only with your assets, butto help assess your need in other areas such as protectionplanning, tax planning, and asset allocationstrategies. In addition, in a physician's world, litigationis a major concern as assets begin to grow.

"You will want to start protecting your assetsearly," Reiman says. "No matter the size of youraccounts, the assumption is that as a physician, youhave assets. It is too late to start protecting yourassets and income after you get sued. This is calledfraudulent conveyance. They can also sue you forfuture income. Not being aware of your financialsituation and options is never a good idea no matterthe size of your current or future net worth." 

And remember that once you assemble a financialteam, it's equally important to meet regularly toreview plans and update goals and objectives. "It isvery important to meet on a consistent basis, whichvaries depending on the physician's situation," Compardo says. "It is important to not only getupdates of changes in the physician's financial situationbut to inform the physician on how they aretracking against their goals and objectives. Also,there are always many changes in the regulatoryenvironment that need to be communicated to thephysician and reviewed in light of the impact thechanges may have on their specific situation.Depending on the complexity of the physician's situation,we generally meet at least 2 to 3 times per yearfor a formal review and more frequently if specificneeds arise." 

Planning

Your Financial Lifeline Is Only as Strong as Your Financial Team

What was at the rootof the market debacleand the horriblecorporate scandalsof the late 1990s?Of course, there was more than onecause. But if you press experts to namejust one, most will probably say that itwas not requiring corporations toexpense the cost of executive stockoptions. This provided corporate boardsthe excuse to award options to theirexecutives by the truckloads, which inturn motivated the executives at manycorporations to pump up their stockprices in the short term in any way theycould, including resorting to fraud.

Options provide the holder the rightto buy a stock at a particular price,called the exercise price, within a certainperiod, called the option life. Whatmakes them so attractive is that theexercise price is generally set at the marketvalue when the options are issued,and the life is often 10 years. So if acompany's stock is selling at $30 todayand an executive is granted 1 millionoptions, then for every dollar the stockprice goes up during the option's life,the executive will earn $1 million.

Now suppose the stock price goes upat the modest rate of 6% per year overthe 10 years. By most measures this willbe considered poor performance. Yet,the stock price would be about $54 atthe end of 10 years, and the executivewould earn $24 million. Furthermore,an executive can generally cash in theiroption at anytime after a short waitingperiod of 2 to 3 years. Therefore, theexecutive will have every incentive topump up the stock price in any way theycan and as early as they can, and thentake the money and run.

If executive options are such a onewaystreet, how did we all come toaccept them as a great incentive compensationtool? Well, the argument was, andstill is, that options align the interest ofthe executives with those of the shareholders,because executives holding a lotof options would try their best toincrease the stock price, which will benefitthe shareholders as well.

The problem is that options hardlyalign their interests, because if the stockprice goes down, the executive sufferslittle, whereas if it goes up, the executivebenefits handsomely. Any shareholderwould love to get that deal, especiallywhen it comes free.

But the worst part of the story—which played the key role in the stockmarket bubble and corporate scandals—is that corporations were allowedto pretend that options are cost-free (ie,their value does not come out of thepockets of the shareholders). This wasthe key argument against expensingoptions. So the arcane accounting issueof whether stock options should beexpensed plus the perverse incentivesnot-expensing provided, caused muchpain and suffering to so many people.

A major business magazine recentlyreported in glowing terms the test aninvestor with a $6-million portfolio setup to find their ideal investment manager.The portfolio was divided amongfour finalists and they were told thatevery 6 months the manager with theworst performance in the last periodwould be fired and the money would beredistributed among the remaining managers.This way the "ideal" managerwould be found in just 18 months.

Think about it. All this would do isencourage each manager to take wildrisks, because that is the best strategy tomaximize their chance of winning thisgame in the short term. The moneymanager who survives after the 18-month period will almost certainly do soby chance, and the portfolio will probablycollapse shortly after that.

Although this plan may sound ridiculous,we play variations of this game allthe time in investing—think of the feestructure of hedge funds, as well as otheraspects of our life. How humans willrespond to any incentive is very difficultto predict. So it is important to thinklong and hard before setting up anyincentive system because all too oftenthey produce perverse results. 

, author of The OnlyProven Road to Investment Success (JohnWiley; 2001) and Financial Modeling UsingExcel and VBA (Wiley; 2004), currentlyteaches finance at the Fordham UniversityGraduate School of Business and consults with individualson financial planning and investment management. He welcomesquestions or comments at chandansen@aol.com.

Investing

Beware of Incentives that Can Haunt You

Deciding your asset allocation while youare developing a balanced portfolio is justthe beginning of your financial planning.Choosing the best mutual funds for your portfoliois the next of many tasks in this process thatrequires due diligence. Some people simply cullleading magazines such as 

for their recommendations.While these publications certainly providesome good ideas, you should first determinewhether you want to buy actively managed fundsor passively managed funds.

In an actively managedfund, a manager or group of managers activelyreviews and analyzes the securities markets andselects securities that they believe will outperformtheir relevant benchmark over time. For example,if you choose an actively managed fund that investsprimarily in large US companies, the manager'sgoalâ€”and your expectationâ€”might be that thefund will outperform the S&P 500 Index, which isa recognized benchmark for large company stocks.As an alternative, you might choose a passivelymanaged fund such as the Vanguard S&P 500fund, where Vanguard simply hires a computerprogrammer to buy stocks that replicate the S&P500 Index. As a result, Vanguard can keep fundmanagement expenses low (eg, 0.18% annually vs0.95% for the average large cap fund). Using passivefunds has the added advantage of minimizingthe need for detailed research on your part. Yousimply buy an index fund for each category youneed. Both active and passive funds have benefits,and it's important to decide what fits your goals.

If you choose to useactive fund managers, your research shouldinclude comparisons of the fund's year-by-yearperformance vs the year-by-year returns of itsappropriate index benchmark. What you are lookingfor is consistency of performance vs the index.Simply looking at 3-, 5-, and 10-year total returnscan hide the fact that the fund hit a couple ofhome runs that skewed its performance over aperiod of time. Also, be sure to remember that youare investing with a particular manager, so reviewingpast returns for a fund whose current managerdid not produce those returns should be viewedwith a skeptical eye. The same holds true if a managerleaves a fund in which you are invested.

When researching fund managers, ask yourselfthe question, "Does their security selection processmake sense to me?" If the manager cannot articulatea well-defined process, performance is likely tobe inconsistent at best. You should be able to findthis information in the fund's prospectus.

To help you in your quest forlong-term top-performing mutual funds, a good researchsource is the Web site Morningstar (www.morningstar.com). The section on funds allows youto sort top fund performers by category over varyingtime periods. Keep in mind that you should payclose attention to fund expenses. In order to preserveyour investment returns, you will want thefund fees to be low unless there is a compelling reasonto pay more than average. 

, AEP, is the founder of the Welch Group,LLC, which specializes in providing fee-only wealth managementservices to affluent retirees and health care professionals throughoutthe United States. He is the coauthor of J.K. Lasser's New Rulesfor Estate and Tax Planning (Wiley; 2005). He welcomes questionsor comments at 800-709-7100 or visit www.welchgroup.com. This article wasreprinted with permission from the Birmingham Post-Herald.

Select the Right Mutual Funds for Your Portfolio

A report containing detailed information on a person'scredit history, including identifying information, credit accounts, loans,bankruptcies, late payments, and recent inquiries.

For a physician, a curriculum vitae is a summary ofyour educational and academic background, includingteaching and research experience, publications,presentations, awards, honors, affiliations, and otherdetails. It is a fairly complete picture of who you are, whatyou've accomplished, and what you're currently achievingfrom a professional and career perspective—it's yourcareer DNA.

A credit report is similar; it details your financial DNA.According to the Federal Trade Commission (FTC), a creditreport includes information ranging from where you live tohow you pay—or don't pay—your bills. The informationcontained in your credit report is purchased by creditors,insurers, and employers to evaluate your applications forcredit, including everything from a basic credit card to ahome mortgage. A poor credit report can influence yourapproval and interest rate, and it can hinder you financiallyfor years to come.

Credit reports come into play in many aspects of ourlives. For example, if you apply for a car loan, the dealershipwill run a credit check on you and obtain a copy ofyour report before they approve you for one. It's also likelya report will be generated when you apply for a newcredit card, finance your son's or daughter's college education,or apply for a new job. The latter example mayseem unusual, but more businesses are using creditreports to gain a better understanding of a person's levelof responsibility. This is especially important if the job'sduties include handling finances.

A poor credit report or low credit score is like having apoor public image and a reputation of irresponsibility. Ittakes a long time to cleanse your report of damaginginformation—7 years in most cases and 10 years wherebankruptcy information is concerned. But according to anEzineArticles.com editorial by Dennis Cary, titled "Understandingthe Importance of Credit Reports," the formulafor maintaining a positive credit report is fairly simple:Paying your bills on time and not maxing out your creditcards are the ingredients for success. Paying bills late ormaintaining a high credit card balance in comparison toyour available credit limit can have a negative impact. It isessential for you to know the details of your credit report;everyone else does. And although errors in credit reportsare infrequent, they do occur, so it is important to catchthem early. It's your responsibility to ensure the informationin your report is accurate.

Thanks to the Fair Credit Reporting Act (FCRA), it's easyto access your report. The FCRA requires that, upon yourrequest, each of the three nationwide consumer reportingcompanies—Equifax, Experian, and TransUnion—provideyou with a free copy of your credit report once a year.

To order a copy of your credit report, simply go to theAnnualCreditReport.com Web site, call 877-322-8228, orfill out the Annual Credit Report Request form that can befound online at www.ftc.gov/credit. You can requestcopies of your report from each company simultaneouslyor individually at different times during the year. Andaccording to the FTC, it's a good idea to obtain a copy ofall three reports because each company gets its informationfrom different sources. With all three reports, you'llhave a complete picture of your credit history.

The FTC warns to be aware of fraudulent Web sites thatoffer free credit reports when they are not part of the freeannual credit report program. In some cases, these freereports come with expensive strings attached. Accordingto the FTC, "Some sites sign you up for a supposedly freeservice that converts to one you have to pay for after atrial period." If you don't cancel during the trial period,you could be agreeing to have fees charged to your creditcard.

What do you do if you find that you have apoor credit report? An EzineArticle.com piece byPhilip Nicosia, titled "How to Repair Your CreditScore," offers the following interesting solutions:

For starters, obtain a new credit card. Yes, creditcards may be at the root of your problem, but ifyou use the credit card responsibly, paying yourbills on a regular basis, your credit report scorewill improve. Consider a secured credit card,where you put up collateral equal to or higherthan your credit limit, which won't be high tobegin with if you have poor credit. The collateralcan be in the form of a car, jewelry, or even stockmarket investments.

As an alternative, consider prepaid cards.According to Nicosia, prepaid cards enable you todetermine your credit line. They not only help yourebuild your credit history, but they'll help youstick to a budget—the failure of which often leadsto poor credit reports. Keep in mind that if you goover your limit on a prepaid card, you could becharged a fine.

You can also take steps toward improving yourcredit score by paying all your bills on time, includingutility bills like phone and electric. Enroll in anautomatic debit arrangement plan through yourutility company and bank, and you'll eliminate thechance of forgetting to pay a bill on time.

Who might make use of your credit report?

How many years does information generally remain onyour credit report?

How many free copies of your credit report can youobtain each year?

Which agency does not provide free copies of yourcredit report?

Ways to improve your credit score include

Close-up: Credit Report

As the 2006 third-quarterearnings report seasongot under way, newsfrom the housing sectorcouldn't have beenworse. The nation's largest builder,D.R. Horton, warned that fourth-quarterearnings would be 25% lowerthan the previous year, cancellationshad risen to 40%, and orders weredown 43%. D.R. Horton's report followedthe same trends as a number ofthe nation's largest builders.

Zolton Pozsar of Moody's Economy.com recently predicted that up to500,000 jobs could be lost in housingover the next 18 to 24 months.

Not only has housing become a largerpart of the economy since 2000, itrepresents a bigger part of householdwealth. In a 

article inSeptember titled "Full House," economistsDr. Robert Shiller and Dr. KarlCase stated that US household realestate holdings were valued at just under$8 trillion, or 40% of household wealth,10 years ago. That figure had more thandoubled to $21.6 trillion, or 56% ofhousehold wealth, by year-end 2005.

The National Association of HomeBuilders Housing MarketIndex (NAHB HMI) isbased on a survey of morethan 400 homebuildersacross the country andmeasures home sales andmarket expectations forthe next 6 months. A readingbelow 50 is consideredbearish. In September,the NAHB HMI fell10% to 30, cutting theindex by more than halffrom a reading of 65 inSeptember 2005. Thismeans builders are morebearish on the housingmarket than at any timesince 1991.

What does this mean for the economy?Merrill Lynch economist DavidRosenberg recently compared the NAHBHMI with the S&P 500 Index and founda striking 80% correlation between thetwo. It is, he says, "a relationship thatover time has actually strengthened,owing to the growing influence that thereal estate market has exerted on theoverall economic and financial landscapeover the past 5 years." 

In this monthly chart, the S&P 500(blue) vs the NAHB HMI (red) showsthe growing correlation between them,which lagged 12 months.

As a leading indicator of the stockmarket, the NAHB HMI is saying thatthe S&P 500 is headed for a lower lowthan that which occurred in October2002 when the index hit 777. In fact,assuming this correlation between thetwo continues, it would mean anS&P 500 value of approximately530 by thefall of 2007.

Maybe real estate willrecover and with it theprognosis for stocks. Butbased on the NAHB HMIas a leading indicator,investors should be prepared,at the very least,for the possibility of anS&P 500 bear market inthe upcoming months,especially in late 2007.Considering that the yieldcurve is bearish and hasremained inverted formuch of the time sinceJune 2006 (ie, long-termbond yields below short-term yields),this is not a possibility that you andyour portfolio can afford to ignore.

 is host for Electionomics.com, a Web site that examines theimpact of government policy on markets. Heis a senior market analyst for TradingEducation.com. A technical trader, publishedauthor, reviewer, and keynote speaker, Matt is a member ofthe Market Technicians Association and TechnicalSecurities Analysts Association. He can be reached atTradingEducation.com/contact.

See What Real Estate Reveals about Stocks

Americans have the tendency to overestimatetheir skill level in many arenas. For example,most of us think we are better automobiledrivers than we really are. When groups are askedhow many members are above average in their drivingskills, approximately 80% respond positively.Since only 50% can be above average, 30% mistakenlybelieve they can handle a car better than theyactually can. This idealistic, positive report extendsto specialty groups and professionals as well. Wheneducators describe their teaching ability, 94% saythat they are better at their work than fellow teachers.Again, only 50% can be better.

Investors—professionals and nonprofessionals—show similar results. A group of architects was askedto estimate the return in their pension plans the previousyear. They recalled their investment performanceas 6% higher than the actual return. They also estimatedthat they beat the market by 5% more thanthey actually did. Similar studies performed withfinancially educated investors showed similar results.

Many of us can't face up to the reality that ourfinancial decisions don't turn out as we expect.Sorting through the expensive aftermath causes toomuch pain for close inspection, and few people haveenough courage. Therefore, we attempt to minimizethe negative impacts and accentuate the positive evidence.We are willing to deceive ourselves—some ofus more than others.

(MITPress; 2004), discusses self-deception, such as the typethat investors make regarding their financial outcomes.In the box on the left is an interview withHirstein, which reveals the concepts in his book andhow they are applied to the marketplace. 

Advice for Investors from William Hirstein

It's important to know that you don't know[everything]. I would think it would be disastrous if youthought you knew and you didn't know. So, it might bewise to underestimate the amount of your knowledge andto keep seeking more, rather than fall into the trap of feelingyou know everything to put your money here.

There are two sources of information—emotionaland intellectual—does self-deception apply to both?

I would think it would be important to keep trackof your own emotions and think about where they led youawry. For example, you can convince yourself that yourteam has a chance to beat another team that is actuallybetter, but it's wishful thinking.

I'm thinking that some of our financialsources may be plagued by self-deception.

Give everybody a credibility rating and adjust itup and down.

What thought processes lead people astray?

Watch out for the following scenario: We have atendency to overrate ideas because we came up withthem. There is a tendency to think that I am such a cleverfellow, because I alone have noted this. You have to reinyourself in.

, MD, dissects barriers to effective monetarydecisions so they become manageable. Her unique training andexperience as a practicing physician board certified in neurologyand psychiatry, combined with her 7-year investment advisorcareer, contribute to her expertise. She welcomes questions andcomments at MyMoneyMD@aol.com.

Avoid Self-deception While Investing

As winter's chill approaches in many parts of thecountry, fluctuating fuel costs are undoubtedly on the mindsof many budget-conscious physicians. Yet, an important fuelconserving option already exists in many homes: the hearth.

Indeed, the centuries-old practice of warming a homefrom its hearth is being given new life with modern energy-efficienttechnologies. Unfortunately, the majority of fireplacesin place today fall far short of achievable efficiencies.And unless a physician has shopped for a fireplace lately,they probably don't realize the variety of energy-wiseoptions now available—be it new construction or retrofit.

"While fireplaces and other hearth products of the pastwere widely used for ambiance, many of today's hearth productsare very energy efficient and can help cut energy bills,"said Jack Goldman, president of Hearth, Patio & BarbecueAssociation (HPBA). "With today's products, consumers canhave good looks, ambiance, and a highly efficient heatingdevice all in one." According to past studies, such zone heatingcan provide energy savings of 20% to 40%.

Dr. Martin Steinweiss, a retired dental surgeon fromOcean Township, NJ, looked into hearth heating optionswhen he found his master bedroom addition was always 5degrees cooler than the rest of the house. Not wanting toturn up the thermostat, he bought a natural gas stove for the500-square-foot room three winters ago. Now, he simplyuses a remote to turn the stove on and off. "It works perfectly," he says. "It only takes about 20 minutes to heat theroom." While the stove cost approximately $2500,Steinweiss says, "I don't waste heat in the rest of the house." He adds, "Is it worth it? I think it is."

As people seek out less expensive alternatives to warmingtheir home, freestanding stoves, like Steinweiss' purchase,are making a comeback. "More and more people aredoing stoves now," comments Mark Smith, managerof the Wood Stove & Fireplace Center inOakhurst, NJ. "The past two seasons, more peopleare getting into energy efficiency." About the size ofan easy chair, today's freestanding stoves are madeof steel, stone, or cast iron; come in a variety ofstyles; and can burn wood, gas, coal, oil, or pellet.Many stoves function just like furnaces, includingthermostats and timers, yet they focus specifically onone room, saving money.

Pellet-fueled stoves in particular are garnering theattention of the energy-wise. Pellet is made of 100%wood sawdust that would normally be destined forlandfills. Not only is pellet from a renewableresource, but it's inexpensive and clean-burning."The green theme is taking over," Smith comments."Wood pellet and corn burning [options] are popular?people are going with those for the fuel efficiency." In fact, sales of pellet appliances rose a staggering76% between 2004 and 2005. Many pellet stovescan also burn corn.

While you'll need to add pellet to your stove generallyonce a day, the cost savings can be worth it, asSmith attests. He once spent $200 to $400 everymonth during the winter to heat his 1900-square-foothome. After investing $3200 in a pellet stove placedin his family room, he now spends about $400 for theentire season. This is his third winter with the stove."I really stand behind pellet fuels," he says.

Those with a traditional fireplace who would liketo gain more heat efficiency or take advantage of pelletfuel should look into a fireplace insert. Accordingto HPBA, half of all US households have at least onefireplace or freestanding stove—traditional woodburningfireplaces being the most common. With anaverage age of 23 years, seven of eight are more than10 years old, and with efficiency ratings of a mere5% to 10%, such fireplaces are ideal candidates forupgrades. This is because their open combustiondesign allows an abundance of heated air to bedrawn into the fire, causing the fire to burn too fastand wasting energy. As Smith explains, "The hotterthe fire gets, the more air it takes out of the house." 

Inserts, on the other hand, can generate efficienciesof 65% with their insulated, closed-door system.Made of cast iron or steel, they can be fueled by gas,propane, and EPA-certified wood, coal, or pellet. AnEPA-certified wood-burning insert can also reducesmoke emissions to almost zero. Besides stoves,inserts are Smith's most popular seller. They can havethe efficiency of a stove, but still look like a traditionalfireplace with a surround and mantle. Recently, alot of inserts have been converted to use more efficientfuels, Smith says, such as pellet.

Unfortunately, even wood-burning fireplaces in newconstruction may not have great energy efficiency. Sincefireplaces rank among the top three features desired bynew homebuyers, six of 10 new homes built in theUnited States today have at least one fireplace. Butmany builders tend to install less expensive, prefabricatedmodels that offer great esthetics and ambiancebut may not provide optimal efficiency, Smith says. Infact, 71% of fireplace installation decisions are by thebuilder—only 24% by the homebuyer.

Two better choices for new wood-burning fireplacesare clean burning and EPA-certified, producingless than 7.5 grams of particulates per hour. Withinsulated, closed combustion systems (ie, their glassdoors must be closed during operation), they burnmore efficiently, generate substantial heat, and reduceemissions. Though "there's a lot of interest" in thesemodels, Smith cautions they're also very expensive—as much as 3 times the cost. While a traditional fireplacemight run as low as $1200, a high-efficiencymodel can cost $5000. As a result, at Smith's store,"there's a lot of talk, but not a lot of sales." 

With concerns over gas prices, one would expectgas-fueled fireplaces, inserts, and stoves to be lesspopular. And indeed, compared to pellet fuel's 76%growth, gas appliances grew a mere 2% between2004 and 2005. However, gas appliances representednearly 67% of the total market last year, whilepellet appliances were only about 4%. So clearly, gasappliances are still big sellers.

While some units are designed solely for decorativepurposes, heater-rated units are a better choicefor physicians who desire efficiency. An Annual FuelUtilization Efficiency rating means the unit is testedto the same standard used to rate today's energy-efficientfurnaces and can retain up to 70% of the heatit generates. As to costs, Smith says to expect a costof 25 cents to 75 cents per hour of operation.

Of course, there are many more factors to hearthselection than just energy efficiency and potential costsavings. Ambiance, esthetics, venting options, spacerestraints, maintenance, convenience, and more alladd into the decision. Direct vented gas units, forinstance, are the best choice for those with allergies.Talk to a dealer to find the right fit for your home—and stay warm this winter. For more information,visit www.hpba.org.

Avoid Burning Money with a Smart Hearth in Your Home

Every physician-investor would welcomean unexpected financial windfall ofsome sort. While not every physician canhit the lottery or find buried treasure, thereis a chance you could be sitting on a substantialsum of money that you weren'teven aware of. According to Bankrate.com,the National Association of UnclaimedProperty Administrators says that there areliterally billions of dollars in cash and valuablesjust waiting for their rightful ownersto claim them. As a matter of fact, theyprofess that 1 of 8 Americans have theright to collect money from old bankaccounts, stocks, bonds, uncashed paychecks,utility deposits, and other sources.If you're going through your parents' records, you may discover old bank statementsthat indicate there is still money inthe account. If the bank is no longer inservice, you can contact the FDIC to trackdown where the money has gone andmake an attempt to claim it. You may alsofind old stock certificates that could beworth considerable amounts of money. Ifthis happens, contact the SEC to see if youhave a right to the money and to find outthe current value of the certificate.

Bulletin Board

Discover Money You Didn't Even Know You Had

Not every physician-retiree wants tosettle down and live their twilight years ina peaceful, secluded location—some stillwant to enjoy the perks of living close to abig city. For that crop of physicians, arecent report, "Retirement Migration inAmerica," lists the following top 15 metropolitanareas in which to retire that are notonly low in crime but financially sensiblefor retirees as well:

Miami/Ft. Lauderdale area: North Palm Beach, Fla

Minneapolis/St. Paul area: Paynesville, Minn

San Francisco/Oakland/San Jose area: Martinez, Calif

Top Places for City Slickers to Retire

If you're a physician-investor with aglittering gold fund, maybe another preciousmetal can make your portfoliogleam. A new silver exchange-traded fund(ETF) has recently been launched andsponsored by Barclays Global Investorscalled iShares Silver Trust (SLV). Accordingto 

, this ETF marks the firsttime that investors can put their moneyspecifically into silver without holding themetal or diving into futures markets. Thesilver ETF has been a long time coming,and has been delayed in part due toopposition from the Silver Users Association,a nonprofit group that says thefund will take a large chunk of silver offthe market and increase prices. The SEC,on the contrary, has stated that the ETFshould increase efficiency and transparencyof the silver market. If you'reinterested in a silver investment, keep inmind that it is classified by the IRS as acollectible, meaning that if you hold it formore than a year, gains are taxed at 28%,just like gold.

Add a Silver Lining to Your Portfolio

Crude oil has dominated the energylandscape for the past several decades,replacing coal at the top of the heap,because oil is easier to transport and burnscleaner than coal. But now because of thesoaring price of oil, coal has reemerged asa feasible energy alternative, attracting theinterest of many physician-investors.According to 

, the United Stateshas a good grip on the coal industry, with27% of the world's reserves. In fact, UScoal stocks have outperformed the majoroil companies over the past 2 years. Froman investment perspective, coal is more ofa long-term prospect than a short-termmoneymaker, as coal companies mainlywork off of long-term contracts. If youwant to invest in this fossil fuel, you won'tbe able to find it in natural-resourcesmutual funds or exchange-traded funds.Rather, you'll need to look into individualcoal stocks. 

recommends suchcoal producers as Peabody Energy andConsol Energy.

Coal Stoking the Buying Fires of Investors

Some physicians delve into the world ofcollectibles as investments that are sure toappreciate, such as coins, stamps, etc. Butif you dig a little deeper you can find a collectiblegenre that has become more andmore popular over the past few years: fossils.According to 

, high-quality fossilprices are rising at auctions due largelyin part to a growing number of admirerswho want to display them in their personalcollection as organic art pieces. Youdon't have to fly out to Wyoming with ashovel in hand to acquire these ancientartifacts, as there are numerous pieces tobe found on auction blocks all over thecountry, and they are all appreciating invalue. 

gives the example of a manwho bought a fossil at auction 15 yearsago for $3400 and it is now appraised tobe worth around $25,000. Not a badreturn on investment, and for the kid inyou, probably a lot more fun than pouringyour money into yet another fund.

Discover a Very Old Method of Investing

While many physician-investors haveachieved financial success with exchange-tradedfunds (ETFs), the flood of new ETFsin recent years has some experts speculatingthat the public is getting confused bythe myriad of specialized ETFs in the multitudeof market sectors. According to the

, there are currentlyaround 280 ETFs listed on domesticexchanges—more than 180 on theAmerican Stock Exchange and over 100 onthe New York Stock Exchange. Investorswere initially attracted to ETFs when theydebuted a decade ago because of their lowfees and low turnover, as well as the waythey track the benchmarks of the top markets,such as the Dow and the S&P 500.Total assets in US-listed ETFs have surgedfrom $80 billion in 2001 to $324.7 billionin May of this year. So far in 2006, therehave been over 70 new ETFs listed. Butmany of these new funds are based oncomplex benchmarks that try to identifyoutperforming stocks and sectors thathave been difficult for individual investorsto access in the past. Because of this, someexperts argue that these ETFs are moreconfusing to investors and have a higherturnover and fees, which is the very oppositeof why ETFs became so popular in thefirst place. Other experts say that ETFs areexperiencing overload, but the industry issimply in a rapid development, much likemutual funds in the 1990s.

ETF Overkill May Hurt Their Appeal to Investors

Debuting in California in March, in thepast few months 50-year mortgages havepopped up in a handful of states.Physician-homebuyers who are seekingrelief from high monthly mortgage paymentsmay think extending the length oftheir mortgage will give them much-neededrelief. According to the NationalAssociation of Realtors, half of first-timehome buyers are age 32 and older, meaningif they sign a 50-year mortgage, theywould be paying off their house until age82. But few people live in one house for solong, meaning that while the 50-yearmortgage looks appealing in terms oflower monthly payments, so many homebuyerswould be better off with hybridadjustable mortgages. Even if you did planon staying in the same home for 50 years,Bankrate.com points out that the total costis much higher than a traditional 30-yearmortgage, because the interest rate duringthe extra 20 years could rise significantly.For example, a 30-year loan of $300,000with a fixed rate of 6.5% would mean amonthly payment of $1896.20, while thesame loan stretched out to 50 years wouldbe lower at $1691.15. However, becausethe payments are stretched out another 2decades, the homebuyer would end upshelling out a total of $332,058 more.

December 2006

Take a Look at a Baby Boomer's Super Bill

Improve Finances with a Lower Credit Score

Perspectives from the office & beyond: OUT OF BANGKOK—A JOURNEY TO AND BEYOND CHIANG MAI

You Have to Be a Team Player to Win

Your Financial Lifeline Is Only as Strong as Your Financial Team

Beware of Incentives that Can Haunt You

Select the Right Mutual Funds for Your Portfolio

Close-up: Credit Report

See What Real Estate Reveals about Stocks

Avoid Self-deception While Investing

Avoid Burning Money with a Smart Hearth in Your Home

Discover Money You Didn't Even Know You Had

Top Places for City Slickers to Retire

Add a Silver Lining to Your Portfolio

Coal Stoking the Buying Fires of Investors

Discover a Very Old Method of Investing

ETF Overkill May Hurt Their Appeal to Investors

Long Haul for Homebuyers with a 50-year Mortgage

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READING ROOM: Stock Investing for Dummies

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Where Will You Find Yourself at Age 60?

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