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THE TEN BIGGEST

MONEY MANAGEMENT MISTAKES


AND HOW TO CORRECT THEM
By Charles J. Givens

MISTAKES CORRECTION DIFFERENCE


PERSONAL FINANCE
1. 30-year mortgage 15-year mortgage or Save $80,000 for every
extra principal payments $50,000 borrowed!
2. 18% Bank Card 11.75% MasterCard & VISA Save 45% Interest!
Arkansas Federal Savin{ls Bank-lssuer
Charles J. Givens Org.-Agent

3. Whole life/universal life Annually renewable term Save 80% premiums!


Insurance Insurance
4. Lousy creditlno credit Secured MasterCard & VISA Instantly re-establish credit!
Arkansas Federal Savin{ls Bank-lssuer
Charles J. Givens Org ....:Agent
Write: Secured Card
P,O. Box 3111, Orlando, FL 32802

TAXES
5. Non-deductible vacations Deductible job interviews Government will reimburse
while traveling you 30% of vacation money!
6. Paying non-deductible Start a small business at Save $600 in taxes for every
allowances to children home and pay tax deductible $2,000 of children's salaries!
salaries to children
7. Non-deductible VCR, Using personal assets in a Your assets become tax
computer, car part-time business deductible!
8. Filing your tax return File Form 4868 to get a Automatically reduce your
before April 15th four-month extension chance for audit by 50%!

INVESTING
9. Cert. of deposit and No-load bond mutual funds Top bond mutual fund
bank money markets currently yielding 13.9%
plus capital gains.
10. Government guaranteed Buying tax liens from the You earn 15% to 30%,
interest of 7%-T-bills, government or discounted guaranteed and secured!
savings bonds mortgages from former
homeowners

o 1989 Charles .1. Givens Orepnization R7


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Have Questions?
Call your consultant at the
Charles J. Givens Organization
on the Financial Hotline
407-331-1130
This service is provided as a benefit to
members, with current paid dues.

Helpful Hints
1. When calling with your questions
please be specific and concise.
2. Your consultant will help you with all
the strategies and tax questions.

Hotline hours are 8:00 am to 6:00 pm EST


Health I surance
Clearinghouse
1-800-477-7472

fI
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I,;
<
All Forms Of Health
Insurance Available
8:00 A.M. To
12:00 Midnight
Eastern M-F
APPLICATIONS
WORKSHOP
HOW TO GET STARTED
IN APPLYING.
MONEY STRATEGIES ·
Powerful full-day workshop
Led by Charles J. Givens National Instructors
Workshops are included in your membership
Your spouse or family member may attend with you FREE!

During the Workshop you will


Learn How To:
• Get started using Money Strategies
• Get answers to all of your personal financial questions
• Prepare your written plan for reaching the 0 tax bracket
• Prepare your written investment plan
• Choose the specific tax and investment strategies you will use

CHARLES J GIVENS ORGANIZATION

APPLICATIONS WORKSHOP
Please fill in the date of your next Applications Workshop. _ _ _ _ _ _ _ _ _ _ __
What to bring: Pen and paper. MONEY STRATEGIES MANUAL and your questions. ~ , OPTIONAL: Tape Recorder

Be sure to attend!
THE CHARLES J. GIVENS FINANCIAL GROUP
NATIONAL STAFF
Charles J. Givens CONSULTANTS Robert Gager
Chairman and Founder Seminar Coordinator
Robert E. "Buddy" Hewell
Rona Id L. La ne Insurance, Annuities and Janice Higdon
President and CEO Retirement Planner Seminar Coordinator
Louis Eyermann Charles "Buddy" Smith Terry Hazelette
Vice President, Operations Financial Planning Seminar Coordinator
William Norton Kerry Purdy
NATIONAL SEMINAR
Vice President, Research and Seminar Coordinator
Special Projects Division COORDINATORS
Bernie Winkler
Larry O. Sparks Adena Givens Seminar Coordinator
Vice President, Share the Director of Seminar Personnel
Wealth Field Operations James Cook
Michael Cooper Seminar Coordinator
Hal Culbertson Director of Seminars
Vice President, Share the Robert Brown
Wealth Training Steve Arling Seminar Coordinator
Seminar Coordinator
Rusty Culler Julie Berk
Vice President, Share the Sal Porta Seminar Coordinator
Wealth Administration Seminar Coordinator
Carol Sapp
Thomas Breiter Cherie Bazemore Workshop Manager
Vice President, Investment Seminar Coordinator
Cheryn Grime
Division Assistant
Bill McGinn
Howard Slutsky Seminar Coordinator
Steve Czerniejewski
Vice President, Finance and Workshop Coordinator
Donald Birchfield
Comptroller
Seminar Coordinator Bob Barnes
Steve McClaskey Workshop Coordinator
Elena Bronson
Vice President, International
Division Seminar Coordinator
Bob Berk
Jennifer Dunaville Workshop Coordinator
Rick Jensen
Vice President, Health Seminar Coordinator
Joe Bornstein
I nsurance Clearinghouse Michael Summar Workshop Coordinator
Seminar Coordinator
NATIONAL INSTRUCTORS Marci Gaddis
Rick Parker Workshop Coordinator
Charles J. Givens III Seminar Coordinator
Jim Greene
Thomas Breiter Tim Sobitz Workshop Coordinator
John Dicks Seminar Coordinator Jeanine Mueller
Patty Corso Workshop Coordinator
Rick Jensen
Seminar Coordinator
Gibson Prescott
Joseph Sgarlata
Vince Evans Workshop Coordinator
Steven Sitkowski Seminar Coordinator
Lisa Rawlson
Pete Ulmer George Grubbs Workshop Coordinator
Seminar Coordinator Anna Trammel
Leo Bessette
Workshop Coordinator
Every effort has been made to ensure the accuracy of the material contained in this reference manual;

r however, errors do occur. Material contained herein is not intended to take the form of legal advice. In
applying the strategies, you are encouraged to seek the help of competent professionals. An
aggressive attorney and accountant can be your greatest allies.
Mary Wald Margie Leinberger Harry C. Stone II
Workshop Coordinator Accts. Rec. Clerk Consultant
Payra Sotomayor Paul Veresko
/~
Wynne Wycoff
Workshop Coordinator Accts. Rec. Clerk Consultant

COMPUTER SYSTEMS Chuck Bauer


ADMINISTRATION
Consultant
Nita Rawlson Lisa Philpott Troy Schake
Exec. Asst. to Chairman Director Consultant
Sherry Jamail Steve Andrews Brent Cozlin
Exec. Asst. to President Tech. Writer Consultant
Donna Willia ms Lisa McBurney Bill Craver
Receptionist Software Support Consultant
Sharon Young Bordin McKowen Scott Stinnett
Receptionist Programmer Consultant
Mary Mulkey Todd Strickland Glen Vitale
Exec. Secretary LAN Manager Consultant
ACCOUNTS RECEIVABLE Linda A. Bartz
Software Support FULFILLMENT & QUALITY
Dicksie Carroll CONTROL
Richard Brannon
Manager LAN Assistant Schuyler Pouncey
Director
Becky Albershardt Ken Sandlin
Accts. Rec. Clerk LAN Assistant Leslie Costa,
Delta Grp. Mgr./Pur. Agent
Tiffany Baker
Aeets. Ree. Clerk FINANCE
Brian King
Kerry Benfer Ernie Arnold Operations Manager
Acets. Ree. Clerk Director, Accounting Mitch Sedlak
Joann Bridges Lisa Fillmore Warehouse Operations
Aeets. Ree. Clerk Aeets. Payable Clerk Paul Steigelman
Eda Correa Bonnie Givens Warehouse/Mail
Accts. Rec. Clerk Controller
HEALTH INSURANCE
Patricia Crosby Betty O'Hagan CLEARING HOUSE
Accts. Rec. Clerk Asst. to VP
Rick Jensen
Teresa Giachetti Joyce Kamper
Vice President
Accts. Rec. Clerk Payroll/Personnel
Paula St. Denis
Debbie Grevey Judy Riordan
Admin. Asst.
Aeets. Ree. Supv. Bank Reconciliation
Deborah Bell
Dena Grimes Margaret Sayne
Insurance Counselor
Aects. Ree. Clerk Aects. Payable Mgr.
Richard Chandler
Audrey Harkness Melanie Cordeiro
Insurance Counselor
Aeets. Ree. Clerk A/P Clerk
Terry Cypher
Emily Hendon Catherine Schwiegerath
Insurance Counselor
Aeets. Ree. Clerk NP Clerk
Chris Gregory
Suzanne Hensley FINANCIAL CONSULTING Insurance Counselor
Aeets. Ree. Clerk
Larry Weis Nancy Jahnsen
Linda Howington
Director Insurance Counselor
Acets. Ree. Clerk
.",
Jim Crumrine Ron Lane, Jr.
Jeff Lair /
Assistant Director Insurance Counselor
Accts. Rec. Clerk
Kristy Sed la k Cindy Timpano Cheryn Grime
Insurance Counselor Manager, New Member Assistant
Services
Margie O'Brien SHARE THE WEALTH
Insurance Counselor Lara Anderson
Secretary Larry O. Sparks
Tim Ver Meer
Vice President, Field
Insurance Counselor MORTGAGE CLEARING Operations
Richard Whitaker HOUSE
Hal Culbertson
Insurance Counselor
Fred Farmer Vice President, Training
Kelly Zielinski Director Rusty Culler
Insurance Counselor
Vice President, Administration
PUBLISHING
Maria Avare
Sandra Sparks
Seminar Coordinator Beth Webley Vice President, Communication
John Kennedy Director
Taylor Hegan
Clerical Assistant Suzanne Allen Vice President, Sales
Advertising/Editor STW
MEMBER SERVICES Helen Brown
Jennifer Griffith Dir. of Lead Distribution
Vicki Pouncey Production Mgr.
Director Tom Brown
Debbie Kirkpatrick Dir. of Admin.
Janice Archambault Publisher
Central File Mgr. Michele Casteel
Michael Starnes Admin. Ass!.
Maureen Fallucca Publisher Hal Culbertson
Customer Service Mgr.
Elaine Wilson Sharon Du Bose
Tina Kendrick Editor Financial Digest Exec. Secretary
Cust. Servo Rep.
REAL ESTATE INVESTORS Mary Jane Sims
Barbara Lindner
Cust. Servo Rep. INSTITUTE Mary Kay Turner
Jennifer Lorenz Joe Sgarlata
Refund Admin. Co-Founder
Michelle McDowell Eileen Silva
Cust. Servo Recpt. Director
Sherry Re Anthony Merenda, Jr.
Cust. Servo Rep. Asst. Director of Technical
Support
Treanna Scholer
Cust. Servo Rep. Jane Martinez
Exec. Asst.
Jessica Schwartz
Cust. Admin. SCHEDULING
Bren Taylor
Kimberly Appel
Cust. Servo Rep.
Lecture Manager
Candli Pruitt
Gail Lewis
Cust. Servo Rep.
Assistant
Denise Krsek
Diana Oliver
Computer Services Manager
Assistant
Mayra Sotomayor
Joy Wynn
Data Entry
Assistant
Jeannine Brinkerhoff
Carol Sapp
Data Entry
Workshop Manager
The Charles J. Givens Group of Companies
As ]part of the Givens Organization you are associated with one of the biggest, most
successful, privately-owned conglomerates in America with annual revenues of over
$100,000,000 and assets controlled of over $200,000,000.

The Givens Group of Companies transcends the boundaries of twelve industries,


including:

• Real Estate Development


• Radio Broadcasting
• Education
• Insurance
• Publishing
• Investment Banking
• Mortgage Syndication
• Financial Planning
• Securities Brokerage
• Entertainment
• Travel
• Property Management

Some of the companies and properties included in the Givens Group are:

Charles J. Givens Organization


• Financial Planning and Education, 200,000 members
• Publishes Charles J. Givens Financial Library and Charles J. Givens Financial Digest
Newsletter
• Conducts 300 2-day Workshops per year in over 100 cities

Charles J. Givens Radio Stations


• KGU-AM Honolulu
• KGU-FM Honolulu
• WTIX-AM New Orleans

Delta Investment Partnerships I through XVII


• Real estate investment partnerships
r
Givens Group Properties
Some of the premier properties owned by the Givens Group include:

Douglas Point
• 17,000 sq. ft. office building on Interstate 4, international headquarters of the Givens
Organization

Crown Oak Center


• Premier office park in Orlando

Wekiva Comers
• 60,000 sq. ft. prestige retail shopping center

Conway Center
• 21,000 sq. ft. strip shopping center in south Orlando

Maitland Commons
• 16,000 sq. ft. office building in Maitland Center

Southern Bank Building


• Office building anchored by Mr. Givens' Southern Bank

Interstate
• Offices and Showroom Building which fronts on Interstate 4 in Orlando

Bally Fitness Center


• 25,000 sq. ft. building in Orlando near Universal Studios

Pioneer Financial Center


• Office building anchored by Pioneer Savings Bank

Market Place Financial Center


• 14,000 sq. ft. office building anchored by Barnett Bank

Somerset Shores
• 48 unit lakefront duster home development in the Bay Hill area of Orlando

Palm Lake
• Residential development in West Orlando
Delta Capital Properties
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\ • Leasing and Property Management Co.
• Manages properties acquired or built by other Delta companies

Delta Prestige Homes


• Upper-end residential real estate development

Delta First Financial


.. NASD and SEC registered broker-dealer and registered investment advisor
• Raises capital through the sale of securities for the acquisition, development, and con-
struction of real estate projects

Givens Radio Network


• Produces the weekly 2 hour Charles J. Givens Financial Digest broadcast on 60 sta-
tions nationwide
• Owns radio production studio and transmitting facility

Longwood International Travel


• Commercial Travel Agency with in-house satellite offices at the Givens Organization

r Southern Bank
• Charles J. Givens is a founding director and a major stockholder in this new bank.

Hovey Court Partners


• Owns nine office buildings certified as National Historic Structures located in
Cherokee Historic District of Orlando

Pelican Bay Hill


• Participating mortgage syndicate which finances the acquisition and construction of
residential properties in Orlando and Naples, Florida, including the Westinghouse
Pelican Bay Complex on the Gulf

Starbuck's - Great American Videocade


• Company specializing in family games and video entertainment
• World's largest family entertainment center and video store
• 2 locations
/

Please Read Carefully

We welcome you as a member of the Organization.


Please read the next few pages before beginning the program to acquaint yourself
with all of your membership benefits and how to use your membership successfully.

The Charles J. Givens Organization, because of the success of its members, has in
12 years become one of the greatest educational and economic forces in America.
There are currently 600 staff members, almost 100 at a national level, and 500 on the
governing councils of the Delta Groups. One hundred fifty thousand families are
members of the Organization.

This is your organization, not mine. It exists for one purpose only, to help make you
more successful. From our instruct~rs to our administrative staff, everyone at the
Organization is dedicated to that purpose.

What you will learn as a Organization member is based on my 25 years of experience


gained while building my own dreams.

As a member, you will learn what works and what does not when it comes to
managing and making money in America. The strategies work, work for everyone and
work all of the time.

The principles are straight forward , easy to apply and give you a starting point as well
as a complete plan for putting control of your financial future where it belongs - in
your own capable hands.
Givens Organization Affiliates

Delta Capital Corporation, an affiliate of the Charles J. Givens Organization, was


formed in 1983 by Mr. Givens in conjunction with Jack W. Dicks and Charles C.
IIBuddyll Smith, Jr. to be an investment banking company based upon the philosophy
of the Money Strategies Financial Encyclopedia. Because of its success, DCC has now
become a consortium of investment services, commercial and residential develop-
ment, and has an affiliate full service general securities brokerage firm.
Mr. Givens serves as the Director of Delta Capital Corporation. Jack Dicks is Chair-
man of the Board, and Buddy Smith is the Chief Executive Officer. One of the major
subsidiaries of DCC is Delta First Financial, Inc., a Registered Investment Advisor and
fully licensed general securities Broker/Dealer registered federally with the Securities
and Exchange Commission and individually in 42 states. OFF also has firm member-
ships in the National Association of Securities Dealers, Inc. (NASD) and the Securities
Investor Protection Corporation (SIPC).

JACK W. DICKS

Jack W. Dicks, Chairman of the Board of Delta Capital Corporation as well as Presi-
dent of Delta First Financial, Inc., is a well respected attorney with experience in real
estate, taxation, and syndication investments. Jack was listed in 1987 in "Who's in
American Law" and ll Who's Who of the South and Southwest. II After graduation from
George Mason University of Law, he joined a prestigious Orlando, Florida law firm
specializing in securities and investments. He has combined his investment
knowledge and legal expertise to become a successful investor with many diversified
holdings.
Along with his association with the Charles J. Givens Organization as an educator,
Jack was also selected as a nationwide instructor on taxation and securities for both
the National Association of Realtors and the Real Estate Securities and Syndication In-
stitute. In 1987 he was named to the exclusive honor roll of IIWho's Who in American
Law. 1I He has passed the NASD Series 24,6,7,22,26,39 and 63 examinations.
CHARLES C. "BUDDY" SMITH, JR.

Charles C. "Buddyll Smith, Jr. serves as Chief Executive Officer of Delta Capital Cor- ,
poration and is responsible for capital formation and the creation of investment
products. He also serves on the Board of Directors for the First Trust Savings Bank of
Jacksonville, Florida. He graduated form the University of South Carolina and pursued
advanced studies in economic theory and philosophy at L'Abri Fellowship in Huemoz,
Switzerland. In 1978, Mr. Smith founded his own investment consulting organization.
In 1983, he along with his partners, Jack Dicks and Charles J. Givens, formed Delta
Capital Corporation. Later, he was one of the co-founders of Delta First Financial, Inc.
In this capacity, he is responsible for implementing the financial goals and objectives
for thousands of clients throughout the country. Together with Mr. Dicks and Stephen
P. Sitkowski, he has helped to formulate Delta Financial Services, the financial plan-
ning affiliate of Delta First Financial, Inc. StephenP. Sitkowski, he has helped to formu-
late Delta Financial Services, the financial planning affiliate of Delta First Financial, Inc.

STEPHEN P. SITKOWSKI

Stephen P. Sitkowski, one of the newest staff members of Delta Capital Corporation, ,.,.. )
has been a national instructor for the Charles J. Organization since 1985. He now ser-
ves as both President and Chief Executive Officer of Delta First Financial, Inc., where
he is also both Executive Officer and Principal, Mr. Sitkowski has recently relocated to
Florida after a successful career in Orange County, California, where he was President
of Financial Services Unlimited, a financial planning firm with more than 8,500 clients
nationally. As a Certified Financial Planner, an Investment Advisor, and author of
IIMoney Strategies in Motion," he is frequently asked to speak on both radio and
television, and is a widely acclaimed national public speaker. He was listed in IIWho's
Who in America,1I IIWho's Who in California,1I and IIWho's Who in Business and
Finance." Further, Mr. Sitkowski was named in the International Directory and has ap-
peared in "Window on Wall Street. 1I
INSTRUCTORS BIOGRAPHIES

Stephen P. Sitkowski, CFP

Steven P. Sitkowski has been a national instructor for the Charles J. Givens Organiza-
tion since 1985 and is currently President of Delta Financial Services. As a Certified
Financial Planner, an Investment Advisor, and author of "Money Strategies in Motion,"
he is a frequent guest speaker on radio and television, and has appeared in "Window
on Wall Street" and in "Who's Who in Business and Finance."

John Dicks, Esquire

John Dicks is a respected attorney specializing in investment taxation and finance. He


is the co-author of "The Bookshelf Lawyer" which was written in conjunction with Char-
les J. Givens to save readers thousand of dollars in legal fees. In addition to being a
national public speaker, he is an Investment Advisor, and was named as one of only
200 people nationally as a designated Specialist in Real Estate Securities.

Joseph Sgarlata, MBA, CPA, CFP

Joseph Sgarlatta has a Masters Degree in Business Administration, and is both a Cer-
tified Public Accountant and a Certified Financial Planner. His field of expertise is in
real estate and mortgage investment, and he is a veteran instructor for the Givens Or-
ganization. He has written two books and lecture tape courses entitled "High Return In-
vestment Strategies After Tax Reform," and "Building Wealth Without Cash," and is a
widely acclaimed speaker.

Richard N. Jensen, MPA, RFP

Rick Jensen has a Masters Degree in Public Administration, which deals with the
private sector of business, and is a Registered Financial Planner. Further, he is one of
the few instructors licensed in all eight financial disciplines of the Charles J. Givens Or-
ganization. Rick specializes in international investing and insurance, and as an interna-
tional stock broker he has dealt in all 42 stock markets throughout the world.

(
,......,.
Thomas Breiter )
Tom Breiter is currently the Vice President of Operations of the Charles J. Givens Or-
ganization. He is a licensed securities representative and serves as the portfolio
manager for Charles J. Givens and the organization. His book, liThe Complete Money
Movement Strategist," has been highly touted as a guide to mutual funds and personal
portfolio development.

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STOP!
PLEASE READ CAREFULLY BEFORE
YOU BEGIN YOUR TAPES
YOUR CHARLES J. GIVENS ORGANIZATION MEMBERSHIP BENEFITS
Your Membership Benefits are the tools of the Money Strategies Wealth
Buildling System. Your Levell Membership includes:
PART 1. Financial Library -On Tape
Audio and Video Tapes, 450-page Reference Manual
PART 2. Applications Workshops
PART 3. Charles J. Givens Financial Digest monthly newsletter
PART 4. Financial Hotline
PART 5. Membership Card
PART 6. Delta Group
Additionally, your membership in the national Organization permits optional
Delta Group participation in cities where groups have been formed.
Most Delta Groups have small dues charge for participation.

PART 1 - YOUR FINANCIAL LIBRARY


r . Audio and Video Tapes
• 450-page Reference Manual
AUDIO and VIDEO TAPES
The Financial Library on audio and video tape allows you access to money strategies
and answers to questions about money and how it works. Your tape library is a
compendium of easy-to-apply strategies and techniques that work. They work for
everyone and they work all of the time. These strategies have been time tested, not
only by me, but by more than 160,000 Givens Organization members. No one has
ever told me that one of my strategies would not work.
The Reference Manual contains over 300 strategies divided into seven sections. Each
section will help you plan and handle specific situations you will encounter while
building your wealth.
The manual is organized into seven sections, each representing a necessary part of a
financial plan.
Section I-Getting Organized & Getting Started
Section II-Insurance: Cutting Your Insurance Premiums by 50%
Section 111- Money Saving Buying and Borrowing Strategies
Section IV - Powerful Investing
Section V - Tax Preparation & Tax Planning
Section VI- Small Business Strategies
Section VII - Basic Real Estate Investing
Everything you must know to master the art of managing your money is contained in
the tapes. There are no prerequisites. If you are an absolute beginner, you will get the
help you need to feel comfortable and confident managing money through the tapes ~
and workshops.
If you are knowledgeable about money, you will find the advanced strategies and
answers you are looking for as you get further into the program and spend time with
our national instructors.
There ~re two ways to use the Financial Library and Reference Manual and both are
equally important.
Use the Financial Library to achieve specific objectives and answer specific
questions.
By going to a specific section and reviewing the strategies and explanations you will,
in the shortest time, know how to:
a) Begin a new strategy.
Examples: Refinance a home, send your kids to college free, increase your
take-home pay.
b) Correct financial errors you have made in the past.
Examples: Re-establish your credit, use more advantageous methods of taking
tax deductions, move your money from banks to better investments.
c) Answer a specific question.
Examples: "Why shouldn't I buy Universal Life Insurance?", "What tax rule
replaces the Capital Gains Rule?", 'How do I get a good investment plan
started?"
Use the Financial Library to organize a life-long wealth building plan.
Go through each section one by one or through each section page by page. You will
begin to see how all financial decisions are related, how incredibly powerful you can
become in making financial decisions, and how easy managing money really is when
you have all the answers at your finger tips.
Using the Strategies List included in the Reference Manual, circle those strateg~es you
wish to use and build them into your written plan.
Using the Financial Library is like having me as your personal financial advisor 24
hours a day, 7 days a week. You don't have to make appointments and spend
hundreds of dollars to get the answers you need. It's all right here - in the Financial
Library.
REFERENCE MANUAL
The Reference Manual is full of facts, forms, charts, and hard-to-get toll-free
telephone numbers, as well as the important points and principles you will disoover as
you go through your Financial Library tapes.
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The reference manual may contain one or more errata sheets correcting the material
for current changes in tax rules, investments or personal finance too recent to include
in the tapes. New changes will be included in your monthly Financial Digest
Newsletter.
VIDEO TAPES
Each of the four video tapes corresponds to a section of the reference manual. Use
the search, fast forward, or reverse controls on your video tape recorder until you
locate the point in the tape you need.
AUDIO TAPES
There are approximately 90 minutes on each audio tape, 45 minutes on each side.
When side A ends turn the tape over at that point. Do not fast forward or rewind.
REFERENCE MANUAL PAGE NUMBERS AND CONTENTS
Your Reference Manual follows the Financial Library Tapes, section by section. Each
chapter in your Reference Manual has a header page with the section number, 1
through 7, and the section title.
The balance of each Reference Manual section contains written support material for
the knowledge you are gaining from your Financial Library tapes. Your tapes will refer
to specific strategies listed in your manual, but not all pages will be referred to in the
tapes. These extra pages are there to reiterate important points and give you

r supplemental information which can best be done in written form. You will always be
able to tell which strategies are referred to on the tapes, however, because these
strategies have a special symbol in the manual pages:
.... ""
THE BEST WAY TO USE THE FINANCIAL LIBRARY

1. Have your Reference Manual open to the appropriate section and pages as
you go through the tapes.
2. Review the pages in the appropriate section in your Reference Manual
before you turn on your tapes.
3. Stop and rewind your tape to review something that is unclear.
4. Review the written material in your Reference Manual after you finish each
section to firmly implant the facts, principles, and strategies in your mind.
5. Don't try to go through the complete program in one, two, or three sessions.
The information in this program took me 20 years to learn; a few weeks or
months on your part will not mean you are lax in your learning.
6. Play the tapes often. Repetition is the best teacher. Each time you listen to a
section, you will discover new ideas you did not hear before.
7. Use captive time for listening to the audio tapes. Driving to work or summer
suntan time can be more productively used if you listen to your tapes while
doing things that don't require all of your mind power.
8. Keep your Financial Library and Reference Manual where you can see them.
Don't let them get "out of sight, out of mind." Working with money is
something you do every day of your life.
9. Incorporate your strategies into your daily and yearly written plan. Check off
each strategy on the Strategy List with a date of completion.
PART 2-APPLICATIONS WORKSHOPS:
The Starting Point on Members' Wealth-Building Journey
A series of two full day Workshops covering all the areas of finance that you need to
develop your plan:
• Total Investment Planning
• Basic Real Estate Investing
1. Learn from our National Instructors who are all tax attorneys, GPAs, or financial
planners. You probably will never meet more knowledgeable people when it
comes to wealth building. You will find that there are few questions they can't
answer.
2. Learn more about applying the strategies contained in your Financial Library
and Reference Manual.
3. Get answers to your personal financial questions.
4. Start to develop a written investment plan.
5. Get answers about your membership and the Organization.
6. Learn more about upcoming programs.
7. Learn about other publications and education materials available from the
Organization to help guide you and save you time and money.
8. Meet other members, both new and long time, who have similar interests and
objectives.
The Applications Workshops are educational, inspirational, enlightening, confidence
building, and most of all, fun. Plan to attend the Workshops each time they are given
in your area.
Although you can use all of the strategies in your Financial Library without attending
the Workshops, I believe you will find the Applications Workshops one of the most
beneficial parts of your membership. The Financial Digest will keep you informed of
the dates and times of the Applications Workshops.
As an active Organization member;
You may bring your spouse or another family member to the Applications
Workshops.
Workshops are included in your membership benefits as long as your
dUies are current. There is no extra charge.
You may attend the Applications Workshops as often as you like,
wherever they are held.
PART 3 - CHARLES J. GIVENS FINANCIAL DIGEST
The Financial Digest Newsletter is sent to you monthly from Organization
headquarters in Florida. The objectives of the Financial Digest are:
1. To give you timely updates to the strategies in your Financial Library and
Reference Manual.
2. To teach you new strategies as they are developed by the Charles J. Givens
Organization.
3. To inform you of trends and changes in the tax laws, investment opportunities
and the economy which can be used to your advantage.
4. To inform you of the time, place, subject, and speaker for Delta Group meetings.
5. To alert you to Applications Workshops, special in-depth seminars, and other
Organization programs in your area.
6. To inform you about new Organization publications and audio/Video tapes when
published.
7. To give you specific, timely strategies for your mutual fund investments in the
column entitled "Money Movement."
The Financial Digest is mailed so that you will receive it before the first of each
",
month. Read it carefully cover to cover. All information is important to your wealth /

)
building plan. Keep your newsletters together for easy reference.
If you move, your Financial Digest may not follow you unless we receive a change of
address form, included in this section of your Reference Manual.
PART 4 - TELEPHONE HOTLINE
All Members whose dues are current have access to a personal Charles J. Givens
Organization Consultant who can be reached by telephone to answer questions about
Money Strategies. The Money Strategies telephone number is (407) 331-1130.
Imagine - instant answers to financial questions from Givens Organization experts.
Topics which may be discussed include:
1. Insurance
2. Borrowing Money
3. Credit
4. Small Business
5. Tax Planning
6. Real Estate

HELPFUL I-IINTS:
1. Before calling write down your questions.
2. When calling with your questions please be specific and concise.
3. Write down the answers given to you by the consultants for future reference.
PART 5 - YOUR MEMBERSHIP AND MEMBERSHIP CARD
Your membership card is the only proof you need of your membership in the Charles
J. Givens Organization. Bring your membership card to all Applications Workshops,
Delta Group meetings and other Organization programs you attend.
Your membership covers you, your spouse if you have one, and any children 16
through 20 years old. Your first three months of Organization dues are included with
your membership enrollment fee; thereafter, dues are $20 per quarter.
Dues can be paid by using the easy quarterly debit plan or by paying $80 annually. If
you have any questions about dues payments or would like to participate in the debit
plan, call Customer Service at (407) 774-3443 or write:
Customer Service Department
Charles J. Givens Organization
921 Douglas Avenue
Altamonte Springs, Florida 32714
Although we will try to remind you, it is your responsibility to keep your membership
current.
If you lose or damage your membership card, we will replace it for a $2.00 handling
charge. Please include a self-addressed stamped envelope. If the membership dues
are not paid, you will not receive the Financial Digest or have access to the
Applications Workshops and other Organization programs until your dues are brought
current. In the past, the Organization has not charged a reinstatement fee for
members who have let their active membership status lapse, but may do so in the
future.
Your membership dues are used to cover the administrative costs of the Organization,
the rental of the meeting rooms for the Applications Workshops, salaries of the
Organization staff, and for the cost of developing, printing and mailing the Financial
Digest.
The only benefit not covered by your Organization membership dues is your local
area Delta Group dues.
Enjoy your membership. It will help make you wealthy.
PART 6-DELTA GROUPS
The Delta Groups are private clubs for Charles J. Givens Organization members that
meet once each month. There are currently over 100 Delta Groups nationwide with a
staff of 700 council members in 40 states. The objectives of the Delta Groups are:
1. Continuing education through:
a) Monthly video tapes
b) Featured financial speakers
c) Special-interest groups
2. Positive association with other Organization members.
3. Help from other members in understanding money strategies.
4. Answers to questions.
5. Networking - sharing information about aggressive tax preparers, best mortgage
rates, etc. in your area.
THE DELTA GROUP COUNCIL
Each Delta Group is run by a dedicated volunteer staff called the Delta Group
Council. The leader of the council is the Delta Group Director.
The strength of any Delta Group is determined by the strength of its leadership. As in
all groups, some operate better than others. If you feel improvements can be made to
your local group, it is your responsibility to let your council know or get involved as a
council member yourself. The groups exist for your benefit. See your area Delta
Group Director to express your interest. A list of Delta Groups and Directors at the
time of this printing is included at the end of this section. A current list is always
included in your monthly Financial Digest.
DELTA GROUP DUES
As with any club, your Delta Group has annual dues which are minimal. The dues
collected by the groups are used to rent the meeting rooms, pay the printing and
postage for your area newsletter, buy materials for your group programs and for
training the Directors.
Each group council establishes its own yearly dues ranging from $20 to $65 per year,
depending on the costs of the group's activities. You can pay your first year's Delta
Group dues at your first Applications Workshop or Delta Group meeting.
APPRECIATING YOUR COUNCIL
Even though your Delta Group council spends hundreds of hours per year building a
successful program, they are not paid. Don't forget to express your appreCiation
occasionally to your council members. Everyone likes recognition and appreCiation.

('.
"Rookie Of The Month"

Please take a moment and write about your experience using Money Strategies. Use
your own words on how the Charles J. Givens personal finances, taxes, and
investment strategies have helped you and your family. Use the next page as a
starting point, but feel free to use extra pages to tell your story.

Please include specific information on the strategies used and how they have
changed your financial picture. When your story is complete, please mail it to:

The Charles J. Givens Organization


Attn: Publishing Department
921 Douglas Avenue
Altamonte Springs, FL 32714

All stories will be automatically entered into the 1990 "My Story" Members contest
and considered for the new "Rookie Of The Month" column in the Financial Digest.
Effective January 1, 1990, if your story is published in the Digest, you will receive
$100!

Be sure and include your name, address, phone number and membership number
with your story so we can reach you!

r
My Story
The Willingness To Change

When I visited London for the first time in 1967, I was inspired and overwhelmed by
one of the most important pieces of wisdom I had ever encountered. It was written on
the tomb of an Anglican Bishop (1100 A.D.) in the Crypts of Westminster Abbey.
"When I was young and free and my imagination had no limits, I dreamed of
changing the world.
As I grew older and wiser, I discovered the world would not change, so I
shortened my sights somewhat and decided to change only my country.
But it too seemed immovable.
As I grew into my twilight years, in one last desperate attempt, I settled for
changing only my family, those closest to me, but alas, they would have none
of it.
And now as I lay on my deathbed, I suddenly realize:
If I had only changed myself first, then by example I might have changed my
family.
From their inspiration and encouragement I would then have been able to
better my country and who knows,
I may have even changed the world."
Change is the only real difficulty you will ever encounter in applying any form of
knowledge. All "applied knowledge" requires changing old habits and methods, as
does the knowledge you will obtain in this program.
Make change a positive learning experience. The ability to change requires only
attitude, not skill.
The Charles J. Givens Membership

GUARANTEE

A key part of a financial independence mindset is a willingness on your


part to invest effort toward the achievement of your own goals. You
accepted the program because you were willing to make this
commitment.

You may obtain a refund. if within 14 days of your receipt of the


package you return the same ...

• Inresaleable condition as determined by the


Charles J. Givens Organization.

• With written explanation of the 2 strategies you


have used v.'hich did not work for you.

Prior to returning the materials for a refund. a Return Authorization


number must be obtained by calling: Financial Hotline (407) 331-1130.
Be prepared to explain what two strategies you used from your financial
library and the results you achieved from their use.

We look forward to our continued association and assure you that all
our energies are focused on your financial success. Your membership
in the Charles J. Givens Organization will be the best financial decision
you have made thus far in your life. Use at least two new strategies a
month and you will have positive results.

r
Charles J. Givens Organization Membership
The 10 Powerful Member Services
1. Life Insurance Clearing House: 1-800-522-2827
The Life Insurance Clearing House (LICH) was created to find you the best insurance
at the best price from their database of over 1,000 companies. There are 10 people on
the phone every day who you can reach by a toll-free number just to help you with
your life insurance. Whether your goal is to buy the least expensive life insurance or
to move your cash value tax free into better investments, the LICH will do it for you.

2. Htealth Insurance Clearing House: 1-800-477-7472


Hospitalization policies for individuals not covered by a group plan such as retirees
and those who own their own business are outrageous. Through your Givens
Organization membership you can take advantage of low, low group rates with
savings as high as 75%.

3.:M()rtgage Clearing House: 1-800-774-3400


1" When buying a home, no longer do you have to shop at ten or more local banks and
savings & loans for the best rates. One call to the Givens Organization Mortgage
Clearing House and we will find the best mortgage for you, including best rates,
terms and chance of being approved.

4. Credit Card Search System: 1-407-774-3400


The Givens Organization monitors 5,000 banks to find you credit cards with the best
interest and no fees. The Charles J. Givens Arkansas Federal MasterCard or Visa is
the absolute lowest interest rate in the country. The rate is 11.75% with no gimmicks
and by contract interest rate increases for our members are limited. For those who
payoff their credit cards every month we keep an updated file on no fee long float
cards for no cost credit.

5. The Charles J. Givens Arkansas Federal Secured Card: 1-407-774-3400


To help those with previous credit problems reestablish their credit, the Charles J.
Givens Arkansas Federal Secured Card has been created. With a small deposit even
those with a poor credit history can get back on their feet with a new positive bank
credit source. The interest rate on this secured card is an amazing 12%. ~.

6. Computerized Car Pricing and Buying Service: 1-800-221-4001


Buying a new car is one of the biggest financial decisions made and usually leads to
big financial mistakes. Most people overpay 10% to 30% while buying and financing
a car even after all the negotiation. Combining the Charles J. Givens car buying
strategies with computerized car pricing we'll save you thousands. For under twenty
dollars, members can have a computerized search of the manufacturers records and
print for you a report for any car you choose including all options with a price
representing the absolute minimum you can pay. If your local dealer won't agree to
this rock bottom price, the service will buy and deliver the car for you at that price.

7. Tax Shelter Rating System: 1-800-522-2827


Annuities, according to Charles J. Givens, are America's best investment tax shelter
and estate planning tool. Through the LICH, 11,000 annuities are monitored and
rated as to safety and best investment. Through this system you will be able to invest
in tax sheltered annuities that are made up of mutual funds.

8. Delta Advantage Account: 1-800-343-1483


. Moving your money for you. Many of our members.would like their money moved
for them from one mutual fund to another in the no load mutual funds. Through our
sister organization Delta First Financial, also created by Charles J. Givens, you can
have your money moved for you.

'9AlfIutuatEUnci Mloaitoring Service: 1-800-343-1483


The Givens organization and Delta First Financial monitor over 300 no-load funds
and watch the prime rate to determine for you the best mutual funds investments.
1988 recommendations induded: Capital Appreciation Fund (+36%); Windsor II
Fund (+39%); Benham 2015 (+24%).

10. Total Financial Planning: 1-407-331-1130


Through the Total Financial Planning Membership.
DELTA GROUP DIRECTOR (LEADER) LIST (2/23/90)
\ NOTE: Due to the possibility of changes, please refer to the most recent Financial Digest Newsletter
for the current contact number and any new Delta Groups, as well as monthly meeting details.

ALABAMA WASHINGTON, D.C. Springfield


Birmingham Tom Colclasure N.R. Skaggs II
E.N. Tomlinson (301) 369-7583 (217) 522-8700
(205) 871-0747 DELAWARE INDIANA
Huntsville Wilmington Ft. Wayne
Houston Hunt Rod Capel Jerry Young
(205) 852-2066 (215) 458-0350 (219) 432-0604
Mobile FLORIDA Indianapolis
Sally Mullinix Sunny Anderson
(205) 344-1380 Ft. Lauderdale (317) 241-7414
Vince Padilla
ALASKA (305) 981-1060 IOWA
Anchorage Jacksonville Des Moines
Billie Bloker Ann /Chester Courtney Julie Wood
(907) 333-7212 (904) 384-7484 (515) 248-4327
ARIZONA Miami KANSAS
Phoenix Dr. Albert Sutton Kansas City
Eileen Hart (305) 865-6783 Mike Huke
(602) 939-1748 Ocala (816) 761-3225
Tucson Bill Kohler KENTUCKY
Don Drensky (904) 694-5009
Louisville
(602) 622-6850 Orlando Ken Bellville
ARKANSAS Roger Brewer (502) 454-3215
(407) 699-5186
Central Arkansas LOUISIANA
Virgil Doyne Sarasota
Kenneth Davis Baton Rouge
(501) 490-1670 Tim Burge
(813) 922-7316
CALIFORNIA SW Florida (504) 775-3838
Orange County Donna Blevins New Orleans
Paul Cheatham (813) 992-1766 Norm Ballatin
(714) 827-3921 Tampa Bay, (504) 456-7080
Sacramento Dan Morrison MARYLAND
JoAnn Richter (813) 581-2285 Baltimore
(707) 448-7500
HAWAII John Baker
San Diego (301) 880-3862
Chuck Anshell Honolulu
Indy Schneider Prince George's County
(619) 258-9712
(808) 259-7500 Howard/Cecil Grant
San Jose (301) 249-5718
Jim McMorris Maui
(408) 720-9398 Douglas Megenity MASSACHUSETTS
(808) 874-1222 Boston
Walnut Creek
Dale Maxwell IDAHO Phil Pantano
(415) 932-4064 Boise (603) 891-1178
COLORADO Clyde/Marge Benton MICHIGAN
(208) 376-2403 Detroit
Colorado Springs
Tom Bennett ILLINOIS Maurice Betman
(719) 574-2258 Champaign/Urbana (313) 357-7772
Denver Carol Smalley MINNESOTA
Dave Noblett (217) 832-8338 Minneapolis
(303) 838-4092 Chicago Sandra Mershon
Grand Junction H.V. Williams (612) 831-3201
Helen Rajewich (312) 539-8898 (612) 830-0111
(303) 245-5820 Decatur St. Paul
CONNECTICUT Janet Gould Fran Olson
(217) 428-2800 (612) 459-5732
New Haven County
Rockford MISSOURI
(~ Tony and Diane Mase
Randy Kirichkow
(203) 239-1833 Kansas City
(815) 389-1531 See KANSAS
DELTA GROUP DIRECTOR (LEADER) LIST (2/23/90) (cont.)
St. Louis OHIO TENNESSEE
Arthur Blatt Cincinnati Tri-Cities
(314) 432-4964 Carole Huber Tommy Ralston
SW Area (513) 531-13151 (615) 538-4346
Quentin Buck Cleveland (615) 538-3764
(417) 882-7856 Paul Dieter Memphis
NEVADA (216) 751-5413 Scott Shepard
Las Vegas Columbus (901) 362-9921
Jim Olson Noel Rini Nashville
(702) 435-1563 (614) 837·7299 Hamilton Cartwright
Reno Toledo (615) 758-0995
Bill and Linda Ferguson Ted Poremski TEXAS
(702) 331-3095 (419) 836-8420 Dallas
NEW JERSEY Youngstown Jim Taylor
Central RegDon Tom Brett (214) 235-4627
Alan Heinlein (216) 757-9435 Houston
(201) 775-8241 OKLAHOMA Larry Jacobson
Northern Region Oklahoma City (713) 667-0486
John Cason; Beebe Birchall Lubbock
(201) 654-8166 (405) 789-5315 Rick Tyler
Southern Region Tulsa (806) 794-7777
Jack Michaud Mark Hendricks San Antonio
(609) 654-8666 (918) 584-2004 . Richard Robbins
(609) 654-5027 OREGON (512) 733-0051
NEW MEXICO Portland VIRGINIA
Albuquerque Cliff Denning Northern Virginia
Randy Nelson (503) 274-6868 , Shelly Kinnett
(505)293-5276 Salem (703) 361-7738
NEW YORK Byron Bray Richmond
Albany (503) 928-2487 Tom Williams )
Helene Miller PENNSYLVANIA (804) 746-9417
(518) 374-3796 Allentown Tidewater
Buffalo Richard Snyder Sue Carol Grabski
Norm Buckley (215) 437-2698 (804) 622-4210
(716) 992-9094 Chester County W,ASHI~GTON
Long Island Rod Capel Seattle
William Montaruli (215) 458-0350 Patricia Bostrom
(516) 321-4341 Harrisburg/La ncaster (206) 938-3641
Syracuse Jon/Donna Fake Spokane
Keith/Marilyn Kelchner (717) 866-4082 Bob Whallon
(315) 446-5830 Philadelphia (208) 773-9859
Westchester County Jack Michaud WISCONSIN.
Joel Margolis (609) 654-8666 Milwaukee
(212) 594-1117 (609) 654-5027 Bruce Delvoye
NORTH CAROLINA Pittsburgh (414) 355-5184
Charlotte Howard Gee
Robert Morris (412) 367-1303
(704) 553-0361 RHODE ISLAND
Greensboro Providence
George Beaston John Blenkiron
(919) 841-3140 (508) 695-1572
Hickory SOUTH CAROLINA
Lee Isenhour Charleston
(704) 465-6821 George Pye
Triangle Area (803) 554-1362
John Racko
(919) 851-9175
Charles J. Givens Financial Library Strategy List
SECTION ONE· GETTING STARTED & GETTING ORGANIZED

1-1 Create your dreams list.


1-2 Spend the majority of your time on those values that are the most important to you.
1-3 Identify your current values by identifying and prioritizing your ·values.
1-4 Identify and eliminate destructive values from your life.
1-5 Focus on the result you want, and the opportunity, money, time and talent you need will
present themselves.
1-5.1 Put your financial goals in writing.
1-5.2 Create a Records Management System.
1-6 Choose a permanent Records Management area.
1-7 Set up your filing system.
1-8 Choose the record keeping categories for your filing system.
1-9 Purchase a plastic check box for checks, deposit slips, and check registers.
1-10 Store important documents in a bank safe deposit box or a fireproof safe at home.
1-11 Build a tax reference library with IRS publications and forms.
1-12 Keep all tax records at least seven years.
1-13 Keep receipts for all deductible expenses over $25, keep a written record of expenses under
$25.
1-14 Keep expense records in a pocket size expense log.
1-15 Keep receipts in addition to cancelled checks.
1-16 Use a credit or debit card for effective recordkeeping of deductible expenses.
1-17 To determine the deductible portion of your VCR, home computer or other assets, keep a
time use record for 90 days.
{' 1-17.1 Create an Assets List for your Wealth Check-up and for insurance replacement in case of
loss.
1-17.2 To determine your net worth, prepare a Family Financial Statement.

PAGEt
Charles J. Givens Financial Library Strategy List
SECTION TWO • INSURANCE· CUTTING YOUR INSURANCE PREMIUMS BY 50% ,....,.. ..
)
PART 1: LIFE INSURANCE
2-1 If you are single with no dependents, don't buy life insurance.
2-2 Never buy life insurance on children.
2-3 Insure your spouse only if your spouse provides family income.
2-3.1 Substitute the income and career of a spouse for a life insurance policy.
2-3.2 Buy life insurance on a working spouse or a spouse at home If you have dependent children.
2-3.3 Buy the amount of life insurance that if invested at 12% would replace your current family
income.
2-3.4 Determine your family income to determine the amount of life insurance you need.
2-4 As you get older, replace life insurance with income sources.
2-4.1 Buy enough life insurance to maintain the lifestyle of the spouse with the smaller income.
2-4.2 Don't buy a whole life insurance policy because it pays dividends.
2.4.3 Choose the life insurance company, rated A or above, with the lowest premiums.
2-4.4 Don't buy double indemnity for accidental death. Instead, increase the base amount of your
policy.
2-4.5 Never buy the disability premium waiver.
2-4.6 Don't buy a life insurance policy because you recognize the company name.
2-5 Never buy whole life insurance as an investment.
2-5.1 Don't fall for the biggest lies about whole life Insurance.
2-5.2 Don't buy whole life insurance to avoid the threat of being uninsurable in the future.
2-6 Buy only term life insurance and devote the rest of your financial plan to prosperous living.
2-7 Choose the right kind of term insurance for your situation - annual renewable term or level ,..... ',)'
premium term.
2-8 Buy annually renewable term (ART) insurance if you have a short-term need for insurance
coverage.
2-9 Buy annually renewable term (ART) if you are a smoker or are overweight, but Intend to
change your habits.
2-10 Call the Life Insurance Clearinghouse to get the best value on life insurance.
2-11 Replace your existing whole life and universal life insurance policies with term insurance.
2-12 Stop paying premiums to cancel a life insurance policy.
2-13 Remove your cash value during the 30-day grace period to stop the automatic conversion
into a paid-up policy once you stop your premiums.
2-14 Use the life insurance-to-annuity rollover rules to tax protect your existing insurance cash
values.
2-15 Borrow and reinvest your life insurance cash value.
2-16 Don't give life insurance proceeds to your heirs in a lump sum.
2-16.1 Set up your will to distribute only the income from invested life insurance proceeds.
2-16.2 To avoid probate, make the proceeds of your life insurance payable to a named
beneficiary, not to your estate.
PART 2: CASUALTY INSURANCE
2-17 Carry enough bodily injury liability insurance to cover your net assets plus all potential legal
fees.
2-18 Carry a minimum of $50,000 property damage liability coverage, or a maximum of $100,000.
2-19 Buy $1,000,000 of umbrella liability coverage for under $150 per year.
2-20 When value of your car drops below $1,500 drop the collision and comprehensive coverage.
2-21 Drop duplicate coverages like medical payments, no-fault (PIP) insurance, and uninsured ~.
motorists coverage (UMC). ,
2-22 Raise the deductibles on your automobile and homeowner's policy to $500 or more.

PAGE2
Charles J. Givens Financial Library Strategy List
2-23 Never file an insurance claim for under $500.
2-24 Never payout more in premiums than you can collect in damages.
2-25 Substitute a free credit card for expensive low insurance deductibles.
2-26 Check insurance rates on an automobile before you buy it.
2-27 Shop around to save 25% on auto insurance premiums.
2-28 Don't take extra coverages such as towing, car rental, and audio equipment.
2-29 Determine how much an accident or a ticket will raise your premiums.
2-30 Ask for the five basic automobile insurance discounts.
2-31 Decline all extra insurance coverages when you rent a car.
2-32 Buy a separate 6 or 9 month policy to cover motorcycles, mopeds, and snowmobiles.
2-33 Take only the coverages you need on your homeowner's policy.
2-34 Decline the additional coverages on your homeowner's policy.
2-35 Purchase a personal articles ''floater'' to cover expensive personal items.
2-36 Buy flood or earthquake insurance only if you are in a government-designated flood plain or
earthquake zone.
2-37 Video tape your valuables for insurance records.
2-38 Buy replacement value coverage, not market value coverage, on your home.
2-39 Carry as fire insurance at least (but not more than) 80% of the replacement cost of your
home.
2-40 Buy a speCial tenant's policy, HO-4, if you rent a home or an apartment.
2-41 Protect your rental properties with an owners, landlords and tenants policy (OL T).
2-42 Say no to loan insuranc~redit life and disability.
2-43 Replace expensive mortgage life insurance with inexpensive term insurance.
2-44 Raise the deductible on your medical insurance to $1,000 or even $2,500.
2-45 Buy disability insurance only if you are in poor health or are accident prone.
2-46 Don't buy specialty health and life insurance policies.

PAGES
Charles J. Givens Financial Library Strategy List
SECTION THREE· BUYING AND BORROWING STRATEGIES

PART 1: BASIC BORROWING SUPERSTRATEGIES


Get to know a bank loan officer for more financial clout.
3-1 When borrowing money, never take "no" for an answer.
3-1.1 If you are turned down for a mortgage, or have an unusual mortgage situation, contact a
mortgage broker.
3-1.2 Avoid signing a mortgage agreement that contains a prepayment penalty lasting over 5
years.
3-1.3 Don't change your fixed rate mortgage to an adjustable mortgage because your bank says
it's a good idea.
3-1.4 Never payoff a super-low interest mortgage because the bank offers you a discount.
3-1.5 Never buy or finance extended warranties.
3-2 If the return on a potential investment is less than the interest on a loan, pay cash. If the
return is more, borrow to buy and invest your cash.
3-2.1 Always convert add-on interest to the APR factor before agreeing to the terms of a loan.
3-2.2 Never sign a loan agreement containing the rule of 78's.
3-3 Finance automobiles, furniture and other personal assets no longer than 24 to 36 months.
PART 2: CREDIT PROFILE AND CREDIT BUREAU STRATEGIES
3-4 Develop a positive credit profile with the "Big 8".
3-4.1 Total and payoff perishable purchases that appear on your monthly credit card statement.
3-4.2 Compute your interest savings to determine if a low interest credit card is worth the yearly
fee.
3-4.3 Use no fee long float credit cards if you payoff your balance each month to use the bank's
money free. .
3-4.4 Begin a credit rehabilitation program with secured credit cards.
3-4.5 Exercise your credit file "Bill of Rights"
3-4.6 Pull your credit file now and once per year.
3-4.7 Use the TRW Credentials Service for maximum credit file control.
3-5 Correct all personal data errors on your credit file.
3-6 Have the credit bureau re-verify and correct any incorrect credit data.
3-7 Have all missing positive credit data added to your credit file.
3-8 Add the rest of the story to your credit file.
3-9 Have the credit bureau remove any derogatory information outside the statutory limits.
3-9.1 Use small claims court, consumer reporters,and state agencies to resolve credit disputes.
3-10 If you are refused credit, find out why.
3-10.1 Exercise your right to the same good credit as your spouse or former spouse.
3-11 To get credit as a small business owner, incorporate and list yourself as an employee.
3-12 Use a co-signer to help re-establish your credit.
3-13 To rehabilitate credit, borrow the bank's money and use it as security for a loan.
3-13.1 File Chapter 13 instead of personal bankruptcy when your debts far outweigh your ability
to pay.
PART 3: CREDIT CARD STRATEGIES
3-14 To eliminate high-interest credit card debt, make extra principal payments each month of
$25 to $100, plus the minimum payment, plus the amount of your purchases.
3-i4.1 To payoff your credit cards in half the time, with the same monthly payment, use debt
shifting.
3-15 Replace high interest credit cards with low interest credit Cards.
3-15.1 Decline or cancel the charge card insurance on all MasterCards, VISAs, and other charge
)
accounts.

PAGE4
Charles J. Givens Financial Library Strategy list
3-16 Deduct a credit card charge in your check register as if you had made the purchase with a
·::·
(!'
r····
check.
3-17 Overcome poor credit with a secured credit card.
PART 4: MORTGAGE STRATEGIES
3-17.1 Shop around to find the best deal on a mortgage.
3-17.2 Structure a mortgage so that your monthly payments don't exceed 30% of your gross
income.
3-17.3 Get a conventional mortgage only when you cannot qualify for an FHA or VA mortgage.
3-17.4 Convert pOints to interest equivalent in order to compare mortgage rates.
3-17.5 Bid on a VA repo if you want a bargain priced house you can fix up.
3-18 If the fixed rate mortgage interest is over 9 3/4%, get the ARM. If the fixed rate mortgage
interest is under 9 3/4%, get the FRM.
3-18.1 Convert your ARM to an FRM only when the new FRM rate would be 10% or less.
3-19 Use a GPM to buy more home with smaller monthly payments.
3-20 Use a GEM to payoff your home in half the time with payments you can afford.
3-21 Get a bigger mortgage to create a better investment.
3-22 Get a 15-year instead of a 3D-year mortgage.
3-23 Cut your mortgage term in half with extra principal payments.
3-23.1 If you don't qualify for a 15-year mortgage, get a 30-year mortgage and make extra
principal payments.
3-23.2 Ask 5%-8% more for your home when you sell if you have an FHA or VA loan.
3-23.3 Don't make extra principal payments on a mortgage or loan with an interest rate of less
than 9%.
3-23.4 Don't let a prepayment penalty scare you out of paying a mortgage off early.
3-23.5 Don't make extra principal payments on rental property mortgages.
3-23.6 If you possess great discipline, invest the amount of your extra mortgage principal
payments in a mutual fund.
3-23.7 Obtain an amortization schedule for all your mortgages and loans.
3-24 Never use a mortgage grace period; it will damage your credit.
3-25 Refinance your home at a lower interest rate any time the new interest rate is at least 2% less
than the old interest rate.
3-26 Borrow your home equity free by combining an equity loan with a good investment plan.
PART 5: SEND YOUR KIDS TO COLLEGE FREE!
3-27 Buy a home that will payoff a college loan.
3-28 Use the "PLUS Loan" to finance the first $3,000 per year of college costs.
3-29 Turn your property into a mini student dorm.
3-30 Rent your property by the bedroom on a yearly lease to individual students, cosigned by
parents.
3-31 Make your son or daughter the property manager.
3-32 Use the real estate tax deductions to generate extra cash.
3-33 Use the profits from your investment to payoff your loans.

r
PAGE5
Charles J. Givens Financial Library Strategy List
".-
SECTION FOUR - POWERFUL INVESTING
)
4-1 Use the ten best investments to average 20% per year.
4-2 Pay no or low commissions by working directly with government and financial institutions.
4-3 Use tax shelters and strategies to tax protect your investment income.
PART 1: THE TEN BIGGEST INVESTMENT MISTAKES
4-4 Keep your money out of vacant land.
4-5 Don't throw money away in time-sharing.
4-6 Never use life insurance as an investment.
4-7 Stay away from individual stocks and bonds.
4-8 Never invest in bonds when interest rates are rising.
4-9 Don't invest in inflation hedges such as precious metals.
4-10 Don't fall for investment phone pitches.
4-11 Never use a commissioned financial salesperson as a financial adviser.
4-12 Don't overleverage in volatile investments like commodities.
4-12.1 Don't buy overly speculative investments like penny stocks.
4-13 Avoid options as a leveraged or hedged investment.
4-14 Don't fall for investment lies told by investment salespeople.
4-15 Use the 10% solution to go from paycheck to prosperity.
4-16 Store 20% of one year's income as attitude money.
4-17 Use the "Rule of 76" to determine the doubling power of your money.
PART 2: ASSET MANAGEMENT ACCOUNTS
4-18 Use an Asset Management Account to double the interest you receive from a bank checking
account. .~
4-19 Choose an Asset Management Account that gives you maximum legal float. I

4-20 Write all your bill-paying checks from your Asset Management Account.
4-21 Choose an Asset Management Account that offers a debit card.
4-22 Choose an AMA with a low yearly fee.
4-23 Use an Asset Management Account for your small business checking account.
PART 3: THE MONEY MOVEMENT STRATEGY FOR MUTUAL FUND INVESTING.
4-24 Never store money.
4-25 Invest in stocks, bonds and money market instruments only through mutual funds.
4-26 Use only the no-load mutual funds.
4-27 Choose the right type of mutual fund for each economy.
4-28 Invest in only one type of mutual fund at a time.
4-29 Use the prime interest rate to identify the safest and best mutual fund investment for each
economy.
4-30 Invest in stock mutual funds any time the Prime Rate is below the Investor's Decision Line.
4-31 Move your money to a money market fund when the Prime Rate moves above the Investor's
Decision Line.
4-32 Move your money to a bond fund when the Prime Rate is high and coming down.
PART 4: MUTUAL FUND INVESTING
4-33 Use the Money Movement Strategy in no-load mutual fund families.
4-34 Invest only in funds that have more than $25 million and less than $3 billion in aSsets.
4-35 Invest in good performing no-load funds with telephone switching.
4-36 Use the fund family fact sheets to choose the best fund and fund family for you.
4-36.1 Open your no-load mutual fund using six simple steps.

PAGE6
Charles J. Givens Financial Library Strategy List
PART 5: RETIREMENT PLANNING
4-37 Contribute the deductible maximum to an IRA.
4-37.1 Use the double deduction benefits of your retirement to build your wealth.
4-38 Contribute to your retirement plan now-don't wait until later.
4-39 Choose an IRA with a low trustee's fee, $35 or less.
4-40 Borrow the money for your IRA-even if you have it.
4-41 Use your retirement plan as an instant source of borrowed capital.
4-42 Use the loan provision of your 401 (k) or 403(b) to borrow money for an IRA.
4-42.1 Contribute the deductible maximum to your employer's retirement plan.
4-43 Open a self-directed IRA to earn 20% per year.
4-44 Never invest your IRA in a tax shelter.
4-45 Use the switching rules to earn 20% in your employer's retirement plan.
4-45.1 Use the withdrawal exception rules to withdraw money from your retirement account before
age 591/2.
4-46 Use the lump sum averaging method only if you need the cash from your retirement plan.
4-47 Use the IRA rollover rules to minimize the taxes on your employer's retirement plan lump
sum distribution.
4-48 Open your rollover IRA in a no-load mutual fund family.
4-49 Avoid the employer-to-employer transfer of your retirement account.
4-50 Never annuitize your company retirement plan.
4-51 Create additional tax deductions to shelter a retirement account withdrawal.
4-52 To minimize a mandatory withdrawal, recalculate your life expectancy every three years.
4-52.1 Enjoy your retirement money.
PART 6: TAX-SHELTERED MUTUAL FUNDS
4-53 Use a self-directed annuity to earn 20% per year with no commissions or taxes.
4-54 Never annuitize your annuity account.
4-55 Use the tax-free rollover rules to move your annuity to another company.
4-56 Make your annuity account withdrawals tax free by creating "equivalent" tax deductions.
4-57 Invest in an annuity only with funds you plan to leave invested for five years or longer.
4-58 Use your self-directed annuity as an estate planning tool.
4-58.1 Use a self-directed annuity to beat the kiddie tax for children under 14.
4-58.2 Rollover your cash value life insurance, tax free, into a self-directed annuity.
4-58.3 Ask the right questions before investing in a self-directed annuity.

PAGEl
Charles J. Givens Financial Library Strategy list
SECTION FIVE· TAX PREPARATION & TAX PLANNING

PART 1: YOUR TAX ATTITUDE AND APPROACH


5-1 Use only tax strategies, never loopholes or tax cheating.
5-2 Determine your tax bracket to track your tax savings.
5-3 Cut your adjusted gross income (AGI) to increase allowable itemized deductions.
5-4 Use the 1040 long form - you cannot pay more in taxes, only less.
PART 2: TAX RETURN FILING STRATEGIES
5-5 Choose an aggressive tax pre parer or none at aU.
5-6 Increase or decrease your end of year withholding to avoid penalties or get your refund for
Christmas.
5-7 Prepare your own return - at least once.
5-8 Time your refund to earn extra interest.
5-9 Don't apply this year's refund to next year's taxes.
5-10 Avoid tax penalties, don't be concerned about interest.
5-11 When in doubt, deduct it.
5-12 Sign your own return if your income is less than $50,000.
5-13 File your return later, not earlier.
5-14 File an automatic extension form 4868.
PART 3: AUDIT WINNING STRATEGIES
5-15 Don't react to an audit as more than it really is.
5-16 Delay an audit as long as possible.
5-17 Never go to an audit until you get the reasons in writing.
5-18 If a tax preparer prepared your return, take him or her to the audit.
5-19 Let the auditor look at your documents only once.
5-20 In an audit, never part company with your original documents.
5-21 Don't let the auditor copy your tax file.
5-22 Learn how to behave in an audit.
5-23 If you don't get what you think you deserve, go beyond the auditor.
5-24 Apply the statute of limitations to an audit.
5-25 Agree only to a limited extension of an audit.
5-26 Put a stop to the hassle audit if you've been audited during the past three years.
PART 4: FAMILY REAL ESTATE STRATEGIES
5-27 Sell your home to your children.
5-28 Buy a home with your children or grandchildren.
PART 5: ESTATE PLANNING STRATEGIES
5-29 Keep your will up-to-date.
5-30 Give gifts to children in order to reduce estate taxes.
5-31 Create an irrevocable trust to protect your estate.
5-32 Use a dual trust to double the tax-free status of your estate.
5-33 Give charitable gifts in order to lower your estate taxes.
PART 6: INVESTMENT DEDUCTION STRATEGIES
5-34 Turn your investment plan into a tax shelter by deducting investment expenses.
5-35 Deduct the cost of a VCR or home computer used in investment or tax planning.
PART 7: OVERCOMING THE MISCELLANEOUS DEDUCTIONS LIMIT
5-36 Take advantage of the miscellaneous Schedule A deduction rules by combining over 50
potential deductions

PAGE8
Charles J. Givens Financial Library Strategy List
PART 8: TRAVELING THE WORLD ON DEDUCTIBLE DOLLARS
5-37 Use job interviews to make vacations deductible.
5-38 Start a small importing company.
5-39 Become an "outside agent" for a travel agency.
PART 9: MAKING CONSUMER INTEREST DEDUCTIBLE
5-40 Use an equity loan or new mortgage to create deductible interest.
5-41 Qualify your boat or RV loan for deductible interest.
5-42 Use your vacation home as a second home instead of as a rental property.
5-43 Borrow the money for your IRA and deduct the interest.
5-44 Payoff high non-deductible interest debt with low non-deductible interest debt.
5-45 Pay cash for consumer goods, borrow to invest.
5-46 Sell appreciated investments to qualify your investment interest expense as a deduction.
5-47 Convert consumer interest to business interest.
PART 10: ON THE JOB TAX DEDUCTIONS
5-48 Use employee business deductions to turn your job into a tax shelter.
5-49 Deduct your employee business mileage.
5-50 Deduct your job-related education.
5-51 Deduct a home office when used for your employer.
5-52 Pay your spouse or kids to help with your job.
5-53 Deduct your job-related tools and equipment.
5-54 Deduct your special clothes.
5-55 Use form 2106 to calculate your employee business expenses.
5-56 Lump together your employee business deductions with miscellaneous itemized deduction
on Schedule A.
PART 11: INSTANTLY INCREASE YOUR TAKE HOME PAY
5-57 To reduce the amount withheld from your paycheck, add withholding allowances.
5-58 Get next year's refund this year.
5-59 Add one additional allowance to your W-4 form for each $2,000 tax deduction you create.
PART 12: TURN YOUR HOME INTO A SUPER TAX SHELTER
5-60 Turn your home improvements into tax deductions.
5-61 Deduct last minute presale fix-up expenses.
5-62 Use the tax deferral option to avoid taxes when you sell your home.
5-63 Don't invest the profits from the sale of your old home into your new home.
5-64 Create a deductible office at home.
5-65 Take the once-per-lifetime, $125,000 tax exclusion to save as much as $40,000 in taxes.
PART 13: MAKING YOUR RECREATIONAL ASSETS DEDUCTIBLE
5-66 Use your boat, plane, or motor home ill' your small business to create tax deductions.
5-67 Use third party leasing to make recreational assets deductible.
5-68 Deduct the interest on your boat or motor home as a second home.

PAGE9
Charles J. Givens Financial Library Strategy List .
SECTION SIX - SMALL BUSINESS STRATEGIES

Take the business potential quiz to determine your built-in entrepreneur skills.
6-1 Turn any small business into a tremendous tax shelter.
6-2 Begin a small business as a "sole proprietorship" instead of as a corporation.
6-3 Use business "paper" losses to tax shelter job and investment income.
6-4 Operate your activity as a business, not a hobby.
6-4.1 Complete the business start-up checklist as a guide to getting started.
6-5 Show a profit three out of five years to qualify for continuing tax deductions.
6-5.1 Learn the truth about tax deductions.
6-6 Choose a small business idea that is exciting, fun and in alignment with your interests and
abilities.
6-7 Begin marketing immediately to make. business start-up costs deductible this year.
6-8 Hire your spouse and create a deductible IRA.
6-9 Qualify your spouse for Social Security benefits.
6-10 Hire your children and grandchildren and make allowances and gifts deductible.
6-11 Beat the kiddie tax with a children's IRA.
6-12 Pay your child a salary of up to $3,000 and still claim a dependency exemption.
6-13 Use your automobile in your small business to make it deductible.
6-14 Choose the automobile deduction method that gives you the greatest deduction.
6-15 If you have not kept good records, estimate your auto expense deduction using the mileage
rate method.
6-16 Buy an automobile instead of leasing.
6-17 Use your personal assets in your business to make them dedllctible.
6-18 Calculate your deduction based on the percentage of business use.
6-19 Use the asaet-expensing rules for immediate deductions on assets you buy.
6-20 Take depreciation deductions for assets you already Qwn and use in a business.
6-21 Convert to straight-line depreciation when more deductions will be generated by this method.
6-22 Use tax form 4562 to compute and claim all asset-expensing and depreciation deductions.
6-23 Use personal assets in your business to claim the sales tax deduction.
6-24 Use the simplified 90-day record method to allocate business and personal use of assets.
6-25 Take deductions for repairs to business assets.
6-26 Create a deductible office in your home.
6-27 Make your social club, country club and health club memberships deductible through
business use.
6-28 Take deductions for your business-related books, magazines, newsletters and tape courses.
6-29 Take deductions for your business travel expenses.
6-30 Make interest deductible as a bUSiness expense.
6-31 Consider an "S" Corporation election.
6-32 Cut your self-employment tax by increasing your business deductions.
6-33 Use your small business to create an investment/retirement shelter.
6-34 Use only a self-directed small business retirement plan.
6-35 Use the SEP to maximize your contributions without matching contributions for employees.

PAGE10
Charles J. Givens Financial Library Strategy List
(""" SECTION SEVEN· BASIC REAL ESTATE INVESTING

7-1 Live free by buying instead of renting.


7-2 Get a bigger mortgage to create a better investment.
7-3 Locate favorable real estate properties through ads, drive-by's, Realtors and foreclosure lists.
7-4 Use an MLS computer to sort properties by price, terms, number of bedrooms or other factors.
7-5 Use the 10-10-10 formula to buy a property right.
7-6 Use the building block approach to financing real estate.
7-7 Avoid looking at properties that would require a new conventional mortgage or assuming an
existing conventional mortgage.
7-8 Use a new FHA or VA mortgage as your prime source of primary residence financing.
7-9 When buying investment real estate, locate properties with existing FHA and VA mortgages.
7-9.1 Leam the mortgage qualification rules before you look for a home to buy.
7-10 Use a single payment mortgage to cut the monthly payments on a property you are buying
as /Tl.Ich as 20%.
7-11 Use the triple punch strategy to buy your first home.

PAGE11
PLACE
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\ HERE

CHARLES J. GIVENS ORGANIZATION


921 DOUGLAS AVE.
ALTAMONTE SPRINGS, FL
32714

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HERE

CHARLES J. GIVENS ORGANIZATION


921 DOUGLAS AVE.
ALTAMONTE SPRINGS, FL
32714

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CHARLES J. GIVENS ORGANIZATION


921 DOUGLAS AVE.
ALTAMONTE SPRINGS, FL
32714
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SECTION I

GETTING ORGANIZED &


GETTING STARTED

S.
This symbol designates
(.c:~~
strategies which are on
~ both video and audio tapes
Part 1 - . Developing Your
Financial Blueprint

,...,... .
. )
Page 1-2 © Charles J. Givens Organization 1990 R1
Introduction
r America is full of financial victims - those who fall prey to fast talking and sometimes
even well-meaning salespeople who often turn financial decisions into financial waste.

Every family makes two or three major money management decisions every month. Be-
cause of a lack of training, these decisions often turn out to be major financial
errors. Guessing at financial decisions or listening to bankers, brokers, automobile or in-
surance salesmen will cause you to throwaway an easy $1,000 a month.

Knowledge is your first line of defense. For every financial decision there is an optimum
strategy - the right strategy. I have compiled all of these important money strategies
into your Money Strategies Library with tapes and manual. Making your decisions with
optimum money strategies will keep your money where it belongs - in your pocket,
saving you or making you thousands of dollars each year.

As a Givens Organization member we will help you:

• Turn financial waste into spendable profits

• Double the purchasing power of your money

• Create a financial plan that gives you total control over your financial future

• Cut your income tax liability in half

• Put together a million dollar"retirement plan

• Double the profits from your investment plan

• Turn you into a self-confident, competent money manager

These objectives, you will accomplish using these financial tools in your membership.

1. Charles J. Givens Money Strategies Library

2. Applications Workshops

3. Monthly Financial Digest Newsletter

4. Money Strategies Telephone Hotline

© Charles J. Givens Organization 1990 R1 Page 1-3


All of these financial tools have been designed to simplify your life and make your
wealth building plan easy to implement.

In addition, your membership provides you with access to the following current and fu-

ture financial services.

Current Services:

• CarjPuter - the lowest possible rates on new cars

• Lowest rate MasterCard & VISA (currently Arkansas Federal Savings)

• Life Insurance Clearinghouse - lowest life insurance rates, tax-free conver-


sion of insurance cash values to investments

• Delta First Financial, Inc.,- personal financial planning, one-on-one invest-


ment planning, your own-personal, registered and licensed financial planner
and the Advantage Account

• High return, safe investment opportunities with Delta First Financial, Inc.

• Secured MasterCard &VISA to overcome credit problems

• Credit counseling

• Delta Groups in many areas for members who would like lo meet monthly for
continuing education

• Share the Wealth Business Opportunity

• Credit references from the Givens Organization

Future Services:

• Members Group Hospitalization Insurance Plan

• Members National Automobile Insurance Program

• Home mortgages at low interest rates

• Charles J. Givens Asset Management Account

Stop the tape for a few minutes and read the introduction of your manual. These are the
specific instructions for using each ofthese important tools.

Page 1. .4 © Charles J. Givens Organization 1990 R1


Money won't buy emotional happiness but it certainly will buy financial happiness.

r It is my experience that with a carefully laid out plan and the commitment to following it,
anyone or any family can both:

• build a beautiful lifestyle in the present without sacrificing the future, and

• build a financially sound future without sacrificing the present.

How? By making every dollar count. By spending, not saving your way to financial suc-
cess. The concept is simple. All the money you earn except what resides in the cookie
jar is eventually spent.

You can only spend money in two ways.

1) Spending for your lifestyle - buying goods, services and entertainment

2) Buying investments - spending for your future.

But what if you had the knowledge to save so much money when buying goods and ser-
vices you would have all the money it would ever take for investing in a sound and
happy financial future. No saving, no sacrificing.

For instance, let's say you are spending $900 each year on automobile insurance and
you suddenly acquire the knowledge to cut your premium to $450 without sacrificing the
quality and quantity of your insurance. Your $900 would then buy you:

1. Your aLitomobile insurance

2. A $450 per year investment

In addition to buying your insurance over the 10 years you have an additional $4,500 to
invest, which invested correctly will grow to $9,500. That's almost $1,000 per year of
free money produced by a plan that saves you only $400 a year.

As a Givens Organization member, you have at your fingertips over 300 strategies, all
of which can have the same impact as the example just discussed. You can have the
lifestyle you want and a million dollars waiting for you at retirement, all accomplished by
how you spend your money now.

© Charles J. Givens Organization 1990 R1 Page 1-5


The next 20 years are going to happen to you anyway. What happens financially is
based totally on what you know and do, or by default, what you don't know and there-
fore can't do. It is not how long you live that counts, but how much you live.

Becoming A Financial Magnet

There are those who seem to attract money and those who can't seem to hang onto a

dime.

The difference is a function of the mind and not a function of income or assets.

With knowledge, attitude and control, anyone can become a magnet for financial oppor-
tunity instead of a victim of continual financial crises. Some people even think they have
a financial cloud or curse hanging over their heads. Just when the light appears at the
end of the tunnel, that's when the car breaks down, there is an unexpected major medi-
cal bill, the credit card bill is twice what's expected or the bank balance was two
hundred short of what showed in the check register. These are common symptoms of
financial ignorance - the inability to control and create financial progress.

Think of the two bar magnets. Remember way back in science class when we were
taught opposite poles attract and like poles repel? Put one south pole and one north
pole of the two magnets near each other and they will be attracted with instant and
surprising force. Put the two north or the two south poles together and they will repel
each other with the same force.

That is exactly how the mind and financial opportunity work together, or all too often,
work against each other.

With money there is a set of principles that work all the time, and work for everybody,
and those principles are Money Strategies.

The same principles that to the financially successful are completely logical are often il-
logical to the financially illiterate. That is what makes getting out of the financial rut
seem so difficult. The approach is always an attempt to do more of what doesn't work.
Success is never accomplished through dOing more of what doesn't work but only
through using strategies that do work.

Page 1-6 © Charles J. Givens Organization 1990 R1


Financial success is easy if you can just get someone to tell you the rules of the game.

One of the easiest things I ever accomplished was becoming a millionaire - that didn't
take long. The hardest job was figuring out how to do it - that took over 20 years.

You've got something I never had; an entire organization to help you learn and apply
the elusive rules of wealth building. That is what the Givens Organization is all about.

There are only two other possible alternatives. Continue doing exactly what you are al-
ready doing, working harder and trying harder. That approach will create plenty of
frustration but not wealth. Doing more of what doesn't work won't make it work any
better no matter how good your intentions, no matter how hard you try.

By following the guidelines you are about to learn you will become unstoppable finan-
cially - a real pro at rryaking and managing money. And because of this knowledge you
will build your -

Wealth Without Risk.

r
© Charles J. Givens Organization 1990 R1 Page 1-7
Planning and Control
Ever wonder why some people become super-achievers while others just falter and
sputter with only talk of what they want to accomplish?

The difference is not talent, a college education, rich parents or built-in motivation.

The difference between those who


accomplish their dreams and those who only dream
of accomplishing them is planning and control.
There are laws of cause and effect when it comes to reaching your objectives, which
-
makes success a science and not an accident. Anyone who chooses to follow the rules
or strategies for accomplishment will be met with a rich, rewarding, satisfying life. Those
who are controlled by life instead of controlling their lives usually end up frustrated,
angry and cynical.

Taking control means first identifying and accepting where you are and then creating a
dynamic plan to take you where you want to go in the minimum time with the maximum
satisfaction. Personal or financial success therefore begins not ~ith strategies, but with
a definition of your objectives.

Goals to bring satisfaction must be in alignment with your values, and in this section
you will work on identifying your predominant values and choosing your important goals.

There are four important parts to your plan. Your:

Dreams list

Values list

Goals list

Strategies list

Together they become your blueprint for a rich, rewarding journey.

Money Strategies mean little unless they are part of a greater plan. Strategies _are only
tools, not ends in themselves. Your dreams are the destinations, your goals are the
signposts of accomplishment that define your path.

Page 1-8 © Charles J. Givens Organization 1990 R 1


Your Income Does Not Determine Your Outcome

The amount of money that will pass through your hands over a working lifetime is in-
credible. For example, if you work 40 years and earn only an average of $25,000 per
year, you will have made $1 million. If you get an annual raise of only 5%, the $1 million
explodes to $3 million. There is no question whether or not you can make a million dol-
lars - the real question is, how quickly can you make your first million and how much of
it can you keep?

What would you do if you had more money? A typical family conversation might go like
this:

"Brad, if we could only get some extra money. There is so much we could do. Send the
kids to college and payoff the mortgage."
"Come on Brenda! Where is that creative imagination of yours? How about a trip to
Europe? Even a condo in Florida would be nice."
"Well Brad, I could imagine myself in a new Mercedes!"

This couple is dreaming but certainly not planning, and planning is the connective link
@" .'" between dreams and accomplishment.

An even more typical conversation goes like this:

"How could I only have $5 in my pocket? I just cashed a check for $100 yesterday!"
"Where did it go?"
"Let's see. . . .. . $15 for dry cleaning, $20 for gasoline, $30 for groceries, $15 at drug
store, $10 for the hardware store"
"Unbelievable. .. ."
"Oh no!! Barbara did you seethis VISA bill? It's $847!!! How can this keep happening?"

These folks are out of control! Right now their dream is limited to having some money
left over at the end of the month after all of their bills are paid.

Or how about this couple:

"Bob, we've got to be conservative - we can't afford to lose a single dollar. Ever since
we retired costs just seem to be going up, but our income no longer is."
"I know. It would have helped if we hadn't listened to that darned broker. I can't believe
he put us into options and commodities; now we have less money and taxes are just
eating us alive."

© Charles J. Givens Organization 1990 R1 Page 1-9


This couple is scared. They seem to be caught in the retirement trap; the chance that
they will be around longer than their money. They've stopped dreaming and have )
started worrying.

All of these scenarios are caused by the same factors: lack of direction, lack of
knowledge, and lack of financial control. Developing a financial blueprint is the answer
for all financial situations. Your blueprint puts you back in control.

Your financial blueprint is made up of four lists, all determined by you.

All parts of your financial blueprint affect each other and when aligned correctly, give
you practically unlimited power to accomplisr.

Before learning and using strategies, it is a must to first make a dreams list, then iden-
tify your values, and finally choose your goals. You will find yourself easily motivated to
put your strategies to work.

Your Financial Blueprint

Your Dreams Your Values


(Part 1) (Part 2)
What you would do with Those ideas and beliefs that
your life if you had unlimited • are most important to you.
time, money and talent.

Your Goals Your Strategies


(Part 3) (Part 4)
Specific objectives you want The body of knowledge and
to accomplish - the things tools you will use to propel
you want to do and have. yourselftoward your dreams
and goals.

Page 1~10 © Charles J. GIvens Organization 1990 R 1


Your Dreams List

r Strategy #1-1 : Create your Dreams List.

Choose a totally quiet spot where you will not be interrupted. At the top of a pad of
paper write the following:

If I had unlimited ...


TIME MONEY
TALENT SUPPORT FROM FAMILY

Here's what I'd do with my life ...

Relax and let the ideas pour from both your conscious and subconscious. Don't
evaluate your potential for achieving each item you write. What you will write will excite
you, motivate you, inspire you, make you laugh and, most of all, define desires and
dreams that all too often are ready to surface but are held back by the complexities of

,./"'" daily living. Write it all down no matter how silly it seems, no matter what it costs. The
ideas will come slowly at first, gaining speed as you leave behind the realities and limits
in your life.

My first list was 181 dreams long, of which 170 have already become reality. Since that
time I've added hundreds of others, as you will probably find yourself doing.

All of us at any age have dreams, and the first step of turning dreams into reality is to
get those dreams out in front of you where you can see and feel them.

Haying taught my students this dreams list strategy for over 12 years, I have seen
hundreds of people accomplish truly wonderful things that might never have occurred
otherwise.

r
© Charles J. Givens Organization 1990 R1 Page 1-11
Your Dreams List

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

12.

13.

14.

15.

16.

17.

18.

19.

20.

Page 1-12 © Charles J. Givens Organization 1990 R1


Spouse's Dream List

r 1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11 .
..~
12.
f
13.

14.

15.

16.

17.

18.

19.

20.

© Charles J. Givens Organization 1990 R1 Page 1-13


Values List
Ideas and beliefs about the relative worth of things in your life are called values. If you
value security highly, choosing to leave your job and start your own business might be
unlikely or could cause a great deal of stress - unless, of course, you changed your
values. On the other hand, if you value wealth above security, staying in a safe secure
job at an average wage would be a frustrating experience. You would constantly be
looking for opportunity.

If, on the other hand, you value security and wealth equally, you will experience the
frustration of values conflict -the feeling that any decision might be the wrong one and
making no decision might be even worse. The emotions and frustration are all mental
and have nothing to do with what is the right or wrong decision.

Values are not facts but simply choices made for us initially by parents and our
childhood environment. As we grow and mature our values tend to change and become
our choices. The ability to choose your own values is the freedom to choose the direc-
tion for your life.

When you act in accordance with your values you experience emotional balance, a
sense of security and pleasure. When your actions are out of alignment with your
values you can experience fear, guilt, frustration and emotional imbalance.

Fortunately, you can get rid of those negative, unwanted feelings. You can either:

1. Change your actions to align with your values, or

2. Change your values to align with your actions.

Of course, you cannot do either until you identify what your values are. It is not difficult,
although most people spend a lifetime remaining consciously unaware of their values.
In the next exercise, you will create your own values list, listing your major values in
order of importance.

Values are programs in the mind and can be changed only with constant prodding, at-
tention and affirmation. In other words, to change what you value, even if it is in your
best interest, you must reprogram what's in your mind. It is far easier, though not al-

Page 1-14 © Charles J. Givens Organization 1990 R1


ways as rewarding, to change your actions - to get rid of the conflicts and live your life
in accordance with what you already value most.

Surprisingly, there are only a total of about 25 different values in life and these values in
different combinations result in the differences in people's actions. The differences in
the wants, desires and objectives people set for themselves are the direct result of dif-
ferent values.

By identifying and prioritizing your current values you will be able to:

• Set your goals to enable you to spend more of your life dOing and experienc~
ing those things that are most important to you.

• Eliminate values conflict by making certain no two values are pulling you in
opposite directions

• Create an environment of mL..:tual support in your personal relationships by


realizing that two people do not need the same values to create a successful
relationship, but they must be able to support each other's values.

As you can see, values must be identified before goals are set or it becomes all too
easy to establish one or more goals that are in conflict with your values.

Reaching a goal should create a sense of accomplishment, self confidence, excitement


and a desire to celebrate, but if that goal is in conflict with an important value, there will
instead be a feeling of empty achievement, frustration and sometimes even anger.

Take the super-achiever who spends a lifetime building a successful business and
devoting little time to anything else. When he looks back, instead of having a feeling of
accomplishment, he mourns the fact that his marriage fell apart after 20 years and he
has never had a close relationship with his children. One important personal value to
him was family, but he overlooked the conflict in his values until it was too late. Neither
business nor family as his most important value was right or wrong; he just never under-
stood how necessary identifying his values were to living a balanced life.

The truth is that you can have it all. Surprised? To live your life in accordance with your
values does not require sacrifice. You must sacrifice only when you are not living your
life in accordance with your values. Recognizing what is and what is not important to

© Charles J. Givens Organization 1990 R 1 Page 1-15


you is the key. You will be surprised how much easier life becomes after you create and
prioritize your values list.

Your values list will also enable you to choose the dreams on your dreams list that
should come first. The accomplishment of those dreams and goals that are in alignment
with your top five values will be the most satisfying and personally rewarding. That's
where 80% of your available energy and time should be spent.

Strategy #1-2: Spend the majority of your time on those


values that are the most important to you.

Time is always limited. You will get the greatest sense of satisfaction when your time is
spent on those objectives, projects, adventures and relationships you value the most.
Therefore, it is important to prioritize your values once you discover them. It is you and
only you that can decide what is important in your life.

Why spend time doing anything else?

.~
)

Page 1-16 © Charles J. Givens Organization 1990 R1


Strategy #1-3: Identify your current values by identifying
and prioritizing your values.

Your Values List


First, go through the list once or twice, checking off those values that seem important to you on the left
side blank lines. Second, prioritize those values, from 1 to 10, that you have checked from most important
to least important. You may, of course, prioritize more than ten values. There are no right or wrong
answers.

Prioritize (1-10)

'<'j Peace of mind


----
-4'-- Security

,
----i;"". _ _ _ Wealth

Good health
-+--
_..l: __ _ A close relationship with spouse/mate

_.JJ__ _ A close relationship with children

Family (spending time with parents or other relatives)


-~---
Meetingthe "right" person

Meaningful job or career

Fame

Power

Free time
--"'---
Happiness

A close relationship with God


~---
Friendships
./
I· Retirement
-+-- ------
Contributing time, knowledge or money to others

Knowing important or famous people

Being in business for yourself

Having no problems to deal with

Living to an old age

Personal passions - cars, houses, jewelry, etc.

Travel to exciting places

Sense of accomplishment

r
Respect from others - being thought of as a good person
-1--
Other

© Charles J. Givens Organization 1990 R1 Page 1-17


Value List
Give this copy to your mate or another family member.

Prioritize

(1-10)

Peace of mind

Security

Wealth

Good health
A close relationship with spouse/mate

A close relationship with children


Family (spending time with parents or other relatives)

Meeting the" right" person

Meaningful job or career

Fame

Power

Free time

Happiness
A close relationship with God

Friendships

Retirement

Contributing time. knowledge or money to others

Knowing important or famous people

Being In business for yourself

Having no problems to deal with

Living to an old age

Personal passions - cars, houses, jewelry, etc.

Travel to exciting places

Sense of accomplishment

Respect from others - being thought of as a good person by others


Other

Page 1-18 © Charles J. Givens Organization 1990 R1


Strategy #1-4: Identify and eliminate destructive values
from your life.

Most values are positive but there are destructive values that always lead to personal
failure and must be changed for those who want a successful, fulfilling life.

Destructive Values Are:


1. The desire for something for nothing. Symptoms include gambling, cheating or
stealing.

2. The desire to feel superior to others. Symptoms include gossip, prejudice,


bigotry, aloofness, criticism and blame.

3. The desire for continuous, instant pleasure. Symptoms include overspending


and overindulgence in food, alcohol and drugs.

Identifying destructive values is the most important step in their elimination. Destructive
values are parasitic and drain energy that could be spent on the things you value most.
A jockey who is overweight by only four pounds can lose a race on the best horse.

Never put roadblocks in the way of success. Establish as one of your most important
goals the elimiflation of any destructive values.

r
© Charles J. Givens Organization 1990 R1 Page 1-19
Destructive Values List
~
Following is a list of destructive values and their symptoms. You can eliminate the sub- )
conscious, negative values by working directly on the symptoms. Once you have iden-
tified the symptoms that are affecting your life, incorporate your plan to eliminate them
into your goals list. Be honest -this is your list and not for publication.

Check here if any of the following symptomatic success roadblocks


apply to you.

Desire for something for nothing

Gambling (lotteries, gaming tables, etc.)


----

---- Cheating (exams, insurance claims, etc.)

---- Stealing on the job

---- Shoplifting

Desire to feel superior

/
Prejudice/Bigotry
---- ---- )
---- ---- Gossip

Aloofness
---- ----
Criticizing others
---- ----
Blaming others
----
Desire for instant gratification (pleasure) no matter the cost.

Overspending (large debt, constant cash crunch)

Food over indulgence (overweight)

Alcohol (more than one drink)

Smoking

~ ..
)

Page 1-20 © Charles J. Givens Organization 1990 R1


Do not use your list to become self critical. If you value personal success more than any-
( ~\ thing on the above list, simply write out your plan for eliminating destructive values.

Destructive Value Elimination Plan


Here is what I intend to do to eliminate destructive values:

Committed to by _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __

© Charles J. Givens Organization 1990 R1 Page 1-21


Setting Your Course By Defining Your Goals
The next step in creating your financial blueprint is establishing your goals -those
specific objectives on which you have decided to invest your time, energy and money.

Whereas values are mental attitudes, your goals are your physical objectives. A goal
can be accomplished in as little as an hour, like going to the grocery store in order to
stock the refrigerator, or your goal may take most of a lifetime, like creating a million dol-
lar retirement plan.

All goals, to bring satisfaction, must be in alignment with your important values. The
higher the priority of one of your values, the greater the satisfaction you will derive from
reaching a goal that affects that value.

There are specific parameters that make an objective a goal. To be effective in your
blueprint a goal must:

1. Be specific and measurable -you must be able to define your goal in dollars,
numbers, or in specific terms, like the job your want or the color and model of
the car you desire.

2. Have starting and completion dates - to become part of an effective ongoing


plan you must choose a time to begin working on your objective and a date by
which you intend to have your goal accomplished. When put into your total
plan, these target dates will show you where your time will be the most effec-
tive.

3. Be in writing - a major planning mistake is to have your goals rolling around in


your head but not written down. Written goals are concrete and allow you to
plan, organize and control the paths to be followed.

4. Be stated in terms of results and not processes - a result defines the way
your life will be after you have accomplished your goal. The process is the
means, money, material, time and talent it takes to get there.

Page 1-22 © Charles J. Givens Organization 1990 R1


Strategy #1-5: Focus on the result you want, and the
opportunity, money, time and talent you
need will present themselves.

When you focus on what you need, you instantly become aware of lack, which often
becomes a reason for inaction.

For instance: "My goal," you say to yourself, " is a new $35,000 BMW convertible." The
process trap: "Since I only have $600 in the bank, I guess I'll never get there."

Focusing on the result means you have a clear picture of your life with the BMW. You
can see yourself driving it, you can feel it, you can almost taste it and your attitude be-
comes one of, "I will not be denied."

Focusing on the result creates your road map.

It is far more effective, when using a map, to first locate where you want to go. The
shortest path from where you are becomes obvious. On the other hand, if you don't
identify the location of your destination, but simply follow the red and green lines that
mark the roads, it may take you ten times as long to get there. Your destination is the
result you want, the roads are the process of getting there. By forming a clear mental
picture of each goal in your mind and never letting go of that picture, you will always
find a way to accomplish what you want.

Be committed. Your level of commitment to any objective determines how you wi" hand-
le stumbling blocks along the way. The bigger the goal, the more stumbling blocks you
are likely to encounter along the way. The largest concrete blocks can be pulverized
with the smallest hammer with enough persistence. Your commitment gives you the per-
sistence to look at each stumbling block as one step closer to your objective. The win-
ning attitude is:

I Will NOT BE DENIED.

© Charles J. Givens Organization 1990 R1 Page 1-23


Strategy #1-5.1: Put your financiai goals in writing.

There are certain goals we all seem to have in common, although to totally different
degrees. These categories include:

______ 1. Income Goals -the increases in yearly income you want to achieve.

______ 2. Career Goals - the type of work you want to do, the company positions
you want to attain or the business you want to create.

______ 3. Acquisition Goals -the things you want to buy and own.
(other than recreational assets - see #7)

~ _____ 4. Travel Goals -the places nationally and internationally you want to

visit and experience.

______ 5. Accomplishment Goals -the things you want to do and become.

_____ 6. Educational Goals -the knowledge you want to acquire for personal,
financial and career advancement.

______ 7. Recreational Asset Goals -the "fun" things you want to own for
recreation and sports.

______ 8. Investment Goals -the income producing, tax reducing or net worth
increasing investments you want to own.

9. Real Estate Goals.

You will find on the following pages "fill in the blanks" charts to list each of the goals you
have chosen for each category. Check the appropriate space on this page when you
have committed your goals to writing.

Page 1-24 © Charles J. Givens Organization 1990 R1


Income Goals (1)

A. Current Year's Income $ _________________ _ D. Increase From Last Year

B. Last Year's Income $ __________________ _ E. Increase From Previous Year

C. Previous Year's Income $ ________________ _ _ __________ F. Approx. # of years required


to double income at
present growth rate

Step 1: Enter your income for the past three years. Use your W-2 statements
from your employers and 1099s if you are an independent contractor. If you
are self-employed, include net income before taxes. In other words, total the
amount you earned per year. If you are retired, include retirement income,
pension income and social security income, which is part of your investment
plan. Include spouse's income.

Step 2: Determine the percentage increase for the past two years.

Step 3: Determine approximately how many years it will take you to double your
income at the present rate. For instance, if your income is growing at 20% per
year, five years will be required, but if only 10%, a full ten years will be re-
quired. Enter in line F.

You have now taken stock of where you are.

© Charles J. Givens Organization 1990 R1 Page 1-25


What Is Reasonable And Practical

Depending on your financial goals and attachment to your present job or career,
you are now in a position to plan.

My approach to income goal setting is as follows:


Doubling O/OYear
Time Increase

e High priority on increasing or doubling income 4 years 19%


e Average priority on doubling income 6 years 13%
e Low priority - "I love my job and am not to concerned
about income increases 10 years 8%

Income Planning Chart

My Goals

Income % Increase Raise


This year

Next year

3rd year

4th year

5th year

6th year

To set your income goals choose the % increase you want for the year and mul-
tiply by the income that year to determine the amount of raise. Add the raise to
the year's income to determine what your income will be the following year. Or,
you can instead enter the amount of raise you want each year and add to the in-
come of the same year to determine next year's income goal. Enter here your
progress. At the end of each year determine by how far you are exceeding or
missing your income objectives.

Income Goal (From Previous Chart) Actuallncome Deviation +or -


This year
Next year
3rd year
4th year
5th year
6th year

Page 1-26 © Charles J. Givens Organization 1990 R1


compute the % deviation by dividing the difference in actual income and your income
(' goals (actual minus income goal) for the same year by your income goal for that year. If
you are on target, the % deviation will be a positive number. If you are not reaching
your income goals, simply revise your goals.

If You Work For Someone Else -


Ways To Increase Your Income
Check those that apply to you:

Seek promotion within your department.

Seek promotion to another department.

Ask for extra raises - ask, ask, ask.

Change companies for greater opportunities.

Change to a higher paying career by getting the necessary skills or education.

Increase your skills, education or profile in your present job.

Ways to increase your income


Check those that apply to you:

Increase sales - better marketing.

Expand your business.

Cut your expenses.

Expand your product or service.

© Charles J. Givens Organization 1990 R1 Page 1-27


Career Goals (2)
List the directions in which you would like to take your career.

1. Do you want to change careers? Yes ____ No _____ _

To what kind of work? (List Options)

1. 3.

2. 4.

2. Do you want your own business? Yes _._ No _ _ What business?

1. 2.
3 4.

3. Advances you want to make in your present career:

. Current position _________________________ Annual Salary $_________

1 year _ __
$ --------
5 years _ _ _. $ --------
10 years $ --------
,..... .. )
.
4. Do you want to change employers? Yes ____ No _____ _

When?

Who would you like to work for? _ _ _ _ __

Salary required for you to change employers: $_ _ _ __

Page 1-28 © Charles J. Givens Organization 1990 R1


Acquisition Goals (3)
List here all of the things you would like to own other than recreational assets which will
list in #7. Include automobiles, stereos, jewelry, furs, furniture, clothes, etc.

I would like to own:

Item Cost (approx.) Target (mo./yr.)

1.

2.

3.

4.

5.

6.
7.

8.

9.

10.

11.

12.

13.

14.

15.

16.

17.

18.

19.

20.

© Charles J. Givens Organization 1990 R1 Page 1-29


Travel Goals (4)
List the top 10 places to which you would like to travel domestically and abroad. Your
list can include the names of states, cities, monuments or even attractions.

United States. Date (Mo./Yr:)

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

Internationally Date (Mo./Yr.)

11.

12.

13.

14.

15.

16.

17.

18.

19.

20.

Page 1-30 © Charles J.Givens Organization 1990 R1


Accomplishment Goals (5)
List here the things you feel you want to do and become. Include positions you want to
('
hold in clubs, groups, church or even politics.

Include sports in which you would like to get involved or how you would like to excel, as
well as social activities or organizations you want to join.

List awards or other forms of recognition in your career or social life you want to win.

S port, activity or organ iz ation What you want to accomplish Target Date: MolYr.

1.

2.

3.

4.

5.

6.

7.

8.

9.

10

© Charles J. Givens Organization 1990 R1 Page 1-31


Education Goals (6)
List the courses or programs you would like to take and the estimated cost of each.
Examples: Givens Organization Level II membership, Evelyn Wood reading dynamics,
night school courses, completing your degree, etc.

Approximate Approximate
Starting Date Cost

1. $ ----------
2. $ ----------
3. $ ----------
4. $ ----------
5. $ ----------
6. $...:_---------
7. $ ----------
8. $ ----------

Page 1-32 © Charles J. Givens Organization 1990 R1


Recreational Asset Goals {7}

Wheeled Sports
Date to Acquire Type Cost

1 . S ports Car $_--------


2. Motorcycle

3. Bicyde

4. Snowmobile

Water Sports

5. Sailboat

6. Jet SkitWet Bike

7. Fishing Boat

8. Hobie Cat

9. Sailboard

10. Houseboat

11. Yacht

12. Airplane

13. Hang Glider

14. Pilot's License

Mobile Sleeping/Camping Quarters

15. Motor home

16. Camper

17. Tents and camping


equipment

© Charles J. Givens Organization 1990 R1 Page 1-33


Investment Goals (8)

The Investment Goals Chart identifies where you are now. It is up to you to determine
where you want to be and where you will be next year, 5 years from now and 10 years
from now. This chart will help you measure your progress and your commitment to your-
self over the next 10 years.

This Year Next Year 5 Years 10 Years Age 65

Cash in Bank $___________ $___________ $___________ $___________ $ __________ _

Mutual Funds $ ___________ $___________ $___________ $___________ $__________ _

Retirement Accounts $___________ $___________ $___________ $___________ $___________

Other Investments $_---------- $_---------- $----------- $_---------- $_----------

Other Assets $_---------- $_---------- $_---------- $_---------- $_----------


TOTAL INVESTMENTS,
EQUITY, ASSETS $ ___________ $___________ $___________ $____________ $ ___________ _

Page 1-34 © Charles J. Givens Organization 1990R1


How to Use the Investment Goals Chart
r
\
Cash in Bank
Include for this year all money in bank-type savings and checking accounts,
money market accounts or any other cash. Set your goals for the future on the
level of available cash that gives you a smiling sense of security.

Mutual Funds
As you will learn, mutual funds will create the base for your powerful investment
plan. Note how much you have in your mutual fund investments now (if any)
and how you want them to grow over the years. Next to bank accounts, mutual
fund money is the easiest to get your hands on.

Home Equity
Show the current amount of unmortgaged equity - what your home is worth
minus what you owe. For future years, estimate what you think your home
should be worth. If your goal is to buy a more expensive home, circle the time
when you intend to buy, one, five or ten years, and indicate what price range of
home you intend to buy. Adjust your estimated home equity accordingly. The
cost or current value of your home determines the level of lUXUry you enjoy.
The equity determines the level of wealth your home has created. If you own or
plan to own a second home, show those figures also.

Retirement Account
Your retirement account covers the cost of your lifestyle after you are no longer
r producing income from your job or career. By the time you retire, the amount in
your retirement plan should be eight times the income you want to have during
your retirement years. Although "other investments" may also produce income
during your retirement years, here you will list only the amounts you have and
want to have in your retirement accounts, including IRA, SEP, Keogh, 401 (k),
403(b), annuities, federal retirement plan, state retirement plans and union
retirement plans.

In Section IV you will learn what all of these mean and which ones you should
use. For now, simply enter the amount of money currently in all your retirement
plans.

You may treat cash values of insurance as part of your current retirement plan
amount although you will learn in Section" how to get better mileage from that
money.

Other Investments
Other Investments include anything other than your retirement plan, home(s),
mutual funds, bank accounts and investment real estate. Also not included are
non-investment assets like automobiles, jewelry, furniture, etc. Other invest-
ments include: CDs, government savings bonds, Treasury bills or bonds,
stocks, bonds and government securities.

r
© Charles J. Givens Organization 1990 R1 Page 1-35
Real Estate Investments (9)
Part 1: Real Estate You Own Now
List here the real estate you currently own, if any, in part one. Enter your real estate pur-
chase goals in part two.

Date Purchased Current Value - Mortgage Amounts = Equity Description

Your Home ------------- ----------------- -------------- ---------- ----------


2nd Home

Investment 1

Investment 2

Investment 3

Investment 4 __________ _

Investment 5

Totals

Part 2: Real Estate You Want To Buy


Target Date Expected Price Date Actually Purch 'd. Purch. Price Mortgage

Amt.

Your Home

2nd Home

Investment 1

Investment 2

Investment 3

Investment 4

Investment 5

Total

Page 1-36 © Charles J. Givens Organization 1990 R1


Part 2 - Creating Your Records
Management System

© Charles J. Givens Organization 1990 R1 Page 1-37


Strategy #1-5.2: Create a Records Management System (RMS).

How many times have you heard yourself say, "I am such a lousy record keeper."
When tax time comes, the record gathering process involves looking for receipts,
checks and other necessary paperwork in your drawers, shoe boxes, pocket books
and even the glove compartment. Poor record keeping costs time and money - lots of
time and lots of money.

Yet, by creating a Simple Records Management System (your RMS) you can get your
records under control in one evening or a Saturday morning, and then spend a mini-
mum amount of time and effort staying organized.

A good RMS will save you hours of valuable record keeping time, assure that you get
all the tax deductions you deserve, and enable you to know your financial condition at
any point in time.

Records management is simple. It means knowing what records you need and know-
ing where to find them. In this section you wil.1 evaluate your current system and
upgrade it to a true RMS (Records Management System.)
The reasons for good record keeping include:

1. Maximizing your tax deductions.

2. Proof of loss when filing insurance claims.

3. Proof of payments when a creditor's records are incorrect.

4. Total control of your financial life.

5. Score keeping for your progress toward your goal.

6. Proving your point in arbitration or litigation.

7. Satisfying IRS and legal requirements.

8. Exercising warranties and guarantees.

9. Information at your fingertips for completing mortgage and loan applications


and financial statements.

Page 1-38 © Charles J. Givens Organization 1990 R1


Strategy #1-6: Choose a permanent Records Management ~
area. ®
1. Purchase 50 standard size file folders at an office supply store or
drug store.
Cost: about $5, tax deductible as a tax preparation expense.

2. Buy a two-drawer filing cabinet if you don't already have one to


house your records. Current records go in the top drawer. Older
records go in the bottom drawer.
Cost: $30 to $50, tax deductible as a tax preparation expense.

3. Choose a permanent personal office area in your home with a


desk or table.
Cost: $40 to $150, tax deductible as a tax preparation expense.

4. Locate or purchase a printing electronic adding machine.


Cost $25-$60. tax deductible as a tax preparation expense.

© Charles J. Givens Organization 1990 R1 Page 1-39


Strategy #1-7: Set up your filing system.

Keeping your records organized and quickly accessible means setting up a complete
filing system for receipts, bills, statements, contracts, agreements and personal
papers.

The easiest and best method is to set up files for each category of important papers.
Your system will contain files by type, such as "doctor bills", and by company, such as
"FNB MasterCard".

To create your system:

1. Purchase 50 regular size manila file folders.


2. Purchase a 2-drawer file cabinet if you don't already have one.
3. Choose the file names and categories you will use.
4. Label each folder with its file name using a pen or magic marker. Print clearly.
5. File all folders alphabetically in the top drawer.
6. Use the top drawer for this year's files or contracts and agreements still in force.
/

7. Use the botto~ drawer as your history file for the previous year's papers, ,
completed contracts, old tax returns and records, etc. Later I will give you a formula
for how long you must legally keep your records.
You can combine multiple years of records in your history files, i.e., all previous
year's credit card statements from one bank in one file, but you will want to keep
your records in order by year.
You will refer to your history file only occasionally, but when you need history
records you want access to them quickly and conveniently.
8. Purchase a printing calculator (cost $35-$50) which you will use to:
a. Reconcile your bank and credit card statements
b. Compute expense totals for your tax returns.

Organizing and maintaining your records often seems boring and time-consuming.
With your Records Management System, record keeping is easier, automatic and
ends frustration and financial losses caused by lost or misplaced records.

Page 1-40 © Charles J. Givens Organization 1990 R1


Strategy #1-8: Choose the record keeping categories for
your filing system.

Here is a suggested checklist to begin your filing system. Check those file names you
will use. Add other files you will need to this list. The name of the file folder is shown
first. The items that go in the file follow.

1. Asset Management Account - monthly statements, prospectus

2. Bank Account - monthly statements, correspondence

3. Children's File - school papers, birthday and Christmas cards, drawings, awards, diplomas and
certificates

4. Clubs - health club, country club and business club

5. Credit Bureau Report

6. Credit Card Bills/Receipts (one file for each card) - monthly statement and phone numbers

Name of Credit Card

7. Cred Itors(one file for each creditor) - credit card numbers, names, and addresses; credit bureau
report

8. Doctor and Hospital Bills - family doctor, name, address, phone number, medical records,
doctor and hospital bills

9. Education - night school, correspondence school, work-related courses

10. Employment Records - employment contract, employee handbook, fringe benefits information,
retirement plan information

11. Financial Blueprint - your dreams and fantasies list, a list of your short and long-term goals and
strategies, values list, personal income statement strategy, personal balance sheet strategy,
financial statement strategy

12. Givens Organization Information - Financial Digests, membership information

13. Guarantees, Warranties, and Instructions - instructions and guarantees for carpets, tires, stereo
equipment, appliances etc.

14. Home - purchase contract, mortgage papers, home improvement receipts, leases and rental
agreements, payment book, canceled checks

15. Important Papers - birth certificates, marriage license, passport, diplomas.

© Charles J. Givens Organization 1990 R1 Page 1-41


16. Insurance-Auto - automobile insurance policy,traffic infractions and accidents, automobile title,
driver's license information, and license plate information

17. Insurance-Health - health insurance policy

18. Insurance-Homeowners - homeowners or tenants insurance policy, umbrella liability policy,


personal property inventory list

19. Insurance-Life - insurance property, correspondence with company, Insurance quotes

20. Investments-annuities

21. Investments-IRA accounts

22. Investments-Miscellaneous - employee benefits including pension, profit sharing, savings, tax
shelter annuity, list of checking/savings accounts. liquid assets, loans to others, IOU's

23. Investments-Mutual Funds - monthly statements, correspondence

24. Investments-stocks and bonds certificates

25. Investments-real estate

26. Personal - cards, letters, pictures etc.

27. Receipts

28. Receipts - miscellaneous

29. Resume

30. Retirement Plan - papers relating to your job or small business retirement plan

31. Taxes-Federal and State - tax deductible receipts of tax returns and files for last 7 years (one
file for each year)

32. Telephone - telephone bills and correspondence

33. Utilities - electric, gas, water, sewer

34. Will - copy

.~
/

Page 1-42 © Charles J. Givens Organization 1990 R1


Strategy # 1-9: Purchase a plastic check box for checks,
deposit slips and check registers.

Keeping your checks organized is one of the most important steps of your RMS. Don't
leave cancelled checks and statements in envelopes and drawers. File checks in number
order in your check file box along with deposit slips, deposit receipts and your check
register. Always reconcile your bank statements as soon as you receive them.

There is an absolutely false belief that because a bank uses sophisticated computers, it
can't make mistakes. Nothing could be further from the truth. My bank once made a
$40,000 mistake in my account, which was fortunately caught.

Reconcile each bank statement as soon as you receive it, using the form printed on the
back of the statement.

Mark all checks which may have been for tax deductible purchases with a "T" in the upper
right hand corner and file checks in numerical order in your check box. At tax time you
will pull the check with the "Ts" to compute your deductions.

The steps in reconciling your bank statement are to:

1. Be certain all your deposits were recorded correctly. Compare your deposit
receipts with the entries on your statement.
2. Be certain the correct check amounts are deducted from your bank balance.
Compare each check returned in your statement envelope to the amount deducted
by the bank on your statement. Anything that doesn't agree is a bank error.
3. Identify checks outstanding that have not been deducted from your account. Check
off in your check register all checks returned with your statement. Any check
registry entries not checked are checks you have written that were not received
by the bank by the time your statement was prepared. These outstanding checks
must be deducted from the balance shown on your statement to determine the
actual balance in your account.
4. Identify and deduct bank charges. Your bank will charge you for anything it can,
including NSF checks, ATM machine usage or minimum monthly account charge.
Deduct the total of these charges (once you are certain they are correct) in your
check register to adjust your actual balance.
5. Contact your bank immediately if you find any errors in your account.

How do you know if you are in control of your checking account? You know you're not
in control if you ever have to call the bookkeeping department of your bank to check your
balance before you write a check.
© Charles J. Givens Organization 1990 R1 Page 1-43
Strategy #1-10: Store important documents in a bank safe
deposit box or a fire-proof safe at home.

Decide which would be better for you a safety deposit box or a


fireproof heavy metal safe for your home. Check one:
__ Safe Deposit Box-Cost about $50 a year.
Deductible as an investment expense.
_ _Heavy metal fireproof safe-Cost: $125 to $600.

Keep the following important documents in your safety storage


place:

• Mutual Fund Shares


• Stock or Bond Certificates
• Property Deeds
• Automobile Titles
• Personal Property Inventory List and Pl'lotographs
• Marriage Certificate

• Will
• Birth Certificates
• Diplomas
• Military Discharge Papers
• Passports

Page 1·44 © Charles J. Givens Organization 1990 R1


Strategy #1-11: Build a tax reference library with IRS
publications and forms.

Look up the local IRS forms number in your phone book under
United States Government, Internal Revenue Service, Forms.
Enter number here _ _ _ _ _ _ _ _ _ __

Ask the IRS operator to send you the following personal and
small business forms, instructions and publications for your tax
library. Check those you will need.
Personal Small Business
_ _ Pub. 1 (federal taxes) _ _ Pub. 334 (sm. bus. taxes)
_ _ Pub. 17 (general income tax) _ _ Pub. 587 (use of home)
_ _ Pub. 556 (amended returns) _ _ Pub. 463 (car expenses)
_ _ Pub. 550 (investments) _ _ Pub. 534 (depreciation)
_ _ Pub. 545 (interest on debt) Pub. 538 (inventories)
_ _ Pub. 534 (depreciation) _ _ Pub. 535 (bus. expenses)
_ _ Pub. 564 (mutual fund gains)
_ _ Pub. 527 (rental property)
_ _ Pub. 503 (child care credit)

As an alternative, take your list to the IRS forms room at your local
federal building and pick up your forms. Your mileage is deduct-
ible as a tax preparation expense on Schedule A.

© Charles J. Givens Organization 1990 R1 Page 1-45


Part 3 - How To Keep Records
For Tax Deductions

Page 1-46 © Charles J. Givens Organization 1990 R1


There are a few simple record keeping rules I want to teach you now that will insure
that you get the maximum tax deductions you deserve and that you are always in a
position to prove your pOint in any dispute.

We have compiled these record keeping suggestions from IRS publications and from
the IRS auditor's manual, which gives instructions to IRS auditors for what taxpayer
records can be used to substantiate deductions.

Keeping the right records always keeps you prepared. Remember, when you carry an
umbrella, it seldom rains.

Remember, the way the tax code is written, it is your responsibility to be able to sub-
stantiate the amount and purpose of each of your tax deductions.

If your record keeping is poor you won't be in trouble with the IRS, but you may lose
some of the deductions you really deserve. That's just like burning your money.

Whether you run a part-time business from your home, a full-time small business, or
are a professional or have a full-time sales job, the same rules apply.

Let's look at your strategies.

Strategy #1-12: Keep all tax'records at least seven years.

File all the current year's receipts, records and contracts in the top
drawer of your filing cabinet.

Make a second set of "history" files for all records that are over
one year old. You won't need one file for each year in your history
files for each category, For instance, all telephone bills for the past
few years can be combined in one folder.

File your "history" files in the bottom drawer of your filing cabinet.

Dispose of all receipts, cancelled checks, tax returns and other


unneeded papers after seven years. Purge your history files

(~ yearly.
\

© Charles J. Givens Organization 1990 R1 Page 1-47


Strategy #1-13: Keep receipts for all deductible expenses
>
~,

)
over $25, keep a written record of expenses ®
under $25.

Keep receipts forall deductible expenditures over $25 even for


expenses paid by check.

Write the check number and date paid on all receipts for
purchases by check.

Buy an expense-log book at an office supply or stationery store


for all purchases made when you are away from home.

Log all expenses as you make them. You do not need a receipt
for any expenses under $25 logged in your receipt expense book.
However, it is okay to keep them.

Summarize your expenses by month to make your life easy at tax


preparation time.

Strategy #1-14: Keep expense records in a pocket-size


expense log.

To make record keeping a snap carry with you at all times a pocket size expense log.
You can buy one for a couple of dollars at any stationery or office supply store.

Your expense log makes it easy to record deductible expenses you incur away from
home. These expenses include:

• Gas, car repairs, tolls, parking


• Deductible meals and entertainment
• Office Supplies
• Motel Rooms and other travel expenses
Your log should fit easily into your pocket, briefcase or purse and allow you to keep
running totals for all your yearly deductible expenses. A good expense log should keep /" .
records of purchases and automobile mileage and expenses. -,

Page 1-48 © Charles J. Givens Organization 1990 R 1


Here is an example of a page from an expense book.

&pfA'l),t and C3 ~ 12t«1'tri


ITEMS SUNDAY MONDAY WEDNESDAY THURSDAY FRIDAY SATURDAY WUllYSU_

8REAKFAST
TUESDAY
c:tII
LUNCH
C i"S
DINNER
HOTEL Ci1I
TIPS & MISC.
LAUNDRY & VALET e"4*
TEL. & POSTAGE
AIR. TRAIN. 8US &:1-
LOCAL TRANS.
CAR RENTAL
E:r_
PARKING. TOLLS
GAS. OIL. WASH. SVC. ~
ENTERTAINMENT
~
Ie!_
I
TOTALS
~ i-
MILEAGE i8US/NESS
iPERSONAL E. I

CITY
NAME OF HOTEL
&:~
DATE BUSINESS PURPOSE, CONT ACT(S)
EZ~
I
C::3
~-~ I
I
c:a I

© Charles J. Givens Organization 1990 R1 Page 1-49


Strategy #1-15: Keep receipts in addition to cancelled checks.

Buy an inexpensive record book at an office supply store or drug


store. Cost: about $5.00 - tax deductible as a small business ex-
pense.

Get in the habit of carrying your expense book everywhere you


go and entering deductible expenses as they occur.

Keep receipts or invoices that contain the phone number and


address of the company and the items purchased along with your
cancelled checks.

Strategy #1-16: Use a credit or debit card for effective


record keeping of deductible expenses.

Obtain a credit or debit card for business use.

Get in the habit of writing the deductible purpose in five words or


less on each receipt.

Mark all of this year's debit or credit card statements with a T or


P on each line to indicate tax deductible or personal.

Organize and file all of your credit card receipts and statements in
your RMS.

Deduct the yearly credit card fees and interest that applies to
deductible items for your small business on tax Schedule C. Enter
the personal portion of the interest on tax Schedule A under the
personal interest deduction, which is completely phased out in
1991.

Page 1-50 © Charles J. Givens Organization 1990 R1


Strategy #1-17: To determine the deductible portion of your
VCR, home computer or other assets, keep a
time use record for 90 days.

Up until Tax Reform, record keeping for tax deductions was cumbersome and time
consuming. Congress had passed what it called the Adequate Contemporaneous
Record Keeping Rules, which required documentation of every expense and every tax
deductible business mile.

Evidently Congressmen found the rules too difficult to follow themselves, so record
keeping requirement rules are now greatly simplified, particularly in the case of assets
like cars, VCRs or home computers, which are used part of the time for deductible
business or financial planning purposes and part of the time for non-deductible per-
sonal purposes.

By using your assets in a small business or for tax or investment record keeping they
do become tax deductible. If you use a VCR or home computer for both tax deductible
o 0 0 ,

IF and non-deductible purposes, you must determine the deductible use percentage in
order to earn the tax deduction.

The simplest method of apportioning the deductible and non-deductible use is to take
a sheet of notebook paper, draw a line down the middle and on the left hand side
write "Deductible Use," and on the right hand side "Non-Deductible Use." There are
pre-printed sheets on the next few pages you can use. For a period of 90 days, enter
each ending time and beginning time to compute the total time for each purpose. At
the end of 90 days, divide the total deductible usage time by the total time the asset
was ljsed during the same period to determine your deductible percentage. Note that
if you use your asset more than 50% of the time for a combination of business and
financial management, such as taxes and investing, you may be allowed to use the
asset expensing method. See Section VI for a complete description of asset expens-
ing.

© Charles J. Givens Organization 1990 R1 Page 1-51


Deductible uses of a VCR of home computer include:

• Investment education and record keeping


• Tax education, record keeping, and tax preparation
• Real estate education or record keeping for real estate investments
• Any use in your small business
• Financial planning, including the use of your Charles J. Organization video
tapes
Non-deductible uses include:

• Personal use
• Entertainment
• Use by your children

Page 1-52 © Charles J. Givens Organization 1990 R1


Item Year 19- -

r _VCR
_Home Computer
_Other
From
Month Day
To
Month Day

Use this form to comply with the 90 days record keeping requirements for VCRs, computers or other
items that are used for both deductible and non-deductible purposes.
Use an automobile expense record book for calculating the deductible percentage of your automobile.

Begin Time End Time Total Time Begin Time End Time Total Time
Deductible Non -Deductible

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

Total Deductible Time = Deductible %


------
Total Time (Deductible and Non-deductible)
See tax section for a complete description of how to apply the deductible percentage.

r
© Charles J. Givens Organization 1990 R1 Page 1-53
Item Year 19
VCR
From To
Home Computer
Other_ _ _ _ _ __ Month Day Month Day

Use this form to comply with the 90 days record keeping requirements for VCRs, computers or other
items that are used for both deductible and non-deductible purposes.
Use an automobile expense record book for calculating the deductible percentage of your automobile.

Begin Time End Time Total Time Begin Time End Time Total Time
Deductible Non- Deductible

10

11

12

13

14

15

16

17

18

19

20

Total Deductible Time = Deductible _ _ _ _ _oc-


%
Total Time (Deductible and Non-deductible)
See tax section for a complete description of how to apply the deductible percentage. )

Page 1-54 © Charles J. Givens Organization 1990 R1


Item Year 19
.-" VCR
( _ Home Computer
From To
Other Month Day Month Day

Use this form to comply with the 90 days record keeping requirements for VCRs. computers or other
items that are used for both deductible and non-deductible purposes.
Use an automobile expense record book for calculating the deductible percentage of your automobile.

Begin Time End Time Total Time Begin Time End Time Total Time
Deductible Non- Deductible

1
2
3
4

5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

Total Deductible Time = Deductible %


------
Total Time (Deductible and Non-deductible)
See tax section for a complete description of how to apply the deductible percentage.

© Charles J.Givens Organization 1990 R1 Page 1-55


Part 4 - Your Wealth Check-Up

Page 1-56 © Charles J. Givens Organization 1990 R1


Your Wealth Check-Up
r- If winning isn't important, then why bother to keep score? Keeping score financially is
done with a yearly "Wealth Check-Up."

Your yearly "Wealth Check-Up" identifies where all your money came from and went.
Every December most people repeat the pauper's prayer.

"I never made so much money.


I never spent so much money.
Lord, where did it all go?"
Since there is no limit to the amount of money you can spend, the solution is taking
better care of what you have. All the strategies you will learn in successive sections will
help you do just that.

The first step in your "Wealth Check-Up" is identifying where you are. The second
step is to do a yearly update.

For better or worse, you must know where you are financially. Only by planting your
feet firmly on the ground can you generate the greatest momentum toward where you
want to be next year and beyond.

Your Wealth Check-Up defines:

1. Your income and income sources - where your money comes from.
2. Your expenses and debt - where the money goes.
3. Your net worth and financial condition.
Not only will you use your Wealth Check-Up to measure your financial progress, but
the same information, once gathered, will be used to apply for credit, mortgages and
personal or small business loans, saving you countless hours of last minute research.

Your Wealth Check-Up will require only 30 minutes to complete and there is no time
like the present to begin. All the necessary forms are on the following pages.

© Charles J. Givens Organization 1990 R1 Page 1-57


Income Sources
Begin by identifying all of your income sources. Some income sources are con-
tinuous, like wages or interest from CDs. Other income, like gifts, inheritances or
profits from the sale of mutual funds, occur only once.

The IRS has decided that individual taxpayers should account for their income on the
cash basis; that is, you only count money as income when received. For instance,
your home may appreciate in value every year but what you have made does not
count as income until you sell and receive the cash.

The one exception is the new rules for mutual funds. You are required to count mutual
fund distributions as income each year even though you have asked your mutual fund
to reinvest your profits into additional mutual fund shares. You will find a complete
description of this process in the investment section.

To help you identify all of your one time and repetitive income sources of income, com-
plete the income source statement on the next page. You will enter data in only a few
categories but all are included to remind you where to look.

~
)

Page 1-58 © Charles J. Givens Organization 1990 R1


Income Source Statement

Taxable
Income Source Where To Find It Amount N = Non Taxable

1. Job Income Form W-2


Salary Form W-2 T
Bonuses Form W-2 T
Commissions Form W-2 T
Independent Contractor Form 1099
2. Interest Earned
Checking Form 1099 INT T
Savings Form 1099 INT T
Bonds Form 1099 INT T
CDs Form 1099 INT T
Tax free bonds N
Loans to others Your agreement T
3. Dividends from:
Stocks Form 1099 DIV T
Mutual Funds Statements
4. Proceeds from sale of:
Businesses Schedule E T
Investments 1099 T
Real estate Closing statement T
5. Gifts Deposit record N
6 Inheritances Deposit record N
7. Gains and losses
Sale of securities Statement T
Other investments Mutual funds T
8. Other Net Income
Rent received Schedule E T
Tax refunds Tax Form 1040 N
Retirement Income Form 1099 T
(Company, IRA, Keogh)

Annuity Income Monthly T


Statement

Social Security Bank Deposit N orT

Total Income $
(~
(1-8)
Instructions For Income Source Statement
1. Income Source:

Before entering the amount of income for each category, scan the first column for the
categories that apply to you. You can make your search for the amounts easier by
knowing everything you are looking for in advance. Although there are many potential
income source categories, you will probably check only a few. Complete your first income
source list now and prepare another each January for the entire previous year.

2. Where to Find It:

The second column will give you an idea of where to begin looking for the amount of
income for the sources you have checked. Enter the amount or estimated amount in the
third column. Where tax for numbers are shown, the reference is for last year's completed
and filed tax return. "Bank Deposits" or "Statements" refer to this year's statements if you
are doing this exercise the first time or if these entries refer to last year's deposit slips
and statements if you are dOing your yearly January recap.

3. Amount:

Enter for each income source the total amount of income you received or expect to receive
for the entire year, if you are completing your first Income Source Statement in the middle
of the year. When you are using your Income Source Statement to file your tax return, .~
)
be certain the amounts shown are actual for the previous year and not estimated for the
current year.

4. T - Taxable
N - Non-taxable

This column is used to identify source of income, which you will be required to report to
the IRS when you file your tax return.

Most income you receive over your lifetime is taxable one way or another; however, gifts
or inheritances are never taxed to the recipient, even though they can be taxed to the
donor or the donor or the donor's estate. Tax refunds are not taxed nor is Social Security
received until certain limits are exceeded. Refer to IRS Publication 17, for a complete
explanation of what you can or cannot be taxed on.

5. How to Report It:

When using your Income Source Statement to file your tax return, this column indicates
the correct tax form to use. Be certain to read the instructions for each form and item
carefully.

Page 1-60 © Charles J. Givens Organization 1990 R1


Monthly and Yearly Expenses

r' Housing
Taxes
A. Property
A. Rent or Mortgage $
B. Income
payments
C. Social security
B. Repairs
Personal purchases
C. Utilities
D. Improvements or
A. Cash $
B. Charge
Additions
C. Installmel}t
Automobile
Education
A. Loan Payments
B. License fees
A. Tuition and supplies
B. Transportation
and taxes
C. Housing and food
C. Gas and 011
D. Repali's/tires Entertainment and vacation
Food A.Sports
A. Groceries B. Hobbles
B. Dining Out C. Theater
Medical Other

A. Doctor and dental fees A. Legal Services


B. Hospital bills B. Accounting
C. Drugs and medicine C. Charity
D. Child Care
Clothing
A. Expenses
f'
Only the amount of expenditures actually paid out is shown on your expense state-
ment, not the total amount you owe. The amount you owe is shown on your financial
statement. Your income statement, in this case, is being constructed on a cash basis.
In other words, only actual payment made against loans or borrowed funds is counted
as an actual expenditure. For example, if you buy a car, only the cash down payment
and the total of the monthly payments is shown as a current year's expense. If you
sold your car for cash, the money you received is part of your income. Columns II and
III indicate where you can find expenditure items and where to report them for tax pur-
chases.
Strategy #1-17.1: Create an Assets List for your Wealth Check-Up
and for insurance replacement in case of loss.

To complete your wealth check-up, you must identify all of your assets - the things
you own. The greater your assets, the more you have acquired during your lifetime. In-
clude your estimated value (use the value of your assets from the financial statement
that follows) and the brand name and serial or model number of each asset. Keep
your list in a safe, firepro~f place.

Assets need protection. Almost anything of value can be lost, stolen or damaged. The
main purpose of homeowners or renters insurance, as well as your automobile in-
surance is to protect you against loss or damage to your assets.

Using the list on the following page you will identify those assets that need protection.

You can only collect with insurance what you can prove you lost. Once an asset is lost
or destroyed, the insurance company will take the position that it never existed. You
will have trouble believing the foregoing statement only if you have never filed a claim.

Page 1-62 © Charles J. Givens Organization 1990 R 1


Assets List

Include all of your assets from cars to stereo equipment, from lawn equipment to jewel-
ry to furniture.

Assets Seria I/Model# Estimated Cost Estimated Value

Stereo & Video Equipment


$ $

$ $

$ $

$ $

$ $

Appliances
$ $

$ $

$ $

,-, $ $

$ $

Equipment
$ $

$ $

$ $

$ $

$ $

furniture
$ $

$ $

$ $

$ $

$ $

© Charles J. Givens Organization 1990 R1 Page 1-63


Assets Serial/Model# Estimated Cost Estimated Value

Jewelry ~
$ $

$ $

$ $

$ $

$ $

Art Objects
$ $

$ $

$ $

$ $

$ $

Collections
$ $

$ $
~
$ $

$ $

$ $

Recreational Equipment
$ $

$ $

$ $

$ $

$ $

Automobiles
$ $

$ $

$ $

Page 1-64 © Charles J. Givens Organization 1990 R1


Strategy #1-17.2: To determine your net worth, prepare a family
Financial Statement.

A financial statement is a snapshot of your net worth on any particular day.

First, list the value of all of your assets from cash to stereo equipment. The value you
use is today's market value and is only an estimate in the case of electronics or other
equipment.

Assets are what you own.


Liabilities are what you owe.
The difference is your net worth.
Under liabilities show the total amount of your loan balances, not the monthly pay-
ments.

Once you have the totals, subtract your liabilities from your assets to determine your
net worth.

Use your Financial Statement when applying for loans and mortgages. You will usually
be asked for one.

Complete a Financial Statement now and then one each year. Your Financial State-
ment will chart your yearly financial progress.

© Charles J. Givens Organization 1990 R1 Page 1-65


Financial Statements
Name______________________________________________ Date,_________________

Assets Liabilities
Liquid Assets Installment Loans (Balance)
Cash (a) Automobile $ _ _ _ __
$_-----
Checking Accounts (b) Recreation
(c) Furniture
Savings Accounts
(d) Appliances
Money Market Accounts
(e) Credit Card
Savings Bonds (f) Other
Certificates of Deposit Mortgage Loans
Marketable Securities (a) House
(a) Mutual funds (b) 2nd home
(b) Corporate stocks (c) Investment-real estate ________
(c) Corporate bonds Other Loans
(d) Government bonds (a) Secured
(e) Other (b) Unsecured
Cash Value Total Fixed Liabilities
Life Insurance TOTAL LIABILITIES $ _ _ __
Prepaid Items
(a) Escrow for insurance Net Worth Computation
& taxes on your home _ _ _ __ Total Assets
Total Financial Assets Total Liabilities
Fixed Assets
Current Net Worth $------
House
2nd Home
Investment - Real Estate
Furniture
Stereo & Video Equipment
Clothing
Jewelry
Collections
Art Objects
Equipment
(a) Lawn
(b) Woodworking
(c) Other
Recreation
(a) Boat
(b) Trailer
(c) Plane
(d) Sporting equipment
Automobiles
Motorcycles
Retirement Programs
(a) Employer
(b) Individual
Real Estate
(a) Vacation
(b) Investment
Value of Business
Loan Receivable
Total Real Assets
TOTAL ASSETS $_---
SECTION II

CUTTING YOUR INSURANCE


PREMIUMS BY 50%

S This symbol designates


,c:~~
strategies which are on
~ both video and audio tapes

r
Introduction:
The Concept Of Insurance
Insurance is an economic device where you accept a smaller guaranteed 1055 (the
premium) to substitute for the possibility of a larger financial 1055 - the peril. The
greater the possibility of a potential loss, the greater the cost of the insurance.
Insurance was probably created out of care and concern for one's neighbors.
Remember the stories of how a whole community used to come to the aid of a fellow
farmer who had lost his barn in a fire. At no cost the whole village would pitch in to
rebuild the barn. The lost barn would be replaced in a few days, something the farmer
himself might have required a year or more to do. The farmer's family could have
suffered tremendous financial 1055 if, for that year, his time was spent rebuilding the
barn instead of tending crops. The only informal agreement was that the farmer who
lost his barn would become part of the work party the next time there was a 1055.
Those days were the last time insurance was either cheap or nonprofit. Today,
insurance is the biggest and richest industry in the world.

According to Andrew Tobias in The Invisible Bankers, the insurance industry is bigger
than all the banks, brokerage firms and restaurants combined. The basic insurance
concept however, has not changed since the days that everyone pitched in to replace
someone else's 1055. The sole purpose of insurance is to replace the large
unpredictable potential 1055 of one person with smaller guaranteed losses of many
people. The large potential 1055 is the peril or risk and can include:

• Loss of income to a family because of the death of the breadwinner. This


risk is covered with life insurance.

• Expensive medical bills that couldn't be reasonably paid out of current


income. This risk is covered with health insurance.

• Damage to your car done by you or someone else or damage you do with
your car. This risk is covered with automobile insurance.

Almost any risk'can be covered by insurance, but only a few insurance coverages are
good values. The insurance business is divided into two parts - life insurance and
casualty insurance. Life insurance includes not only insurance that pays upon the

Page 2-2 © Charles J. Givens Organization 1990 R1


death of the insured but includes hundreds of variations of combination life insurance
r and savings or investment plans which can be dangerous to your wealth.

Casualty insurance includes just about everything else, such as:

• Automobile insurance

• Homeowner's insurance

o Hospitalization insurance

II Disability insurance

• Liability insurance

• Business insurance

• Rental car insurance

In Part I we will take a look at life insurance, an industry 'fraught with false promises
and deceptive sales practices, which play on people's natural fears of death and lack
of support for survivors. In Part 2: Casualty Insurance we'll cover strategies for
casualty insurance including how to determine which coverages you need and don't
need.

By following the strategies I've outlined, you will be able to cut the average cost of life
insurance by 80% and the cost of the various forms of casualty insurance by 50%,
guaranteeing you can afford the right amount of the right kind of insurance protection
for your family.

© Charles J. Givens Organization 1990 R1 Page 2-3


Part 1~ Life Insurance

Page 2-4 @ Charles J. Givens Organization 1990 R1


Part 1 of the insurance section contains everything you'll ever need to know about life
insurance, which is often (though unnecessarily) one of the most expensive parts of
your financial plan.

You'll learn:

• the insurance terms necessary to understand an insurance policy

• who needs life insurance and who doesn't

• the amount of life insurance you need to protect your family

• how to avoid costly life insurance gimmicks

• why whole life, universal life, and single premium life are some of the
biggest investment ripoffs in America

• how to choose the right kind of term life insurance

• how to use the Life Insurance Clearinghouse to find the best possible and
lowest priced life insurance policy

• how to cancel an old policy and prevent the insurance company from
attempting to keep your cash value

• how to use cash values in better investments

• how to set up your estate plan to correctly distribute life insurance


proceeds

@ Charles J. Givens Organization 1990 R1 Page 2-5


Important Insurance Terms
Familiarize yourself with these terms before you learn and use the strategies.

AdJlUst®r
One who settles insurance claims. If you have a claim, you will be visited by
or speak to an adjuster. He or she will tell you how much the company is
willing to pay. If you think the amount the company offers is unfair or not in
accordance with the policy's agreement, you must sue the company, which
can take years.

Fees and Commissions


The amount the insurance company charges for administrative and selling
expenses. Fees and commissions are added to premiums.

Grace Ptlrlod
The extra period of time following the due date of a premium during which
you have the opportunity to pay the premium to avoid cancellation of the
policy.

Group Insurance
An insurance plan under which a number of employees or associates and
their dependents are insured under a single policy, usually having lower
premiums than an individual policy.

Ha!4Ud
A condition that creates or increases the probability

Incontestabie Clause
A provision that prevents an insurance company from challenging the
coverage because of alleged misstatements by the insured after a stipulated
period has passed.

Insurance:
An economic device whereby the individual substitutes a small fixed cost (the
premium) for a possible large uncertain financial loss (the contingency insured
against).

Llf. Insurance
A plan where you pay premiums to an insurance company while you are living
and the company pays your chosen beneficiary when you expire.

Beneficiary
The person(s) who receive the death benefit or face value of the policy.

Death Benefit
The dollar amount that will be paid to the beneficiary if the insured dies, also
called the face value of the policy.

Page 2-6 © Charles J. Givens Organization 1990 R1


Insured
The person upon whose death the death benefit will be paid.

Mutual Insurance Companies:


An Insurance company that is theoretically owned by its policyholders.
Owner
The person who pays the premiums. The owner can be the insured, the
beneficiary, or even a third person.

Settlement Options
One of the ways, other than immediate payment in a lump sum, in which the
policyholder or beneficiary may choose to have the policy proceeds paid.

Stock Insurance Company:


An insurance company owned by stockholders.

Surrender Charge
The amount of money the insurance company keeps if your policy is
cancelled. Surrender charges apply only to policies with investment plans
such as whole life and universal life, and can run into thousands of dollars.

Universal LIfe
Term insurance coupled with an investment plan. The premiums are variable
with the amount in excess of the insurance premiums and fees going into the
investment plan.

Peril:
The event insured against; the cause of possible loss. Perils include fire, theft,
colliSion, glass breakage, death, injury, etc.

Polley Term
The period during which the insurance is in force.

Premium:
The dollar amount you pay to the insurance company. Premiums can be paid
in one lump sum (single premium), one check each year (annual premium), or
periodically by quarter or by month. Premiums can purchase insurance only or
with life insurance they may be partially diverted into investments, pre-paid
policies and retirement plans.

Rate:
The cost of a unit of insurance. Each unit could be $1,000 and the rate
quoted per $1,000 of insurance.

Risk:
A condition in which there is a possibility of loss; used to indicate the property
insured or the peril insured against.

@ Charles J. Givens Organization 1990 R 1 Page 2-7


Underwriting:
The process by which an insurance company determines whether or not and
on what basis it will accept an application for insurance. An underwriter
reviews all new and renewal applications to determine if the insurance
company is willing to issue a policy.

I~.
!

Page 2-8 © Charles J. Givens Organization 1990 R1


Who Needs Life Insurance?

Strategy #2-1 : If you are single with no dependents,


don't buy life insurance.

About 30% of all the life insurance in force today is on the lives of single people with
no family responsibilities. Life insurance should be used only to prevent a financial
hardship that would be created if the insured dies. If you are single, invest your
money for use while you are living.

Of a trillion dollars of life insurance in force, $300 billion is on the lives of single
people with no dependents, a perfect illustration of how well salespeople are trained
and how little we've learned about money and insurance. Since the chances of living
through the years you are single, usually your 20s, are 985 out of 1,000, even a small
burial policy, the salesperson's last sales pitch, is certainly a poor use of your money.

r
@ Charles J. Givens Organization 1990 R1 Page 2-9
Strategy #2-2: Never buy life insurance on children. ,.....
)
The purpose of insurance is to protect against the loss of your financial assets.
Although children may be an emotional asset, they are not financial assets. Parents
buy life insurance on children because they are told by a salesman that it is the
loving, responsible thing to do. Insurance belongs on the income-providing parent(s),
not the children.

Another ridiculous salesman's pitch is that if you insure a child while he or she is
young, it guarantees the child's insurability later. There is a 99% chance that if a child
reaches age eighteen, he or she will be insurable anyway.

Often whole life insurance is sold as a method of building enough cash value to pay
for a college education for the child who is insured. A $50,000 life insurance policy on
a one-year old child will cost $250 per year and be worth $5,000 when the child
reaches college age. Two hundred and fifty dollars per year invested correctly in a
mutual fund family can create a college fund of $40,000 in the same amount of time.

Insurance salespeople also claim that you should buy life insurance on children
because you are "locking in" low rates on your policy. Here are three reasons not to
fall for that sales pitch:

1. The truth is that you don't want to keep that policy long term anyway
because insurance costs are declining as people live longer; your rates on
your child's won't be adjusted downward as rates in general come down.

2. Investment yield on the insurance company's investments will have


increased, but the investment return on your policy won't be increased.

3. Insurance premiums are less per $1,000 today than they were 30 years ago,
so today you can buy more protection for less premium than you are paying
on old outdated policies bought by well-meaning parents.

Page 2-10 © Charles J. Givens Organization 1990 R1


Strategy #2-3: Insure your spouse only if your spouse
provides family income.

If your spouse is responsible for a significant amount of family income, he or she is a


financial asset, and inexpensive term insurance makes sense until the kids are grown.
If your spouse does not work, or intends to work only part-time, insurance is
unnecessary.

Strategy #2-3.1: Substitute the income and career of a spouse for


a life insurance policy.

Two Income families with no dependents, that is if each spouse has roughly the same
Income, need little life insurance. Those that need life insurance protection the most
are families with children or families with only one income. A good job or career
represents far more substantial financial security than a life insurance policy. If you
have no kids and a spouse with an established career, you need little if any life
Insurance. Referring to the Mortality table in your manual you will see that the
chances of your spouse dying are so small; you will be financially smarter to use the
life insurance premiums you can save to build your investment program.

@ Charles J. Givens Organization 1990 R1 Page 2-11


Mortality Table
This table shows you both the chance of dying at any age as well as the average life expectancy of a person at any age. At age 30, for instance, only 1.55 people
will die that year.

Age Deaths Expectation Age Deaths Expectation Age Deaths Expectation


per of Life per of Life per of Life
1,000 (Y~ars) 1,000 (Years)
0 20.02 70.75 37 2.44 37.23 74 50.75 9.82
1 1.25 71.19 38 2.66 36.32 75 55.52 9.32
2 .86 70.28 39 2.90 35.42 76 60.60 8.84
3 .69 69.34 40 3.14 34.52 77 65.96 8.38
4 .57 68.39 41 3.41 33.63 78 71.53 7.93
5 .51 67.43 42 3.70 32.74 79 77.41 7.51
6 .46 66.46 43 4.04 31.86 80 83.94 7.10
7 .43 65.49 44 4.43 30.99 81 91.22 6.70
8 .39 64.52 45 4.84 30.12 82 98.92 6.32
9 .34 63.54 46 5.28 29.27 83 106.95 5.96
10 .31 62.57 47 5.74 28.42 84 115.48 5.62
11 .30 61.58 48 6.24 27.58 85 125.61 5.28
12 .35 60.60 49 6.78 26.75 86 137.48 4.97
13 .46 59.62 50 7.38 25.93 87 149.79 4.68
14 .63 58.65 51 8.04 25.12 88 161.58 4.42
15 .82 57.69 52 8.76 24.32 89 172.92 4.18
16 1.01 56.73 53 9.57 23.53 90 185.02 3.94
17 1.17 55.79 54 10.43 22.75 91 198.88 3.73
18 1.28 54.86 55 11.36 21.99 92 213.63 3.53
19 1.34 53.93 56 12.36 21.23 93 228.70 3.35
20 1.40 53.00 57 13.41 20.49 94 243.36 3.19
21 1.47 52.07 58 14.52 19.76 95 257.45 3.06
22 1.52 51.15 59 15.70 19.05 96 269.59 2.95
23 1.53 50.22 60 16.95 18.34 97 280.24 2.85
24 1.51 49.30 61 18.29 17.65 98 289.77 2.76
25 1.47 48.37 62 19.74 16.97 99 298.69 2.69
26 1.43 47.44 63 21.33 16.30 100 306.96 2.62
27 1.42 46.51 64 23.06 15.65 101 314.61 2.56
28 1.44 45.58 65 24.95 15.00 102 321.67 2.51
29 1.49 44.64 66 26.99 14.38 103 328.17 2.46
30 1.55 43.71 67 29.18 13.76 104 334.14 2.41
31 1.63 42.77 68 31.52 13.16 105 339.60 2.37
32 1.72 41.84 69 34.00 12.57 106 344.60 2.34
33 1.83 40.92 70 36.61 12.00 107 349.17 2.30
34 1.95 39.99 71 39.43 11.43 108 353.33 2.27
35 2.09 39.07 72 42.66 10.88 109 357.12 2.24
36 2.25 38.15 73 46.44 10.34

-> iJ J
Strategy #2-3.2: Buy life insurance on a working spouse or a
spouse at home if you have dependent children.

A non-working spouse or one who works part-time can be a full time nurse, chauffeur,
teacher, cook, maid and baby-sitter, which in today's world has tremendous monetary
value. It Is even difficult for a mother to significantly earn more take-home pay than
the cost of clothes, commuting, taxes and child care expenses, especially if there are
two or more children involved. Inexpensive term life insurance on the spouse at home
will provide the financial protection to run the household and raise the kids if the
family were to become a one parent household.

Many families must now have two incomes just to get by, even when there are
dependent children. If the mother, in addition to working, takes care of the household,
there is a need for life insurance protection on her if the husband's income alone
could not cover the cost of child care.

@ Charles J. Givens Organization 1990 R1 Page 2-13


Computing How Much Life Insurance You Need

Strategy #2-3.3: Buy the amount of life insurance that if invested


at 120/0 would replace your current family income.

The purpose of life insurance is to replace lost income if one or both spouses or
parents is no longer living.

Refer to the "Life Insurance Planning Chart" that follows. Locate your approximate
current family income in column A. In column 8, you will find the 100% income figure
required for your family to fund an investment program at 12% per year to pay your
family the amount in column A. Later, I will teach you how to invest with a safe annual
return of 12% and more. If your children are grown, you may reduce the amount of
required insurance coverage in 8 to 50%, of current income as shown in column C.
The less responsibility you have, the less insurance you need.

The chart that follows shows the maximum insurance you will need to produce the
same Income your family now has even if you are gone. Since the right term
insurance is so inexpensive, a plan that replaces your income is a reasonable ~
I

financial goal.

Page 2-14 © Charles J. Givens Organization 1990 R1


, ) J
Life Insurance Planning Chart
First year level premium cost
Approximate amt. Approximate amI. of to frovide insurance for
Invested at 12% insurance that if invested 50 0 0 income replacement
Your Current that would re~lace at 12% would replace Preferred Non-Smoker Male
Income your income 00% 50% of your income

Age 25 Age 35 Age 45 Age 55


(A) (8) (C)

$20,000 170,000 85.000 *115 *155 *270 463

25,000 210,000 105,000 121 161 281 560

30,000 '250,'000 125,000 144 182 325 657

35,000 300,000 150.000 173 208 380 778

40,000 350,000 175.000 202 234 435 899

45,000 375,000 200.000 230 260 490 1020


50,000 420,000 210,000 221 271 512 1069

60,000 500,000 250,000 250 288 513 1125

70,000 600,000 300,000 290 335 605 1340

80,000 675,000 350,000 330 383 698 1555

90,000 750,000 375,000 350 407 744 1663

100,000 850,000 425,000 390 454 837 1878

125,000 1,000,000 500,000 450 525 975 2200

150,000 1,250,000 625,000 550 644 1207 2738

175,000 1,500,000 750,000 650 763 1438 3275

200,000 1,750,000 875,000 750 882 1669 3813

300,000 2,500,000 1,250,000 1050 1238 2363 5425

400,000 3,400,000 1,700,000 1410 1665 3195 7360

500,000 4,200,000 2,100,000 1730 2045 3935 9080

750,000 6,250,000 3,125,000 2550 3019 5832 13488


1,000,000 8,400,000 4,200,000 3410 4040 7820 18110
[* $100,000 ** Female Rates are equal or less}
Strategy #2-3.4: Determine your family income to determine the ~.
)
amount of life insurance you need. '--

Your Income from investments and programs a family would have without personal life
insurance.

1. Total the following investment income that would continue even


after the demise of a spouse.

Income Producing Investments Income Type Yearly Amount


Certificates of Deposit Interest $
Savings Accounts Interest $
Treasury Bills Interest $
Bonds Interest $
Stock Dividends $
Mutual Funds Dividends $
Net Real Estate Income Rents
(after expenses) $
Payments from sale of a business
or real estate Installment Payments $
Other Investment Income $

TOTAL CURRENT INVESTMENT INCOME $._---


(Enter 0 if no current investment income)

_tI'_ _ _ 2. Total the amount of other income your family would have if you or
your spouse were not working.

Income Producing Programs Yearly Amou nt


Social Security $_---
IRA Withdrawals $_---
Retirement Plan Income $._---
Life Insurance Policy Paid By Employer $_---
Spouse's Job Income $_---
Annuities $_---
TOTAL PROGRAM INCOME $.----
(Enter 0 if no current investment income)
_tI'_ _ _ 3. Total your "estate income".
Total Investment Income (From 1) $.----
Total Program Income (From 2) $,----
TOTAL ESTATE INCOME $_---
_t/_ _ _ 4. In determining how much life insurance you need, you will subtract
your total "estate income" from the total income needed in your estate plan.

Page 2-16 © Charles J. Givens Organization 1990 R1


Strategy #2-4: As you get older, replace life insurance with ~
income sources. ~
As you get older, your responsibilities decrease and so does your need for life
Insurance. Your objective is to become self-insured-to build enough wealth that you
have no need for life insurance.

During younger years, ages 20 to 50, couples usually have few assets and have
children living at home, which creates greater financial responsibility. These are the
years when adequate life insurance is most important in substituting for loss of
potential income. As you grow older, your assets begin to substitute for the life
insurance you need. Life insurance is just money, nothing more, and is a substitute
for income that is lost in the event of the death of a spouse or parent. Assets built
over your lifetime that replace or reduce the need for life insurance are:

Certificates of Deposit Savings Accounts


Treasury Bills, Notes, Bonds Bonds
Net real estate income Stock dividends
Mutual Fund Shares Other Investment Income
Spouse's job income Social Security
Job related retirement programs Employer-paid life insurance

The greater your non-job related income, the less life insurance you will need.

-Strategy #2-4.1: Buy enough life insurance to maintain the


-§WI

lifestyle of the spouse with the smaller income.

If one spouse has a much higher income than the other, your strategy changes. If
your income is $100,000 per year and your spouse's income is only $20,000 per year,
your lifestyle is probably far greater than the lower paid spouse could afford alone.
You will want to carry enough life insurance on the higher paid spouse so that if
invested at 12% the income would allow the lower paid spouse to maintain the same
lifestyle. There is no reason to couple the potential loss of a spouse with the potential
loss of a home and investment accounts.

@ Charles J. Givens Organization 1990 R1 Page 2-17


How to Avoid Costly Life Insurance Gimmicks
~.
)
Strategy #2-4.2: Don't buy a whole life insurance policy because
it pays dividends.

Companies that sell life insurance are divided into two groups:

1. stock companies

2. mutual companies

Stock companies are owned by stockholders and are run like any other private
corporation. The stock is normally sold on the major stock exchanges. The profits
these companies earn are returned to the stockholders as dividends.

Mutual companies are technically owned by their policyholders. The objective of these
companies, theoretically, is not to earn a profit, but to provide the lowest-priced
insurance to their policyholders. Therefore, when a mutual company has taken in
more money during the year than it needs for expenses and paying claims, the
company Is supposed to return some of the excess money to policyholders as so
called dividends. The insurance business doesn't work that way. It is important to note
that the insurance companies call the returned money "dividends", but they are not
considered dividends even by the IRS and are not taxed as such. Dividends are
defined by state insurance departments as a return of overcharged premiums.

When a life insurance policy pays dividends it is called participating; when it does not,
It is called non-participating. Participating policies pay dividends periodically. There
are several options open to the insured when the dividends are paid.

1. The dividends can be returned to the insured in cash.

2. The dividends can be applied to future premiums.

3. The dividends may be used to buy so-called paid-up life insurance; however,
the amount of paid-up insurance a dividend can buy is very small.

Most participating policyholders feel they are getting a great life insurance deal
because the company pays dividends. It seems like free money but it is not. Based on

Page 2-18 © Charles J. Givens Organization 1990 R1


research of over 1000 policies from both stock and mutual companies, we found that
r the premiums on the dividend paying policies issued by mutual companies are on the
average higher by the amount of the dividends!

. In other words, the average premiums charged by mutual companies are higher. The
mutual companies charge higher premiums and then pay back what they overcharged
in tile form of dividends while making policy holders feel they are getting free money.
What a schemel

Strategy #2-4.3: Choose the life insurance company, rated A or


above, with the lowest premiums.

There are over 1,000 life insurance companies but only a limited number of different
types of insurance policies. Once you learn the right kind of insurance to buy, the only
two considerations are the rates and the ratings.

Insurance companies are rated by the A.M. Best Company in a book published yearly
for the life Insurance industry insiders called the Best Agents Guide To Life Insurance
Companies. The prime concern is the protection of your cash value over your lifetime
since the obvious question is, "What would happen to my cash value if the company
went bankrupt?"

@ Charles J. Givens Organization 1990 R1 Page 2-19


Strategy #2·4.4: Don't buy double indemnity for accidental death.
Instead, increase the base amount of your policy.

When you buy the double indemnity option twice the face amount of the policy will be
paid to the beneficiary, but only if the insured dies of an accidental death within a
specified period of time after the accident, usually 90 days.

The cost per $1000 for double indemnity is more expensive in some policies than the
base cost per $1000 of annual renewable term insurance. The base cost pays a
death benefit for any type of death not just accidental. Rather than spending money
on double indemnity, increase the base policy to a higher death benefit for all causes.
Example: On a 35-year-old, non-smoking male, the base cost is about $.75 per $1000
of life insurance. Accidental death insurance is around $.90 per $1000. For the same
total premium of $215 covering $100,000 'life' insurance with an additional $100,000
accidental death benefit, you could instead own $220,000 of total life insurance
protection.

In addition, chances of dying accidentally, instead of f,romother causes, are only


about 6 out of 100. Those statistics are how the insurance company beats you with
optional coverages.'

/'

Pag82-20 © Charles' J. Givens Organizatid[1 1990 R1


Strategy #2..4.5: Never buy the disability premium waiver.

The disability premium waiver pays your life insurance premiums if you become totally
disabled. The DPW is a form of expensive credit life insurance, one of the biggest
financial ripoffs.

The cost of disabili'ly premium waiver can cost as much as 12% of the total premium
for a life insurance policy.

DPW is never worth it. You must be totally disabled for six months or more to collect.
After twenty-four months of total disability the definition of disability usually
deteriorates from not being able to perform the duties of your occupation to not being
able to perform the duties of any occupation.

Strategy #2 4.6: Don't buy a life insurance policy because


s

you recognize the company name.

The tendency is often to believe that if you recognize the name of the company such
as Metropolitan, Prudential, or Equitable, somehow the insurance must be better.
Name recognition in the insurance business comes solely from the amount of money
spent on advertising - money that is ultimately charged to policyholders as
premiums. Because of the high overhead, term policies from the old line, recognizable
companies are usually much more expensive than from the companies you may not
recognize. Choose based on lowest rates, not name recognition.

@ Charles J. Givens Organization 1990 R1 Page 2-21


Strategy #2-5: Never buy whole life insurance as an
investment.

There are only two basic types of life insurance policies: life insurance with a savings
plan, and life insurance with no savings plan.

Whole Life Insurance


Whole life is a plan where your money goes into a "hole," never to be seen again.
Whole life has literally cheated millions out of billions since its inception.

Whole life is not an investment at all. Your cash value is really the property of the
insurance company and makes the insurance you are buying overpriced by 600%

Whole life policies usually have level premiums (equal yearly installments) and claim
to build tax-deferred cash value. That claim is a lie. Your beneficiary receives only the
face value of the policy or the cash value, whichever is greater, but not both.

Here is an example of the disappearing cash value:

The Disappearing Cash Value

At age 35, a father buys a whole life insurance policy under the following
terms:
$100,000 Death Benefit (face value)
$1,300 Yearly Premium
$35,400 Cash Value after 20 years

At age 55 he dies.
What he thought his family What his family
would receive actually received

$100,000 Death Benefit $100,000

$35,400 Cash Value $ o


$135,400 TOTAL $100,000

The cash value of $35,400 becomes the property of the insurance company. Whole
life is therefore just a grossly overpriced term insurance policy.

Page 2-22 © Charles J. Givens Organization 1990 R1


Whole Life Insurance
The Disappearing Insurance Value
Another way to expose the whole life ripoff is to look at the policy in terms of the
"disappearing insurance" instead of the "disappearing cash value".

Since the company is responsible for paying only the face value or death benefit of
the policy regardless of cash value upon the death of the insured, the more cash
value you build, the less money the company will have to payout of its own pocket.

To illustrate the point notice that in the following hypothetical whole life policy, as the
cash value grows, the insurance company's liability shrinks.

Your Cash Value Amount Insurance Co. Death Benefit


Would Pay

0 + $100,000 $100,000

$5,000 + $95,000 $100,000


' ..
$20,000 + $80,000 $100,000

$50,000 + $50,000 $100,000

r"' Decreasing term insurance is a policy where the premiums remain constant but the
amount of life insurance decreases as the insured gets older. From Column B, doesn't
It appear as if a whole life policy is just a cleverly disguised, overpriced decreasing
term policy? It isl The insurance company is giving you nothing but insurance, but you
are giving them the free use of your thousands of dollars of cash value.

Recently on a radio show in Oklahoma City, after exposi~g the ills of the whole life
Insurance Industry, I received a call from an ex-whole life sale~.(!1an who related the
following story.

"When I was young and less wise, I became a whole life salesman for a major
Insurance company. My second month I sold a whole life policy to a young couple in
their early 20s with two small children. The premiums were high, but the amount of
insurance was only $20,000 because the majority of the premium went to build the
so-called cash value. Three years later the husband, the insured, died in an
automobile accident leaving fhe kids with no father aOO-the family with no income.

@ Charles J. Givens Organization 1990 R1 Page 2-23


"When the wife turned in the insurance claim she received $20,000 but, of course, not
a dime of the cash value. The money barely covered the funeral arrangements and a
..-
)
few months family expenses.

"I realized," he said, "that had I done what was good for the family instead of what
was good for me and the insurance company, I would have sold the family a term
policy. For the same exact premium, I could have sold the family almost $1,000,000
of life insurance with no artificial savings plan and the wife and children would have
been taken care of financially for the next 20 years or more.

"This experience," he continued, "shook me emotionally so badly that I quit the life
insurance business forever. I honestly felt because of my knowledge and their lack of
it that I had stripped this family of the protection and help they really needed.

Don't make the same mistake. Divide your life insurance from your investments and
use your life insurance dollars to buy the maximum necessary protection for those you
love and need to protect.

Page 2-24 © Charles J. Givens Organization 1990 R1


Strategy #2-5.1: Don't fall fO,r the biggest lies about whole life
insurance.

"You can borrow the cash value at 5% to 8%."


What a benefit I The insurance company is charging you interest on your own money,
which you overpaid in premiums, and then reduces your death benefit by the amount
you borrow.

"Your policy will eventually be paid up."


In reality, a paid-up policy is created only by overpaying your premiums. The
overpayment eventually pays your future premiums. Therefore, all paid-up policies are
just prepaid policies.

"You'll be earning Interest."


Whole life policies pay an average of only 1.3% interest. Worse yet, you never receive
It. The Interest earned is added to your cash value and the cash value, remember,
r-" becomes the property of the insurance company when you die.

"Your Insurance policy Is a tax shelter."


You are told that life insurance enjoys some special tax status. For instance, you can
borrow money from your insurance policy tax-free. You can borrow money from
anywhere tax-free.

You are told that insurance proceeds, at the time of death, are income tax-exempt.
After death, there is no income tax on any part of an estate. Insurance proceeds and
the rest of the estate are subject to estate taxes.

"If you buy life Insurance when you're young, it will cost less."
It is true that yearly premiums are less when you are younger, but only because you
will pay greater total premiums over a longer period of time. The only reason to buy
life insurance when you are young is financial protection for your family, not saving
money.

© Charles J. Givens Organization 1990 R1 Page 2-25


Strategy #2-5.2: Don't buy life insurance to avoid the threat
of being uninsurable in the future.

Because a life insurance policy can be cancelled by the company only for
non-payment of premiums, salesmen often use the threat of future uninsurability to
get you to buy an outrageously priced policy.

The truth is that 97% of all those who apply for life insurance are accepted and only
5% are charged extra because of poor health. All insurance is a bet, and in the case
of insurability the odds are already overwhelmingly on your side. The question of
future insurability is a scare tactic used by salesmen for the purpose of trying to sell
you more insurance at an earlier age.

Page 2-26 © Charles J. Givens Organization 1990 R1


Universal Life Insurance
Universal life is a term insurance policy coupled with an investment plan. The
investment can pay a fixed interest rate or, in some cases, can be self-directed into
mutual funds. The cost of insurance and fees and commissions are deducted from
your premium, and only the balance goes into the investment. Universal life insurance
makes a poor plan for many reasons:

1. You are not paid the 8% to 10% claimed by the company.


2. The fees and commissions are far too high.
3. There is a huge surrender charge if you change your mind.
A 45-year-old man buys a universal life policy combining a $100,000 death benefit
with an investment promising a yearly return of 10% for 20 years. He pays $2,000 in
premiums per year or $167 a month. He is paid the 10% only on the money that goes
into the investment; that is, what is left from the $2,000 premiums after the fees,
commissions, and, of course, the cost of the insurance itself are deducted. In a typical
universal life policy, the first year fees and commissions alone can amount to $600.
He loses 30% of his $2,000 to fees and commissions. Only about $1,100 the first year
goes into the investment and earns 10%.

The actual yearly investment return on most universal life policies is less than 6% for
the first ten years. Each year in a universal life policy, the cost of the insurance
increases, further reducing the amount that goes into the investment, but you never
see It happening because your premium remains the same. The high surrender
charge penalty is the insurance company's method of making it impractical for you to
change your mind and drop the policy. Those companies that charge the least in
front-end fees have the biggest surrender charges.

@ Charles J.. Givens Organization 1990 R1 Page 2-27


Evaluating Universal Life Insurance Plans:
Is There A Good One?
In 1987, the Charles J. Givens Organization studied 200 Universal Life policies with
the following results:

1. The Cost of the Insurance in a Universal Life Plan

In the ideal Universal Life policy, the term insurance yearly premium would
compare to the lowest cost "ART"-Annually Renewable Term. No plan we
evaluated had really competitively priced term insurance.

2. No Front-End Commissions

In the ideal policy, there would be no commission or front-end load on the


amount of the premium going into the investment plan. The commission paid
on the universal life insurance should be no more than the lowest
commissions on a term policy. The lowest commission rates we could 'find
were about 5%, the highest, 30%, and the average about ~1 0%. In all cases
the commission applies to the entire premium, not just the insurance portion.
Those with lowest front-end commissions always have the largest surrender
charges.

3. Surrender Charges

The surrender charge is the money the insurance company keeps out of your
investment should you change your mind and cancel the policy. The ideal
surrender charge is zero, second best would be 5% the first year, declining to
zero after the first five years. The surrender charges are highest during the
first five years and run as much as 30% to 100% of your total cash value.
Often the higher the up-front fees and commissions, the lower the surrender
charges. Many companies have concluded that gouging you just once, either
coming or going, is sufficient. Others get theirs on both ends.

4. Choice of Investments

Other than the cost, the most impo~ant point to consider is where your money
is invested. The ideal plan would give you a choice of no-load mutual funds.
The poorest plan is one that invests your mo.ney at a fixed or fluctuating
interest rate. Some plans do offer mutual funds as an option. As you can
see, current universal life policies fail in all but the choice of investment
category.

Page 2-28 © Charles J. Givens Organization 1990 R1


UNIVERSALLlFE-THEMOSTDECEPTlVE
LlFEINSURANCEPRODUCT
By Deborah S. Fox
AL. Williams Regional VP
Premiums efGJty
Charges
"Cost of Insurance"
People usually buy Universal Life for at least one of two
reasons: 1) Insurance protection to replace the l?sS of a
breadwinner's income, and/or 2) to accumulate sav10gs at a
competitive rate of return. After listening to the sa~es pitch,
Accumulation
Universal Life (UL) appears to be the perfect 10surance
contract. UL allows you to set the premiums, skip an oC-
casional premium payment, stop premium payments al- I UNIVERSAL LIFE
together after a certain number of years, borrow money, and
increase or decrease the face amount of the policy; The only The faucet represents the premium you pay into your policy
thing it doesn't offer is maid ~ervice ~very w~k! I .don't (monthly, quarterly, semi-annually, or annually). The bucket
mean to be so facetious, but UL IS a fox 10 sheep s clotlllng. represents the cash accumulation in the ~avings portion ,of
the policy. The ladle represents the mortality charges the m-
The big problem is the average consumer. is not given the surance company "dips" out of your account to pay for the
information to understand what the poltcy really costs. face amount of insurance you have chosen. Theoretically, the
Those who have purchased UL are stuck with trying to
level of cash accumulation in the bucket should increase as
decipher their contract to find out what they have actually you pay more and more premiums into your policy. Typical-
purchased. The purpose of this article is to enable you to
ly, each year the insurance company will declare the rate of
"decode" the contract. Herben Denenberg, former Insurance return to be credited to your savings,
Commissioner of Pennsylvania, tells of an index that
measures the difficulty to understand a written dOCument. Right now you are undoubtedly wondering, "What's so bad
On a scale of 0 to 100, 0 signifies the most difficult to read, about that?" Contemplate the following: In November 1985,
100 the easiest. The Bible would be rated a 66, Time A.M. Best Insurance Services published a national survey of
magazine 52, The Wall Street Journal 43, a life insurance 125 UL policies to compare the rates of return paid on the
policy 34. cash accumulation on a $100,000 policy for a male non-
smoker age 35. After 10 and 20 years (keep in mind that
In 1979 the Federal Trade Commission published the results interest rates were higher when the survey was conducted),
of a 2-year investigation of the life insurance ind,ustry" "~ur the survey showed that the investment return rates varied
study disclosed that American consumers are 10S1Og billions from 8.5% to 12.25%. The "net effective yield" (premiums
of dollars yearly as a result of ill-informed and inappropriate paid, less the cost of insurance and policy changes) is what
life insurance decisions." The release of the report came
the company would actually be paying if all the wonderful
during a time of rising interest rates on savings and ~nve~t~ company's projections were realized. The number one rate
ment instruments. Consumers began to demand that bfe 10- company quoted a current rate of 10.5%, but after 10 years
surance companies pay the savings portion of their policies a actually pays only 5.19%; after 20 years, 8.02%. The 125th
rate of return comparable to other savings vehicles offered
company was quoting a current rate of 11 %, but after 10
in the marketplace. years shows a negative return of 4.9%; after 20 years, only
The answer was the UL product, introduced in the early 2.36%!
1980's. UL is a mixed up combination of term and whole life How can an insurance company get away with quoting one
insurance, "bundled together" with an investment pIa,n. The so called "current rate" and actually pay a much lower rate?
name, "Universal Life", is generic. Each company· has Its own
This means, in many cases, that the policyholder has a nega-
special product name such as "Target Life", "Appreciable
tive rate of return for the first 5 to 10 policy years. If a
Life", and "Futureplan", UL is merely another version of
federally regulated bank said it pays 10.5% interest, when it
traditional, whole life cash value policies with added bells
really pays less than 4%, it would be violating the federal
and whistles. UL is structured to be complicated so that the
banking regulations.
average consumer (and also the agent who seils it) can't see
what's really taking place. Let's use shopping for a home loan as another analogy. Bank
A says it will loan you the money for 10% and 2 points plus
Let me illustrate exactly how UL works. Your savings ac-
$250. Bank B offers the loan for 10.5% and 1 point. Which
count is called the "cash value", the cost of your insurance
is the better loan? The federal government passed Truth in
protection is called "mortality" or "risk" charges, and the
Lending laws to give the consumer a way to compare ~e
money you pay into the policy is called the "premi~m".
"real" lending rate, that is, the true cost of the loan taking
(Note: There is no direct relationship between ili.e premIums
into account all expenses and fees. This "real" rate is ex-
and the actual mortality charges of a policy. The premiums
pressed as the A.P.R. or Annual Percentage Rate. Each
can be set randomly according to how much money you want
lending institution is required to uniformly express its credit
to spend or how much the agent can '.'lilk out of rout) Each rate in A.P.R., so the consumer can compare "apples to ap-
pictured item represents a component 10 a UL pobcy.
ples" between lenders.
Truth in Life Insurance laws do not exist. In fact, in 1945 the
insurance industry lobbied Congress to pass a special law ex-
empting the industry from federal regulation. The insurance
industry is regulated solely on a state level and is not held
accountable for any projections they make. Most
policyholders are under the impression that the illustrations
presented to them by their agent are included in their in- your policy longer (but remember, the mortality charges are
surance contract. In reality they are not. increasing) .
Universal life (UL) policies have all sorts of hidden expenses The end result of all this is that a policyholder can never
and charges that are not figured into the "current" rates earn the kind of returns the companies are promising. In
quoted by the insurance companies. The current return is fact, policyholders, in some cases, find that the saving por-
just a "gross, not a net return. As quoted in the Wall Street tion of their policies start to decrease after a number of
Journal, February 12, 1986 by Joseph Belth, professor of in- years because the expense and mortality charges exceed the
surance, Indiana University: "The (UL) gross rate is a sales premium shortage. This situation can happen easily if the
gimmick. There is so much attention focussed on it. But it is "current" interest rate is lowered by the company (which is
of very limited value in and of itself." the current trend due to declining interest rates in recent
years) or if the company raises its mortality charges.
Look at the next diagram. Included are hidden expenses and
charges that are generally not explained to the policyholder Let me sum up the disadvantages of universal life.
and only found in the fine print of the policy.
I) UL is a "bundled product" by combining protection and
savings. Therefore, UL is very inflexible because it is

I UNIVERSAL LI~~ l under the control of the insurance company, not the
individual. You can't keep your savings without the
insurance and vice versa. You can't move your savings to
another vehicle if you're dissatisfied with the insurance
Premiums

e
e '. &ortality
Charges
t "Cost of Insurance"
company's performance.

t
2) Typically, UL's mortality charges are high. You can shop
around for pure term insurance and find lower rates for
insurance protection elsewhere.
3) The hidden expenses and charges in UL policies eat
, away at your premiums, which makes it virtually
t
Surrender ,Charges impossible for you to receive any sort of decent,
competitive net return on your money.
4) UL does not qualify as an IRA, which is still a great tax
Do you see all the "leaks" in the system? First, you have a shelter.
leaky faucet. Before any of your premiums are credited to
your account, most companies will deduct "expense" or "ad- How can you beat the life insurance game? Shop for an inex-
ministrative" charges, which may be set as a monthly dollar pensive term policy for your insurance protection (it will
amount or as a percentage of your premiums. Often these save you 30% to 80% of what you're spending now) and in-
charges are highest during the first policy year, thereby leav- vest the difference in premium into alternative investment
ing only a minute portion of your premiums in your cash vehicles not tied to the insurance contract. The bottom line
accumulation account. is if you have any type of whole life cash value policy, it is
not how much money you've lost up to this point, but how
Next, the company deducts the mortality charges. As you get much more money you'll lose by staying in it.
older the cost of insurance increases because you're more
likely to die. The company will "dip" more out of your ac-
count to maintain level insurance coverage.
Finally, after the expense and mortality charges have been
*This article reprinted from August. 1988 and September. 1988
deducted, the leftover premium makes it into the savings issues of the Financial Digest.
portion of the policy. The company will now credit interest,
but only to that leftover portion. If your "current" interest
rate is 9%, you're getting 9%, but 9% on how much? Only
on the premium that has been eroded by expense and mor-
tality charges.
We're not yet fmished. Here is the coup de grace. Up to
now, any real interest you've earned, if any, is strictly on
paper. If you want to use your accumulated savings, try get-
ting your money out. Most universal life policies have sur-
render charges for anywhere from 10 to 20 years. You have a
"leaky bucket" along with everything else. This translates into
the insurance company keeping all or a hefty portion of your
savings should you cash out. (If you don't cash out, you can
borrow your own money by paying interest to the insurance
company for the rest of your life!)
On the average, for 2 years after paying all your premiums,
your cash value will be zero. The surrender charge eats it up.
The company keeps all of your money; you get nothing.
Usually, the surrender charges will decrease as you keep
Single Premium Whole Life Insurance
Single Premium Whole Life insurance is sold primarily as a tax shelter, not as
Insurance. The concept is simple enough-you deposit a single payment of between
$5,000 and $500,000 into a plan that combines a whole life policy with an investment.
You are supposedly able to accumulate earnings over the years, which can then be
borrowed with no taxes, to be used as your income during retirement. There are six
major drawbacks.

1. You are buying the worst value in life insurance-whole life.

2. You must buy insurance to qualify for the investment, so less than 100% of
your money is invested.

3. There are either heavy front-end commissions and fees, big surrender
charges that reduce the investment benefit, or you receive 8% to 10% per
year on an investment that should pay you 12% to 15%, based on the return
the insurance company is getting on your money.

4. A bill is pending in Congress already that would tax withdrawals as income.


Congress could impose the rules on policies already in force.

5. There is a better tax-sheltered investment, often available from the same


insurance companies, called an annuity. The annuity earnings are
compounded tax-free as long as the money is left invested. The best
tax-sheltered annuities are those that offer mutual funds as investments.

6. You are told the major benefit is that you may borrow money tax free from
your policy. The truth is you may borrow money from anywhere tax free.

© Charles J. Givens Organization 1990 R1 Page 2-31


Strategy #2-6: Buy only term life insurance and devote t h e .
rest of your financial plan to prosperous living.

Term insurance is pure insurance protection, no bells, whistles, fancy packaging or


investments to buy. The premiums per $1000 of insurance are therefore the lowest of
any form of life insurance. If the insured dies within a given period of time, the
company pays the agreed upon sum of money to his/her beneficiary. Once a term
policy is purchased future insurability is guaranteed up to age 70 or 90 or even 100
depending on the company that issues the policy.

You can look at term life insurance as if the insured bet the premiums paid on his/her
policy for the possibility of collecting the amount of insurance over some period of
time. If the insured dies, he or she wins the bet, so to speak and the heirs collect the
face value of the policy. If the insured lives, the insurance company wins by collecting
premiums without paying off. Obviously life insurance is one bet you always hope to
lose.

As each of the terms for the insurance comes to an end, the insured will discover that
the cost of the insurance for the next term will increase. Why? Because the insured is
getting older. The mortality table on Page 3-8 demonstrates an ever-increasing
number of deaths per 1000 as the sample population moves upward from age 0 to
100. Since the risk of death is greater, the cost of the insurance is greater.

Term is the least expensive life insurance, often 70% to 80% less than the
insurance-plus-investment policies like whole life and universal life. Term insurance
pays salesmen far less in commissions and, therefore, is seldom offered if you don't
insist. Because insurance policies make poor investments, term insurance is the life
insurance choice of all knowledgeable insurance buyers.

Although most people falsely believe that term insurance cannot be bought as you get
older; the truth is, that both annual renewable term and level term guarantee your
insurability to age 90 and with some companies, to age 100.

Page 2-32 © Charles J. Givens Organization 1990 R1


Strategy #2-7 Choose the right kind of term insurance for
your situation-annual renewable term or
level premium term.

There are three different types of term insurance you should understand.

1. Annually Renewable Term (ART)


You buy a policy for one year at the end of which time you receive a renewal
notice for the next year's premium. The younger you are the lower the rates
begin, increasing each year by a few dollars. ART is the least expensive and
the best value of the three types of term insurance if your need for insurance
is short term. The insurance is guaranteed renewable every year as long as
you pay your premium. As you get older, your life expectancy decreases so
the yearly premium increases.

2. Decreasing Term
With decreasing term, your yearly premiums remain the same, but the amount
of insurance decreases each year. Decreasing term is used for both mortgage
insurance and credit life insurance and is usually overpriced by 400% or more
when used for those purposes. Decreasing term has little value in most
circumstances other than making insurance companies a little wealthier.

3. level Premium Term (LPT)


You choose a policy period, five, ten, fifteen, or twenty years. Both your
premium and the amount of the insurance remain constant over the entire
period. The longer the term chosen, the higher the yearly premiums. The
advantage of a good level term policy is that your premiums remain constant
each year-no increase. The disadvantage is that your level term premiums
are higher in the first few years than the premiums on an annual renewable
term policy. If you are struggling financially, you may need the lower ART
payments, but Level Premium Term insurance with its fixed premium
guarantees that the rate won't change during the policy period.

in the last couple of years new Level Premium Term policies have been
created that make level Premium Term the best overall financial bargain.

@ Charles J. Givens Organization 1990 R1 Page 2-33


There are at least three unique circumstances in which level term rates will always be
lower than annual renewable term. ;r--...
)

Age Group

1. The yearly rates in your age group for level term are lower over a 5 to 10
year period than equivalent rates for annual renewable term (ART).

Over 50

2. If you are over 50 and believe that you will have a need for life insurance for
at least 10 years. After age 53 the annual increase in ART premiums
becomes far greater than in prior years, making level term a better choice.

Medical Condition

3. You have a pre-existing medical or weight problem or your blood and/or


urine samples indicate high levels of cholesterol, triglycerides, nicotine,
caffeine, or alcohol. These factors may reduce life expectancy, causing
additional premiums to be charged. Level term will have lower average
annual premiums.

Page 2-34· © Charles J. Givens Organization 1990 R1


Strategy #2 8: a Buy annually renewable term (ART) insurance
if you have a short-term need for insurance ~,
coverage. ~

If you need a life insurance policy less than 5 years, such as life insurance required to
obtain a personal or business loan, annually renewable term (ART) may be your best
bet. ART rates are often best for 1 to 5 year periods when the absolute least price is
the main consideration.

Many insurance companies offer the first three years of ART insurance at an
exceptionally low rate, believing that once you buy, they've got you and you won't
notice the exceptionally higher premiums you'll pay in the future. You can use these
early year low rates to your advantage when your need for extra coverage is short
term.

Strategy #2-9: " Buy annually renewable term (ART) if-you ,are
'za s'maker or areoverwe,j,ght, but intend to ~
~
change your habits.

Another reason to buy ART instead of level term is that you are either a smoker or
overweight but intend to change these habits in the next three years. Rates for those
who are overweight or who smoke are much higher for both annually renewable term
and level premium term pOlicies. You can profit from short term ART insurance now
and then qualify for low non-smoker or better health rates in a few years.

"

@ Charles J. Givens Organization 1990 R1 Page 2-35


Strategy #2-10: Call the Life Insurance Clearinghouse to
get the best value on life insurance.

Now you're ready to make your move; to straighten out your lifetime life insurance
plan. Here. is how:

1. Determine the amount of term life insurance you need using Strategy #2-9.

2. Refer to the Life Insurance Planning Chart to determine the approximate


cost with the lowest premiums for a person your age. The charts show the
first year premiums for level term. coverage.

3. Call the Life Insurance Clearinghouse at 1-800-522-2827 [in the Orlando


area, dial (407) 896-0409]. The Life Insurance Clearinghouse is an
organization I have personally set up with Buddy Hewell, the Charles J.
Givens Organization's insurance consultant, to help you buy the least
expensive life insurance without having to listen to misleading insurance
sales pitches. Buddy and/or Jo Hewell, the directors of the Life Insurance
Clearinghouse, are registered and licensed to do business in all states· and
they will find you the best policy at the best rates. There 1s no charge for this
service for readers of this manual.

Life Insu ranee Cleari ng house


1-800-522-2827

*The Life Insurance Clearinghouse is subcontracted with a licensed resident agent in


South CarOlina, Hawaii, and Wyoming.

/'

Page 2-36 © Charles J. Givens Organization 1990 R1


Call The Insurance Clearinghouse To Accomplish The Following:
1. To receive the best term rates out of over 1,000 insurance companies.

2. To buy the least expensive term insurance for a person your age.

3. To receive help in determining how much insurance you need.

4. To receive help converting your existing insurance to inexpensive insurance.

5. To move your cash value.

1-800-522-2827
In the Orlando ares, dial (407) 896-0409
This service is FREE to you as a member of the Charles J. Givens Organization.

The Insurance Clearinghouse was created to benefit the members of the Charles J.
Givens Organization, and is a joint project of the Givens Organization and ATAP
Financial Services.

@ Charles J. Givens Organization 1990 R1 Page 2-37


Instructions For Using Your Life Insurance Clearinghouse

The Life Insurance Clearinghouse will provide you with the most current and best life
insurance rates available. With their data base of over 1,000 insurance companies,
research is on-going and you can always be assured of getting the best policy
possible.

PREFERRED RATES: All rates quoted will initially be preferred rates. Preferred rates
apply to healthy, low risk profile individuals. These are people who have no personal
history of high blood pressure, diabetes, cancer, no personal or family history of
coronary artery disease, are non-smokers who are not overweight, and have a
cholesterol level of less than 230. Since 90% of the applicants using the
Clearinghouse fit the preferred category, this is the rate quoted. Don't be
disappointed if you don't fit in this category, you will still get the best rate possible for
a person in your general condition.

STANDARD RATES: People who do not qualify for preferred rates will pay a standard
rate which is a bit higher than the preferred rates, but still is the best standard rate
available. Standard rates are normally about 25% higher than preferred rates.
Occasionally, in the case of pre-existing health problems, a person is individually
rated based on the degree of risk involved. You will always be notified in advance if
your condition requires a special rate and will be placed with the company who offers
the best rate under these conditions.

SMOKER OR NON-SMOKER: Another factor affecting rates is whether. you smoke ..


To be classified as a non-smoker you must NOT have smoked or used any tobacco
products within the last 12 month period - no exceptions. The new technology for
detecting nicotine in the body is so advanced, that if you smoke or chew tobacco
even only once or twice during the year it will become apparent in your blood and/or
urine test. There is no honor system here, the insurance company checks. So, answer
the question on the application honestly or you may be rejected by a company that
would have written a policy at good rates for smokers.

Page 2-38 © Charles J. Givens Organization 1990 R1


The Life Insurance Clearinghouse has discovered some companies which provide
rates far more favorable to smokers than other companies.

All rates quoted are annual rates in order to keep premiums low as possible. If you
request a monthly, quarterly, or semi-annual payment mode, you increase your
premium base. Each time an insurance company must handle paperwork or
payments, the premiums go up. Therefore, annual payments save you money. Your
premiums will be low enough for the amount of insurance you request that one annual
money-saving premium should be easy to make.

DOITNOW
Complete the Request for Quotation form on the following page and mail it to the Life
Insurance Clearinghouse to secure the best current quote available based upon data
specific to your situation. The right to use the Clearinghouse at no charge is part of
your membership benefits.

The Life Insurance Clearinghouse is an affiliate of the Charles J. Givens Organization.

© Charles J. Givens Organization 1990 R1 Page 2-39


REQUEST FOR QUOTATION
THE LIFE INSURANCE CLEARINGHOUSE
2203 East Hillcrest Street, Orlando, Florida 32803
Telephone: 1-800-522-2827
Date
Name ___________________________________________________

Clty___________________ State _ _ _ _ _ _ _ Zip Code _ _ __

Birth date Sex (M) _ (F)_


Nearest Last (DO NOT complete this)
Have you smoked or used ANY tobacco products in the past 12 months?
Yes No If yes, specify: Cigarettes __ Cigars __
Pipe __ Chewing Tobacco __

HEALTH: (Answer YES or NO) Do you have or have you ever had:
Coronary Disease ____ Diabetes _____ Cancer _ __

High Blood Pressure _ _ _ High Cholesterol _ _ _Height ___ Weight __


Amount of Insurance _ _ _ _ _ _ _ __

SPOUSE AND/OR FRIEND


Name Of Spouse (if also to be insured) ____________________________

Birth date _ _ _ _ _ _ _ _ Sex (M) __ (F) __


Nearest Last _ _ _ _ _ _ _ _ _ (DO NOT complete this)

Have you smoked or used ANY tobacco products in the past 12 months?

Yes No _ _ _ If yes, specify: Cigarettes __ Cigars __


Pipe __ Chewing Tobacco __

HEALTH: (Answer YES or NO) Do you have or have had:


Coronary Disease ____ Diabetes ______ Cancer _ __
High Blood Pressure _ _ _ High Cholesterol _ _ _ Height _ _ Weight ___
Amount Of Insurance _ _ _ _ _ _ __
Phone:(H). _ _ _ _ _ _ __ (W) _ _ _ _ _ _ __
FOR CLEARINGHOUSE USE ONLY
Quote(s) Mailed _ _ _ _ _ __ Applications(s) Mailed _ _ _ _ _ __
(1) Company _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Amt. _ _ _ __
Company Amt. ________
(2) Company Amt. _ _ _ __
Company Amt. ______

Page 2-40 @ Charles J. Givens Organization 1990 R1


The Ufe Insurance Clearinghouse

Action To Take Immediately After You Receive Your Quotes

Review the quote which you will receive from the Life Insurance Clearinghouse and
read all the accompanying material. You will then have a clear understanding of the
type of plan, the insurance company with the best rates for you and the A.M. Best
rating for the company. A.M. Best is a service that rates the stability of insurance
companies. Any rates quoted by the Clearinghouse will have a best rating of A or
better. The application along with the quote should be completed and mailed within 14
days to lock in the rate.

POLICY ISSUE TIME - The usual time is 6 - 8 weeks if there are no delays in
getting all necessary information.

BINDING RECEIPT - Your insurance will be in effect with most companies upon
~ completion of all medical requirements. Always include a check with the application.
When the Insurance Company accepts and deposits your check, and if you have
answered all questions truthfully, your policy will be issued in the rate class for which
you applied.

Completing The Application

The life Insurance Clearinghouse will choose the company that is best for you. The
Life ~nsurance Clearinghouse will give you specific written instructions for completing
the particular application you will receive. Here are some factors to consider as you
complete your application.

Keep in mind that your application becomes part of your Insurance Policy. USE
BLACK INK so it will copy clearly.

Do not use correction fluid to correct mistakes, most companies will not accept
applications with correction fluid. If you make a mistake, draw a single line through the
error and initial it.

@ Charles J. Givens Organization 1990 R1 Page 2-41


Applications are divided into specific sections. Here is what to consider in each
section. ,..--.
.1

I. Proposed Insured
This section of the application is intended to gather personal information such
as Name, Address, Sex, Birthday, Birthplace (give state only), Social Security
Number, Occupation or Duties, and Employer of the person who's life will be
insured. Always provide COMPLETE and SPECIFIC information.

II. Other Insured Or Owner

Most applications will have this section. DO NOT COMPLETE THIS SECTION.
The rates quoted to you do not include premiums for riders. Designating an
OWNER other than the insured is necessary only if the insurance is for
business reasons. If you do designate an OWNER, the owner must sign as the
owner/applicant, in addition to the insured signing. When an OWNER is
designated, the insured no longer has control of the policy.

III. Beneficiary Designation

Insurance companies require that the beneficiary have an INSURABLE interest


in your estate. A simple definition of an insurable interest is a person who
would suffer a financial loss upon the death of the insured, i.e., a spouse,
children or someone to whom you owe a legal debt. However, after a life
insurance policy is issued, you may select almost any beneficiary of your
choice. Generally, mothers, fathers, grandparents, aunts, uncles, nieces,
nephews, cousins, sisters, brothers, and FRIENDS do not have an insurable
interest. This problem may be handled be designating the "Estate of The
Insured," as the Beneficiary, and letting the Insured's Will dictate the terms. A
Trust may also be indicated as a primary beneficiary.

If a Trust or Estate of the insured is named as the primary beneficiary, there is


no need to designate a contingent beneficiary.

A Contingent Beneficiary is the individual whom you would wish to have the
proceeds of the policy in the event that the insured and the primary beneficiary ""

Page 2-42 © Charles J. Givens Organization 1990 R1


die together, an event most likely to occur with a husband and wife. Therefore,
to avoid confusion and litigation, a contingent beneficiary should be indicated.
Children of the insured sharing equally is the most often contingent beneficiary
designated. Be aware that the children will not receive the proceeds until they
reach the age of majority in your particular state. Therefore, caution needs to
be taken when minor children are involved. Again, a Will or Trust is the best
way for the insured to dictate how the proceeds of the policy are to be
distributed.

IV. Life Insurance In Force


This section of the application refers to your current life insurance coverage in
force. Most forms ask for the name of the insurance company, the amount of
coverage, the year the policy was issued, whether the policy has a waiver of
premium or an Accidental Death Benefit provision. Each state has regulations
regarding the replacing insurance coverage. If you indicate on your application
the intention to replace your coverage, replacement forms must be sent to you
for completion, an unnecessary hassle.

Since you must qualify for the amount of the coverage you request, and will not
know until the underwriting process is over whether you can actually secure the
coverage requested, it seems presumptuous to make a decision in advance on
whether or not you will replace your current policy.

My recommendation is that you not make any decision on dropping coverage


until you know that you can secure other coverage. Therefore, your family and
assets are protected at all times. In order to expedite the processing of your
application and eliminate extra paper work, answer any replacement questions
"NO."

V. Medical Information Section

This section of the application is designed to gather your medical records in


order to determine if you are healthy, and therefore a good risk. Honesty is
always the best policy, since insurance companies probably already have

© Charles J. Givens Organization 1990 R1 Page 2-43


medical information on you through the MIB (Medical Information Bureau). If
the underwriter discovers any discrepancies in the information provided, issuing
the policy will get delayed or the coverage may be declined and this
information would then become part of the computer file insurance companies
share.

VI. Special Risk Section


This section of the application is designed to determine if you participate in any
hazardous type of activity which would place you in a position of being at
greater risk of death than people who do not participate in such activities.
These activities include: hang gliding, scuba diving, race car driving and
non-commercial flying.

VII. Signature of Proposed Insured


This is one of the most important parts of the application, as signatures are
necessary to constitute a legal contract. Some applications require a signature
in 2 or 3 places. Make sure you sign in all correct spaces. Check again.

Each application has a space for a witness to the proposed insured's signature.
Life insurance companies prefer that the spouse and/or the primary beneficiary
witness the signature of the proposed insured. If the witness cannot be either
of these, it is a good idea to have the relationship of the witness to the
proposed insured written below the witness' signature. Example: Mary Doe,
daughter of the insured.

VIII. Supplemental Forms


State regulation of the insurance industry is becoming more and more complex
and because of human rights states now regulate anything which could be
construed as discrimination. The insurance companies comply with state
regulations by requiring various supplemental forms to be signed by the
insured. The most common supplemental forms are the blood consent form
and the authorization to obtain and disclose information forms. All these forms
constitute part of the required policy issuing process and must be in your file in

Page 2-44 © Charles J. Givens Organization 1990 R1


case an insurance company gets an audit by the State Insurance Department.
Grin and bear it. Just sign the forms.

Mall Your Application Directly To The Life Insurance Clearinghouse

You can not SAVE money or time by mailing your application directly to the
insurance company. This will delay your application and protection for 2-3
weeks while the insurance company determines the Agency responsible for the
application and returns it to the Clearinghouse for signatures and processing.

The Clearinghouse underwriter makes sure your application is completed


correctly. Your medicals are also ordered by the Clearinghouse, not the
insurance company.

@ Charles J. Givens Organization 1990 R1 Page 2-45


Understanding The Underwriting Process
Each individual who makes out an application for Life insurance coverage goes
through a qualifying process called underwriting. The person at the insurance
company who processes and accepts or rejects applications for life insurance
coverage is called the underwriter.

Qualifying in part is based upon the total amount of Life insurance in force, plus the
amount requested in the new application. Example: You have a current policy for
$250,000 and make application for another $250,000, the underwriting of your new
application will be based upon $500,000 coverage.

During the underwriting process several other factors are also considered which
include:

1. Medical Information:

The insurance company gathers your medical history from several sources.
Most companies require that a medical examination be conducted by a
Para-Med Organization. These medicals will include a mlood profile, urinalysis
and a Para-Med (an abbreviated examination by a medical technician), all done
at no cost to you. The para-med organization will contact you to make an
appointment which can be done at your home or office. Set up your
appointment as quickly as possible to avoid delays. The medical exam takes
only a few minutes. Additionally, the insurance company will use the Medical
Information Bureau (MIB) to gather additional medical information about you.
The MIB is a non-profit membership organization of Life Insurance companies,
that operates an information exchange on behalf of its members and keeps a
medical history on just about everyone who has ever purchased life insurance.
The answers to medical questions on your application are often checked
against MIS records to see if you are telling the truth or forgot to mention
anything material.

You can find out what is in your file if you wish!

Page 2·46 © Charles J. Givens Organization 1990 R1


Upon receipt of a written request from you, the Bureau will disclose any
information it may have in your file to your personal physician for your review. If
you question the accuracy of information in the Bureau's file, you may seek
correction in accordance .with the procedures set forth in the Federal Fair Credit
Reporting Act. The address of the Bureau's information office is: Post Office
Box 105, Essex Station, Boston Massachusetts 02112.

2. Ilnspectlon Report:

Generally, an inspection report is only required on larger amounts of coverage


- $300,000 or more. This investigative consumer report is information
compiled through personal interviews with neighbors, friends or others with
whom you are acquainted. The inquiry includes information as to your
character, general reputation, personal characteristics and mode of living. This
report usually is handled through Equifax Services.

Occasionally you may be contacted directly by the insurance company by telephone.


Be honest, but cautious in answering any type of personal questions via telephone.
~ Some people have been known to give information actually detrimental to their own
case. Especially, be wary of questions relating to the replacement of Life Insurance
coverage.

3. Financial Justification:

There must be financial justification for any amount of Life insurance you are
securing. The larger the amount, the more rigorous the qualifying process.
Most life insurance companies will require a simple financial statement if the
amount is $500,000 or more. A rule of thumb for determining the amount of
coverage you may request is to multiply 10 times your annual income. Amounts
of insurance within this range are acceptable. Other criteria such as business
obligations and/or debt liabilities may be used to increase the maximum
amount of insurance coverage for which you qualify.

@ Charles J. Givens Organization 1990 R1 Page 2-47


Policy Delivery

After all the underwriting requirements have been met and the company has approved
your application, the Life Insurance Clearinghouse will receive your policy so it can be
checked for accuracy. The policy will then be promptly mailed to you.

Upon delivery there may occasionally be some additional forms to be completed and
returned to the Clearinghouse. They can include a policy delivery receipt (larger
policies), an amendment to the policy, a short form health certificate, or the collection
of money on larger policies where a binding receipt could not be given. Return these
forms quickly since your policy will not be in force until all delivery requirements are
complete.

Page 2-48 © Charles J. Givens Organization 1990 R1


How To Cancel Ufe Insurance Policies

Strategy #2-11 : Replace your existing whole life and


universal life insurance policies with term
insurance.

There are no valid financial reasons for buying or keeping whole life or universal life
policies at any age. You are always better off with term insurance and investing the
difference yourself. If your health has deteriorated and you are no longer insurable,
you should keep your existing policy. Otherwise,drop the whole life and universal life
and replace with term, reinvesting your cash value in tax-sheltered annuities.

Get together all existing life insurance policies you own, including those on children.
First, buy the right amount of the right kind of term insurance you determined earlier.
Second, cancel your existing whole life and universal life policies using the strategies
that follow. Third, move your cash value to a tax shelter such as annuities.

As part of your membership you can get help replacing old policies and moving cash
r-'" values into tax shelters by calling the Life Insurance Clearinghouse at 1-800-522-2827.

© Charles J. Givens Organization 1990 R1 Page 2-49


Worksheet for Cancelling and Liquidating a Life Insurance Policy

Strategy #2-12: Stop paying premiums to cancel a life


insurance policy.

1. Stop paying premiums. If you have automatic deduction premium through your
checking account, you should send a letter to your financial institution revoking
the authorization and request that they do not honor any future drafts.

2. After 30 or 31 days the policy will lapse. Some life insurance policies, however,
contain an automatic provision to convert the cash value in the policy to a
reduced paid-up life insurance policy. The provision gives the company the right
to borrow enough money from the cash value to pay the premium necessary to
keep the policy in benefit. In addition, the company charges interest on each
loan and makes a new loan to pay the interest until all of the cash value has
been used. Because of these life insurance privileges, you must act to liquidate
your life insurance policy.

3. Check here if your bank account is currently charged directly for


life insurance premiums. Go to the next step whenever you wish to cancel the
policy.

4. Use the blank form letters on the next 2 pages to stop an insurance company from continuin!
to charge your checking or savings account for premiums on a policy you wish
to cancel. An example letter is below.

TO: Florida National Bank


1230 Orange Avenue
Orlando, Florida 32789

RE: Metropolitan Insurance Co., Policy #3245678

DATE: July 26, 1989

ACCT. #: 456187-98

Effective Immediately, I am revoking my authorization for the above named insurance company to
directly charge my account for premiums.

James Dunstan
4765 Jamestown
Altamonte Springs, Florida 32714

Page 2-50 © Charles J. Givens Organization 1990 R1


TO:

RE:
DATE:

ACCT. #:

Effective Immediately. I am revoking my authorization for the above named insurance company to
directly charge my account for premiums.

@ Charles J. Givens Organization 1990 R1 Page 2-51


TO:

RE:

DATE:

ACCT. #:

Effective Immediately, I am revoking my authorization for the above named insurance company to
directly charge my account for premiums.

Page 2-52 © Charles J. Givens Organization 1990 R1


Worksheet for Preventing Automatic Conversion
.~
( -Strategy #2-13: Remove your cash value during the 30-day
grace period fo stop the automatic
conversion into a paid-up policy.

Follow these steps to liquidate most life insurance policies:

1. For your records, photocopy:

a. the declaration sheet

b. cash value tables and surrender values

c. the application

d. store copies in your safe or safety deposit box.

2. Write, print, or type a simple letter or memo of instructions to the home office
with your name, Social Security number, policy number, and a request for
the total cash surrender value to be mailed to you immediately upon receipt.

3. Sign the letter or memo exactly as it is on the policy application. If the


beneficiary is an adult have them sign the letter also.

4. Photocopy the letter and store it in a file with other photocopies.

5. Enclose your original policy with your letter. Direct the correspondence to:
The Home Office, Attention: Policyholders Service Department. Mail "return
receipt requested".

6. Place the post office receipt in your file. When the dated and signed receipt
is returned to you, put it in your file also.

7. You should have your check within 7-10 working days after the signed
receipt is returned to you. If there is a discrepancy between the amount you
receive and the amount from your surrender value calculations, you must
contact the company.

8. If you have any problems when you call, use the insurance company's 800
number or call collect. Write down the name of every person you talk with.
Start by asking for the president.

9. If you are unable to get satisfaction, file a complaint against the insurance
company with your state insurance department.

@ Charles J. Givens Organization 1990.R1 Page 2-53


Strategy #2-14: Use the life insurance-to-annuity rollover
rules to tax: protect your existing life
insurance cash values.

When you drop a whole life or universal life policy, you are subject to taxes on the
earnings but not on your principal. If you have a significant amount of earnings or
taxable cash value, roll the money into a tax-free annuity with the same company if
possible. The tax laws allow the tax-free rollover. Your cash value is now yours and is
tax protected. The best annuities are those that offer mutual funds as investments.

Strategy #2-15: Borrow and reinvest your life insurance


cash value.

A second alternative, if your health makes you uninsurable, is to borrow the cash
value of your policy at 5% to 8% interest and reinvest at 20% using investment
strategies in the Investment section, Section IV. Borrowing your cash value is also a
tax-free transaction.

Under the new tax laws, interest paid on borrowed insurance money is deductible if
the money is used as investment capital. Investing the borrowed cash value makes
the interest tax deductible.

Page 2-54 © Charles J. Givens Organization 1990 R1


Strategy #2 16: a Don't give life ~nsurance proceeds to your
heirs in ~ lump sum,

Write your will so that life insurance money is invested according to your instructions,
and not given to family members in a lump sum. Only then can you be certain that the
money will last until the kids are grown and your spouse is provided for. After the kids
are grown, you can have the principal split among your family members. In eight out
of ten cases studied, lump sum insurance proceeds left to families were totally gone
in one to five years through unintentional mismanagement or poor financial advice.

!f5jWI: -, 1+ \71' *£+t JFi [

Strategy #2-16.1 : Set up your will to distribute only the income


from Bnvested me insurance proceeds.

Have your will written so that life insurance proceeds are invested according to your
Instructions, using strategies like Money Movement in mutual funds, and not given to
family members in a lump sum. Only then can you be certain that the money will last
until the kids are grown and your spouse is provided for. After the kids are grown, you
can have the principal split among your family members.

*
Strategy #2 .. 16.2: To avoid probate~ make the proceeds of your
life insurance payable to a named beneficiary,
net to your estate.

Since life insurance proceeds are not taxable under the personal income tax laws,
many individuals mistakenly believe that the proceeds are also exempt from the
federal estate tax. The proceeds of life insurance are not subject to probate as long
as there is a named beneficiary. They are still, however, included in the total of your
estate and may be subject to estate taxes.

@ Charles J. Givens Organization 1990 R1 Page 2-55


Part 2 - Casualty Insurance

© Charles J. Givens Organization 1990 R1


Auto insurance laws were enacted to protect innocent victims of accidents from
r serious financial loss. Most states require that registered car owners have insurance.
Automobile insurance is one of your biggest expenses, yet you'll find you can cut
your premiums 30% to 50% with these strategies. There are eight different
automobile coverages you must understand.

Liability Coverage
The liability portion of your policy covers your legal liability for damage you do to
other people or to their property. There are three types of liability cov~r?ge available
on your policy.

1. lBodily Injury Liability

Covers injury to people in other cars, pedestrians, and passengers in the policy-
holder's car. The policyholder and family members are also covered while driving
someone else's car, including rental cars. Bodily injury liability covers legal defense
and any damages up to the limits stated in the policy, whether determined by
negotiation or by a jury. There are two limits you choose on a policy; the maximum
r the insurance company will pay each person injured and the maximum the company
will pay per accident. Most states require that you carry at least $10,000/$20,000
limits, meaning $10,000 per person and $20,000 per accident.

Strategy #2-17: Carry enough bodily injury liability to cover ___


your net assets plus all potential legal fees. @
How much liability protection should you carry? Enough per person to cover the net
value of your assets, plus an extra one-third for attorney's fees. If you rent your
home and are living paycheck-to-paycheck with few assets, the minimum protection
is probably enough. If you have $100,000 equity in your home, $50,000 of personal
assets and money in retirement plans, you will want to carry $250,000/$500,000 or
even up to $1,000,000.

r
© Charles J. Givens Organization 1990 R 1 Page 2-57
2. Property Damage Liability
Property damage liability covers damage to someone else's car or property caused
by the policyholder's car. Family members, and others driving with permission are
also covered. Limits should be at least $50,000 because of the current high cost of
automobiles and the possibility of multiple car damage. The limit applies per
accident.

Strategy #2-18: Carry a minimum of $50,000 property damage >


"'~"
liability coverage, or a maximum of $100,000. ~

3. Umbrella liability

Strategy #2-19: Buy $1,000,000 of umbrella liability coverage >


for under $150 per year. ~~
~
Instead of raising the limits on both automobile and homeowners' policies and
paying double premiums, you can buy an inexpensive IISupplemental Umbrella
Liability Policy" that covers all personal liabilities. You can buy $1,000,000 of
protection with an umbrella policy for only $100 to $150 per year. You must ask for
umbrella liability insurance by name. Since the commissions are so small, your
insurance agent may neglect to mention it.

Before selling you the umbrella liability supplement, most companies require you to: .

1. Carry a minimum required limit on your homeowners' and automobile


policies, usually $100,000/$300,000.
2. Place both your automobile and homeowner's policy with the company.

Page 2-58 © Charles J. Givens Organization 1990 R1


Comprehensive And Collision Insu.rance

4. Comprehensive

Comprehensive insurance pays for losses due to theft, damage from fire, glass
breakage, falling objects, explosions, etc. The deductible ranges from $50 to $500.
Ordinarily banks and finance companies require you to buy collision and
comprehensive before approving you for a car loan.

5. Collision
Collision insurance covers damage to your car in the event of a collision with
another vehicle or object no matter who is at fault. Your insurance company will
seek reimbursement from the other driver's insurer if the policyholder is not at fault,
and then reimburse the policyholder for the deductible. Deductibles usually range
from $100 to $1,000. Collision is expensive. It typically represents about 33% of your
total premium.

Strategy #2-20: When value of your car drops below $1,500,


drop the collision and comprehensive
c......
"'~("T-,
\::::...~)
coverage.
.....c::;,

If your car is damaged, you can't collect more than the car is worth no matter how
much in premiums you've been paying. When your car is older and not worth much,
it no longer pays to carry comprehensive and collision coverage at all. Thieves don't
tend to steal old cars; the penalty is no greater for stealing a new car.

© Charles J. Givens Organization 1990 R1 Page 2-59


Strategy #2-21: Drop duplicate coverages like Medical
Payments, No-fault (PIP) Insurance, and
Uninsured Motorists Coverage (UMC).

6. Medical Payments
Medical Payments coverage pays for medical expenses caused by a car accident to
your family members, or another person riding in your automobile. You and family
members are already covered under your hospitalization policy, and others riding in
your car are covered by the liability portion of your policy or by their own
hospitalization policy. Typical premiums for this coverage are $40 per year for
$5,000 of insurance. You cannot collect twice for the same medical expenses, so if
you have hospitalization insurance, medical payments coverage is a complete waste
o.f your money.

7. No-Fault Insurance (Personal Injury Protection)


No-Fault insurance is based on state laws that are supposed to lower the cost of
automobile insurance by allowing an injured party to collect without litigation.
No-Fault Laws allow you to recover losses from your own insurance company even
if someone else is at fault, but require you to give up your right to sue. These laws
vary by state, but the common features include:

• reimbursement for medical expenses,


• reimbursement for lost income,
• compensation for death, permanent injury or disfigurement, and
• reimbursement for property damage.
No-Fault is more duplicate or unnecessary coverage, and should not be taken
unless required by state law. Medical expenses are covered under your
hospitalization plan, and property damage is covered under the collision portion of
your policy.

Page 2-60 © Charles J. Givens Organization 1990 R1


8. Uninsured Motorists Coverage (UMC)

If you take the UMC, you and your family members are covered by your own
insurance company for bodily injury caused by an uninsured motorist or hit-and-run
driver. UMC also pays if your medical bills are in excess of the other driver's liability
limits.

Notice that the liability portion of your insurance policy covers only injury you do to
others; the uninsured motorists coverage is for injury others do to you. UMC is just a
high-priced combination life insurance and hospitalization policy and thus is a
complete waste of money. If you have other hospitalization and medical coverage,
you cannot collect the medical benefits twice even though you paid both premiums.

Here is a section from a State Farm policy:

"No Duplication of Benefits - no insured shall recover twice for the same
expense or loss under this or similar vehicle insurance or self insurance."

© Charles J. Givens Organization 1990 R1 Page 2-61


Strategies For Insurance Oeductibles

Strategy #2-22: Raise the deductibles on your automobile


arid homeowner's policy to $500 or more.

The deductible is the amount you agree to pay before the insurance company has
to kick in. Most policyholders opt for the lowest possible deductible - usually
$100-on automobile comprehensive and collision coverage, and the same on
homeowner's policies. Lower deductibles may make you feel good, but they do you
no good. Each year, less than 10% of all automobiles and homes will be involved in
accidents or losses, and only half of those policyholders will have to pay any
deductible. Choose the deductible with which you feel most comfortable, $500 or
even $1,000. As your assets and income increase, increase your deductibles
accordingly. Increasing your auto insurance deductible to $500 will reduce your
comprehensive and collision premiums as much as 30%. Increasing the deductible
to $1,000 will cut those premiums up to 60%.

Page 2-62 © Charles J. Givens Organization 1990 R1


Strategies For Insurance Deductibles (cont.)
The following two strategies will show you why low deductibles don't make sense:

Strategy #2 23: 0 Never file an insurance claim for under


$500.

Smart policyholders don't file small claims. The insurance company will raise your
premiums next year by as much as 25%, or worse yet, cancel the policy. Save your
insurance claims only for the big losses.

Strategy #2-24: Never payout more in premiums than you


can collect in damages.

You pay so much extra for lower deductibles that, over the years, you could not·
collect in damages half of what you're paying in premiums. Lower deductibles waste
dollars.

Remember, insurance is not free. Collecting on a claim from an insurance company


is not a gift. The insurance company's cost of processing even the smallest claim is
over $400 just for the administrative expenses and paperwork, and these costs are
added to the premiums you pay for lower deductibles.

Strategy #2-25: Substitute a free credit card for expensive


low insurance deductibles.

For some the concern is, "What if I am responsible for a deductible or can't collect
from the other driver, and don't have the extra money to fix my car?"

Your best "no cost" insurance is a no-annual-fee MasterCard or VISA which is never
used for purposes other than emergencies or unusual one time expenses. \IV'ifh a
$1,000 to $2,000 limit, you have the cash available, but unlike premiums, the credit
card costs you nothing unless you use it.

© Charles J. Givens Organization 1990 R1 Page 2-63


How Your Automobile Insurance Premiums Are Determined
In addition to how much and what kind of coverage you choose, there are five .~
factors relating to where you live, how you drive, and what kind of car you own that
also affect the premiums you pay.

1. Rating Territories
Premiums are higher in cities where population density and traffic congestion is high,
and lower in rural areas.
The company's accident experience in your area also determines your rates. Your
premiums from company to company for the same city can vary as much as 100%
because of different accident ratios for different companies.
2. Driver Classification
Age, sex, and marital status are all factors used in determining your insurance
premiums. Those over 25, women, and married people have fewer accidents and the
lowest rates. Males under 25 who are unmarried and the principle drivers of a car
have the greatest statistical chance of accidents and, therefore, the highest rates.
3. Driving Record
Those responsible for accidents or who have been convicted of driving violations
tend to have a greater chance for future accidents, and therefore, pay higher
premiums. In most states points are assigned for moving violations. The more points ~.
you have, the higher your rates. Points remain on your driving record for 3 years.
4. Use of Car
Those who drive to and from work have a greater chance for accidents than those
who use a car for pleasure only. Premium categories are usually:
1. No commuting Lowest premium

2. Less than 10 miles to work Higher premium

3. More than 10 miles to work Highest premium

5. Type of Car
Expensive cars cost more to repair and, therefore, cost more to insure.
Using the damageability rating charts that follow you can determine in advance
whether the insurance premiums are worth the pleasure derived from driving certain
types of cars.

Page 2-64 © Charles J. Givens Organization 1990 R1


Strategy #2-26: Check insurance rates on an automobile
before you buy it.

Because some cars are more expensive to replace or repair, insurance companies
assign code numbers (1-21) to each model. The higher the code number the more
expensive your car will be and the more expensive your collision and comprehensive
premiums will be.

The damageability rating is "initially assigned from the sticker price and then raised or
lowered depending on the average cost of parts and repairs on that particular model.

For example, if a model type is initially rated a 7, its sticker price is between
$6,501 - $8,000 (see Automobile Sticker Price Code Number Chart that follows).
The rating is then upgraded by + 1 or more if the car is more expensive to repair
than other cars costing the same amount, or lowered by -1 or more if the car is
less expensive to repair. This means that while the car's sticker price is
$6,501 -$8,000, its damageability factor may make its cost of repair like that of a car
that initially costs $8,001-$10,000, and thus the insurance premiums will be higher.

These damageabilityratings will give you an idea of the difference in comprehensive


and collision premiums you will pay for a car you are buying. The insurance could
cost more or less than you bargained for, and is a factor in determining which car
you can afford to drive.

© Charles J. Givens Organization 1990 R1 Page 2-65


Automobile Insurance
/'")
~-.

Sticker Price Code Numbers .


(used In Auto Damageability Chart)

Code Number $ Sticker Price


1 0 1,600
2 1,601 2,100
3 2,101 2,750
4 2,751 3,700
5 3,701 5,000
6 5,001 6,500
7 6,501 8,000
8 8,001 - 10,000
10 10,001 - 12,500
11 12,501 - 15,000
12 15,001 - 17,000
13 17,001 - 20,000
14 20,001 - 24,000
15 24,001 - 28,000
16 28,001 - 33,000 p)
17 33,001 . - 39,000
18 39,001 - 46,000
19 46,001 - 55,000
20 55,001 - 65,000
21 Above 65,000
(*Note: There is no code 9 in the rating system)

Page 2-66 © Charles J. Givens Organization 1990 R1


AUTOMOBILE DAMAGEABILITV RATING CHART
Regal Limited Camaro Berlinetta
AMERICAN MOTORS Coupe 10 Coupe 13 +1
Eagle Sedan 6 -3 Celebrity
Sedan 7 -2 Regal T-Type Coupe 8
Wagon 7 -2 Coupe 10 Sedan 7 -1
Eagle Limited LeSabre Custom Wagon 7 -1
Wagon 7 -2 Coupe 10 Monte Carlo
Sedan 7 -2 Spt Coupe 8
AUDI LeSabre Limited Impala Sedan 6 -2
4000S Sedan 13 +2 Coupe 8 -1 Caprice Coupe 10
Sedan 7 -2 Sedan 8 -1
AudiCoupe
Electra Limited Wagon 8 -1
Sedan 14 +2
Coupe 10 -1 Corvette
5000S
Sedan 10 -1 Spt Coupe 17 +3
Sedan 13 +1
Wagon 14 +1 Electra Park Avenue Blazer S-10 10 +1
Quattro Coupe 10 -1 Blazer 11 +1
Coupe 17 Sedan 11 -1 Suburban 10
Electra Estate Sportvan 7 -2
Sedan 14 +2
Wagon 11 -1 EI Camino
BMW Riviera Luxury Pickup 8
Coupe 12 S-10 Pickup 7
318i Sedan 14 +2 15
Conv
Riviera T-Type CHRYSLER
BUICK
Coupe 12 LeBaron
Skyhawk Custom Sedan 8 -1
Coupe 7 CADILLAC Conv 8 -1
Sedan 6 -1 7 -1
Camarron Sedan 10 -1 Sedan
Wagon 7 -1 -1
Deville E-Class Sedan 8
Skyhawk Limited Town & Country
Coupe 8 Coupe 13
Sedan 12 -1 Wagon 8 -1
Sedan 7 -1
Eldorado New Yorker
Wagon 7 -1 -1
Coupe 14 Sedan 10
Skyhawk T-Type 13
Conv 16 Executive Sedan
Coupe 8 Fifth Avenue
Skyhawk Custom Seville Sedan 14
Fleetwood Brougham Sedan 8 -2
Coupe 7 -1
'Coupe Laser Hchbk 8
Sedan 6 -2
Sedan 14 Laser XE Hchbk 10
Skyhawk Limited
Coupe 7 -1 Limo 15 -1 DODGE
Sedan 6 -2 Formal
Skylark T-Type Limo 15 -1 Charger Hchbk 8 +1
Coupe 8 -1 Charger 2.2
CHEVROLET Hchbk 8 +1
Century Custom
Coupe 8 Chevette Hchbk 6 Shelby Charger
Sedan 8 -1 Chevette CS Hchbk 6 Hchbk 10 +1
Wagon 8 -1 Cavalier Omni Hchbk 6
Century Limited Coupe 7 Omni SE Hchbk 6
Coupe 10 HB Cpe 7 Aries
Sedan 8 -1 Sedan 6 -1 Sedan 7
Estate Wagon 6 -1 Sedan 5 -2
Wagon 8 -1 Cavalier CS Aries Custom
Century T-Type Sedan 6 -1 Wagon 6 -2
Coupe 10 Wagon 6 -1 Aries Special Edition
Sedan 8 -1 Citation II Sedan 8
Regal Coupe 6 -1 Sedan 6 -2
Coupe 10 Hchbk 6 -1 Wagon 6 -2
Sedan 6 -3 Hchbk 5 -2 600 Sedan 8
Camaro Sport Conv 10
Coupe 12 +2 Sedan 6 -2

© Charles J. Givens Organization 1990 R1 Page 2-67


AUTOMOBILE DAMAGEABILITV RATING CHART
DODGE, cont.
LTD Country Squire
Wagon 7 -2
Cherokee Ctiief
Wagon 10
~
600ES Sedan 8 -1 Thunderbird Wagoneer
Diplomat Salon Coupe 12 + 1 Wagon 11
Sedan 7 -1 Bronco II 11 + 1 Wagoneer Limited 13
Daytona Hchbk 8 Club Wagon Grand Wagoneer 13
Daytona Turbo E-150 8 + 1 Pickup 10
Hchbk 10 E-250 8 -1
E-350 8 -1 LINCOLN/CONTINENTAL
Ram Charger 11 + 1
Ram Van 7 -1 Econoline Town Car 12 -1
Ram Wagon 10 E-150 8 Sedan 13 -1
Rampage Pickup 7 E-250 8 Mark VII Coupe 14
Rampage Sport 7 E-350 8
Ram 50 Ranger Pickup 6 MERCEDES-BENZ
Cust Pickup 7 + 1 190 Sedan 13 -1
Roy. Pickup 8 + 1
GMC
300
Jimmy S-15 10 + 1 Coupe 17
FORD Jimmy 11 + 1 Sedan 15 -1
EXP Suburban 10 Wagon. 16 -1
Hchbk 8 + 1 Rally 7 -1 380
Spt Coupe 10 + 1 Caballero . Coupe 20 +2
Escort Pickup 8 Sedan 17 -1
Hchbk 6 S15 7 500
Hchbk 6 -1 Coupe 21 +1
HONDA
Escort L Sedan 19
Hchbk 7 Civic CRX
Hchbk 6 -1 Spt Coupe 7 + 1 MERCURY
Wagon 6 -1 Civic Lynx •
~
Escort GL Sedan 7 Hchbk 6
Hchbk 7 Wagon 7 Hchbk 6 -1
Hchbk 6 -1 Civic 1.3 Hchbk 6 Lynx L
Wagon 6 -1 Civic 1.5 Hchbk 7 Hchbk 7
Escort LX Accord Hchbk 6 -1
Hchbk 7 -1 Hchbk 8 Lynx GS
Wagon 7 -1 Sedan 8 Hchbk 7·
Escort GT Hchbk 8 Accord LX Hchbk 6 -1
Mustang Hchbk 8 Wagon 6 -1
Sedan 8 + 1 Sedan 10 Lynx LTS Hchbk 7 -1
Hchbk 10 + 1 Prelude Coupe 11 + 1 Lynx RS Hchbk 8
Mustang LX Capri Hchbk 11 +2
Conv 12 + 1 ISUZU
Topaz GS
Tempo L I-Mark Sedan 8
Sedan 7 Coupe 8 +1 Sedan 7 -1
Sedan 6 -1 Sedan 7 Topaz LS
Tempo GL Impulse Sedan 8
Sedan 7 HB Cpe 11 +1 Sedan 7 -1
Sedan 6 -1 Marquis
Tempo GLX JAGUAR Sedan 7 -1
Sedan 8 XJ6 Sedan 16 Wagon 8 -1
Sedan 7 -1 XJ6-VDP Sedan 17 Grand Marquis
LTD Sedan 10 -1
Sedan 7 -1 JEEP Sedan 8 -2
Wagon 7 -1 Colony Park
LTD Crown Victoria CJ-7 10
Scrambler 8 +1 Wagon 8 -2
Sedan 8 -1 Cougar
Sedan 7 -2 Cherokee Wagon 10
Cherokee Pioneer Sedan 11 +1
Wagon 10 XR-7 Cpe 12 +1
Wagon 7 -2

Page 2-68 © Charles J. Givens Organization 1990 R1


AUTOMOBILE DAMAGEABlllTY RATING CHART
(' MITSUBISHI
Delta 88 Royale
Coupe 8 -1
Pheonix
Coupe 7
Cordia Hchbk 8 +1 Sedan 7 -2 Hchbk 6 -1
Tredia Sedan 7 Delta 88 Royale Brougham Pheonix LE
Starlon Hchbk 13 +2 Coupe 8 -1 Coupe 8
Pickup 6 Sedan 7 -2 Hchbk 7 -1
Montero Utility 8 Custom Cruiser Phoenix SE Coupe 8
Wagon 7 -2 Firebird Coupe 12 +3
NISSAN 98 Regency Firebird Trans Am
Sentra Coupe 11 Coupe 13 +3
Sedan 7 +1 Sedan 10 -1 Firebird SE Coupe 13 +3
Sedan 8 +1 98 Regency Brougham Pontiac 6000
HB Cpe XE 8 +1 Sedan 11 -1 Coupe 8
Wagon 8 +1 Toronado Brougham Sedan 7 -1
Pulsar NX Cpe 10 +1 Coupe 11 -1 Wagon 8 -1
Stanza Hchbk 8 Pontiac 6000 LE
PEUGEOT Coupe 10
Sedan 8
300 ZX 505 GL Sedan 8 -1
Spt Coupe 14 +2 Sedan 7 -2 Wagon 8 -1
Coupe 2 +2 14 +1 Wagon 8 -2 Pontiac 6000 STE
Maxima 505S Sedan 10 -1
Sedan 10 Sedan 10 -2 Grand Prix Coupe 10
Wagon 11 Wagon 10 -2 Grand Prix LE
Pickup 7 +1 604 Sedan 13 -1 Coupe 10
King Cab 10 +1 Grand Prix Brougham
PLYMOUTH Coupe 10
OLDSMOBILE Turismo Hchbk 8 +1 Bonneville Sedan 7 -2
Turismo 2.2 Hchbk 8 +1 Bonneville LE
Firenza
<,
Horizon Hchbk 6 Sedan 7 -2
t'" Coupe 7
Bonneville Brougham
Sedan 6 -1 Horizon SE Hchbk 6
Reliant Sedan 7 -2
Cruiser 7 -1
Sedan 7 Parisienne
Firenza Brougham
Sedan 5 -2 Sedan 8 -1
Coupe 8
Reliant Custom Wagon 8 -1
Sedan 7 -1
Wagon 6 -2 Parisienne Brougham
Cruiser 7 -1
Reliant Special Edition Sedan 8 -1
Omega
Sedan 8 Fiero
Coupe 7 -1
Sedan 6 -2 Coupe 10 +1
Sedan 6 -2
Wagon 6 -2 Spt Coupe 10 +1
Omega Brougham
Grand Fury Salon Fiero SE
Coupe 7 -1
Sedan 7 -1 Spt Coupe 11 +1
Sedan 6 -2
Cutlass Ciera LS PORSCHE
Coupe
PONTIAC
8
Sedan 7 -2 Pontiac 1000 Hchbk 7 911
+1
< Cruiser 7 -2 Sunbird 2000 Coupe 17 +1
Cutlass Ciera Brougham Coupe 7 Targe/Conv 18 +1
Coupe 10 Hchbk 7 928S Coupe 19 +1
Sedan 7 -2 Sedan 6 -1 944 Coupe 17 +3
Cutlass Supreme Wagon 6 -1 RENAULT
Coupe 10 Sunbird 2000 LE
Sedan 7 -2 Coupe 7 Alliance Sedan 7
Cutlass Supreme Brougham Sedan 7 -1 Alliance L Sedan 7
Coupe 10 Wagon 7 -1 Alliance DL Sedan 8
Sedan 7 -2 Conv 10 Alliance Ltd Sedan 8
Cutlass Calais Sunbird 2000 SE Encore Lftbk 6
Coupe 10 Coupe 8 Encore S Lftbk 7
Hchbk 8 Encore LS Lftbk 7
Sedan 7 -1 Encore GS Liftbk 8

© Charles J. Givens Organization 1990 R1 Page 2-69


AUTOMOBILE DAMAGEABILITV RATING CHART
SAAB VOLKSWAGEN )
900 Rabbit L Hchbk 7
Hchbk 12 +2 Rabbit GL Hchbk 8
Sedan 11 +1 Rabbit GTI Hchbk 8
900S Rabbit Conv 10
Hchbk 13 +2 Jetta Sedan 10 +1
Sedan 12 +1 Quantum GL
900 Turbo Sedan 10 -1
Hchbk 14 +2 Wagon 10 -1
Sedan 14 +1 Sci rocco Coupe 13 +3
Vanagon 11 -1
SUBARU
VOLVO
Standard Hchbk 8 +2
DL 240
Hchbk 8 +2 Sedan 10
Hdtp 10 +2 Sedan 8 -1
Sedan 8 +1 Wagon 10 -1
Wagon 8 +1 760 Sedan 13 -1
GL
Hchbk 10 +2
Hdtp 10 +2
Sedan 8 +1
Wagon 10 +1
Brat GL Pickup 7
TOYOTA
Starlet Lftbk
Tercel
Lftbk
7

7
+1

+1
.,
r····

Lftbk 8 +1
Wagon 8 +1
Corolla
Spt Coupe 10 +1
Lftbk 10 +1
Lftbk 8 +1
Sedan 8 +1
Celica
Spt Cpe ST 11 +2
Spt Cpe GT 11 +2
Lftbk GT 11 +2
Celica Supra
Spt Coupe 13 +1
Camry
Sedan 8
Lftbk 8
Cressida
Sedan 10 -1
Wagon 10 -1
Land Cruiser
Wagon 12 +1
Van Wagon 8
Pickup 7 +1

Page 2-70 © Charles J. Givens Organization 1990 R1


Strategies To Cut Your Auto Insurance Premiums

Strategy #2-27: Shop around to save 25% on auto insurance ~


l~~)
premiums. ~

Automobile insurance companies set premiums based on the amount of claims paid
in each area. Auto insurance rates vary as much as 100% from company to
company. According to an independent study, fewer than one in four drivers win get
more than one quote before buying auto insurance. When your policy is up for
renewal, get several quotes. Shop around. You will be amazed at the differences in
prices.

Some of the companies that seem to have lower rates in many areas are Geico,
USAA, State Farm, Travelers and Liberty Mutual. Many agents, to make shopping
more difficult, will not quote over the phone, but don't let that stop you. Let your
wheels do the walking.

Strategy #2-28: Don't take extra coverages such as towing, ~


car rental, and audio equipment. ®
The premiums for extras on an auto policy cost you more money than you could
ever collect. Towing and car rental costs between $20 and $80 extra per car per
year, and yet, only a small percentage of policyholders will ever file a claim on either.
The high premiums charged to insure a few hundred dollars of audio equipment
also makes a poor investment. However, do insure your car phone or audio
equipment worth over $1,000, which is more expensive and highly visible.

('
\

© Charles J. Givens Organization 1990 R1 Page 2-71


Strategy #2-29: Determine how much an accident or a ticket c......
"..~(')\

will raise your premiums. \.':::...fi.::::)


~

You'll be shocked at the different practices auto insurance companies have affecting
policyholders who get ticketed or are involved in an accident. Some will raise your
rates 25% after only one occurrence, others will cancel your insurance altogether.
Choose a company that won't brand you a loser just because of one bad experience.

Strategy #2-30: Ask for the five basic automobile insurance ~


discounts. ®
There are five discounts offered by auto insurance companies to those who fall into
special groups. When buying auto insurance be certain to ask; the agent may not
bring them up.

DISCOUNT AMOUNT SAVED


1. Multi-car - More than one automobile insured by 5-2Cl%
/ i
the same company.
2. Driver Training -take a state certified course. 5-15%
3. Good Driver 5-20%
4. Anti-Theft Equipment-Alarm or systems that 5~20%

disengage the ignition


5. Senior Citizen - 5-20%
If you ask for all of the discounts you are entitled to, your premiums may drop
another 20%. It pays to ask.

Page 2-72 © Charles J. Givens Organization 1990 R1


Redesigning Your Automobile Insurance Policy
Use the form that follows to redesign your automobile policy for lower premiums.
Part One gives you a synopsis of the coverages you need and don't need; Part 2 will
help you analyze and redesign your auto policy. On this form, list the liability limits
and coverages you have on each automobile that you now own along with any
changes you wish to make using these insurance strategies. If you have more than
2 automobiles, make a copy of the sheet. Contact your insurance agent and make
all of the changes, noting the changes in your premiums.

Also use copies of the form when getting auto insurance quotes. Many automobile
premiums are stated on policies as 6 month premiums. If you pay every 6 months
you must double the premiums shown to obtain the yearly figures.

Redesigning Your Automobile Insurance Policy


Part 1
Coverages You Need
Liability
Bodily Injury Pays for damage to other people.
Property Damage Pays for damage to other people's property.
Comprehensive Pays for damage to your car by fire, theft or
anything but collision ..
Collision Pays for damage to your car by collision with
another car or object
Coverages You Don't Need
. No-Fault (PIP) Pays your medical and funeral expenses
and work loss.
Medical Payments Pays your medical and funeral expenses.
Uninsured Motorists Pays your medical and funeral expenses caused
by a non-insured or under-insured driver.
Emergency Road Service Pays for towing.
Car Rental Expense Pays for a rental car if yours is damaged.
Death/Dismemberment Pays for death or certain injuries.
Specialty Coverage Pays for audio equipment, glass breakage, etc.
In some states, unnecessary coverages are unfortunately required. Check your state
rules through your insurance agent.

© Charles J. Givens Organization 1990 R1 Page 2-73


Redesigning Your Automobile Insurance Policy
Part 2

Coverages To Reorganize
Coverage. Current Desired Current New NOTES
Limits Limits Premiums Premiums

Bodily Injury Check for all


Liability possible discounts
Property Damage
Liability
Umbrella Optional for those
Liability needing high lim'its
Comprehensive
Deductible At least $500
Collision
Deductible At least $500

Coverages To Drop

No-Fault
-0-
Medical
Payments -0-
Uninsured
Motorists (PIP) -0-
Emergency
Road· Service -0-
Car.Rental
Expense -0-
Deathl
.Dismemberment -0-
Specialty
Coverage -0-
Other TOTAL
-0- AMOUNT
SAVED:
TOTAL PREMIUMS . . .:::l.._. __....._...............

Pt!:ge 2-74 © Charles J. Givens Organization 1990 R1


Getting Auto Insurance Quotes

Insurer 1 Insurer 2 Insurer 3


Premium Limits

Company

Personal Liability

Bodily Injury

Property Damage

Medical Payments

Uninsured Motorists

Physical Damage

Comprehensive

Deductible

Collision

Deductible

Total Annual Premium

© Charles J. Givens Organization 1990 R1 Page 2-75


Rental Car Insurance Strategies

Strategy #2-31: Decline all extra insurance coverages when ~


\.':::"'~J
you rent a car. ~

By advertising low daily or weekly rates, and adding on big unnecessary insurance
premiums, the rental car companies create huge profits from the confusion and fear
of their customers. Although extra insurance coverages are supposedly optional, the
rental car company will do everything within its power to see that you end up buying
them. All of these insurances are either unnecessary because you are already
covered on other policies or they are incredibly overpriced for the insurance you get.
Here are typical daily and weekly premiums:

Daily Weekly
1. Collision Damage Waiver (CDW) $7.50 $52.50
2. Personal Accident Insurance (PAl) 3.00 21.00
3. Personal Effects Coverage (PEC) 1.25 8.75
4. Liability Insurance Supplement (LIS) 4.95 3~65
;4 ..
TOTAL $16.70 $116.90

1. Collision Damage Waiver (COW)


Your deductible on damage to a rental car now ranges from $3,000 to the full value
of. the car. The rental car company will offer you CDW insurance for about $7.50 a
day to cover the deductible.
Even without the insurance, you are already covered by the rental car company for
fire and theft, and under the "Occasional Driver" clause in your automobile policy you
are covered for collision damage. Any damage deductible you pay will be reimbursed
to you by your insurance company based on the limits in your policy.

One of the new, valuable credit card services is automatic coverage of the rental car
deductible when you charge the rental on your credit card. The American Express
platinum card covers the first $50,000 and a Diners Club Card now covers the first
$25,000 of damages. An Air Travel card issued by the airlines and many MasterCard
and VISA cards also cover the deductible up to $3,000, and there is no additional
cost to you.

Page 2-76 © Charles J. Givens Organization 1990 R1


2. Personal Accident Insurance (PAl)

Personal Accident Insurance is nothing more than an expensive life insurance policy
with medical payments. The policy states, "This coverage pays for death directly
caused by an automobile accident independent of all other causes." Never take the
insurance. You would be paying the equivalent of $1,000 per year for a $175,000 life
insurance policy that covers you only a few minutes a day -while you are driving the
rental car. The actual value of the insurance is less than $50 per year. You are
already covered for medical payments by your hospitalization policy.

3. Personal Effects Coverage (PEe)

Personal Effects Coverage is insurance that covers loss or damage to your personal
property in the rental car or hotel room while you are renting the car. Coverage is
limited to $525 for you and your immediate family members. Again, an absolute
Waste of money. The exclusions-what they won't pay for-are almost comical:
teeth, contact lenses, furniture, currency, coins, tickets, documents, and perishables
or mysterious disappearances. What in the world is left? Your own homeowner's
policy already gives you the same coverage when you are away from home. Check
with your insurance agent.

4. Liability Insurance Supplement (US)

When you rent a car, your automatic liability coverage for injury or death to others is
the bare minimum required by the state. For an extra $4.95 a day, the liability
coverage is increased to $1,000,000 or more. Your auto insurance policy already
covers you up to its current limits, and by getting the Personal Umbrella Liability
policy described in this chapter, you are covered for $1,000,000 of liability at a
fraction 'of the cost.

© Charles J. Givens Organization 1990 R1 Page 2-77


Motorcycle Insurance.

Strategy #2-32: Buy a separate 6 or 9 month policy to cover >


- '?II)..
motorcycles, mopeds, and snowmobiles. ~

Motorcycle insurance (including mopeds, snowmobiles, and other miscellaneous


vehicles) is similar to auto insurance, even though motorcycles are not classified as
automobiles by insurance companies.

Most states requiring auto liability insurance also require motorcycle liability
coverage. You should have liability coverage for your motorcycle. A car owner may
insure a motorcycle with an endorsement to. his auto policy. You are not covered for
your motorcycle through your basic auto policy.

Motorcyclists can get coverages for bodily injury and property damage liability,
medical payments (usually limited to $500), uninsured motorist coverage and
collision and physical damage coverage. Use the same strategies for your
motorcycle as you would with your automobiles. You probably will not need
coverage for other passengers since they are covered by both the liability portion of
your motorcycle policy and by their own hospitalization insurance.

Many insurance companies offer 6-month and 9-month policies to motorcyclists and
snowmobilers where the equipment is garaged for the winter or summer. Ask your
agent; it will save you money.

Page 2-78· © Charles J. Givens Organization 1990 R1


Homeowner's Insurance

Strategy #2-33: Take only the coverages you need on your


homeowner's policy.

The risks you take when you own a home are called perils. These perils have been
divided into 18 categories. The amount of premium you pay for a homeowner's
policy is determined by the number of these perils you wish to cover. Most all
homeowners' policies cover:
• Your home,
• Other buildings on the property (Le. detached garage),
• Your personal belongings (other than expensive items like jewelry and
furs),
• Living expenses for temporary relocation.
The three major policies are HO-1, HO-2, and HO-5, and the perils covered by each
are shown in the following chart. The advantage of an HO-2 is the coverage for
frozen pipes and water damage. This policy is the best value for those living in
climates where pipes do freeze. Others living in warmer climates get the best value
from HO-1, which costs less.

HOMEOWNERS' INSURANCE POLICIES


Peril Basic Fm Broad Fm Comprehensive
HO-1 HO-2 FlO-5
1. Fire or Lightning
2. Removal of endangered property
3. Wind or Hail
4. Explosion
5. Riots
6. Damage by an aircraft
7. Damage by a vehicle
8. Smoke
9. Vandalism
10. Theft
11. Glass Breakage /
12:
13.
Falling objects
Damage from weight of snow or ice.
""
14. Building collapse
15. Hot water heating system damage
16. Water damage from p_'umbing or A.C.
17. Frozen Pipes "- /
18. Electrical Appliances Damage "'- ;..v /
*HO-5 covers all possible perils except flood, earthquake, volcano,war, and nuclear
accident. Some policies cover damage to property of guests, others do not.
Condominium owners can purchase a special policy HO-6 to cover personal property

© Charles J. Givens Organization 1990 R1 Page 2-79


;<IIit"' ..
Strategy #2-34: Decline the additional coverages on your )

homeowner's policy.

Additional coverages fall into the following six categories. None are a good value for
the premium charged.

1. Removal of debris.
2. Damaged property removal.
3. Fire department surcharges - up to $250.
4. Temporary repairs to prevent further damage to property.
5. Trees, shrubs, and r:>lants - covered up to $500 or a maximum of 5% of the
dwelling insurance. Since windstorms are excluded this insurance is of little
value. . .
6. Stolen credit cards - up to $500.

Strategy #2-35: Purchase a personal articles "floater" to


cover expensive personal items.

Your basic policy limits what you can collect for theft or damage of personal articles.
Insure expensive jewelry, furs, and other personal property with a personal articles
"floater." As your wealth increases and your personal assets increase, make certain
your insurance is increased.

Strategy #2-36: Buy flood or earthquake insurance only if


you are in a government-designated flood
plain or earthquake zone.

Flood and earthquake insurance should be purchased by those in designated


potential disaster areas but not by others. To be eligible for flood insurance you
must be in an area that practices land use control measures, and in some cases
your mortgage company will require the insurance. In some parts of the country
earthquake insurance is too expensive to be practical. You can't afford to insure
against every possible risk, so it pays to weigh the cost againstthe potential loss.

Page 2-80 © Charles J. Givens Organization 1990 R1


Strategy #2-37: Video tape your valuables for insurance
records.

You can only collect for what you can prove you lost. The best way to provide an
acceptable insurance record is to use your video camera to create a video record of
furniture, knick-knacks, art work, clothes, stereo and video equipment (including
model and serial numbers), musical instruments and everything else of value. While
you are taping, verbally record the value of the asset and where and when you
bought it. Put the video tape in a safety deposit box along with receipts. Records
won't help if they are lost along with the assets. If you don't have a video camera,
use your slide or Polaroid camera and a tape recorder.

Strategy #2-38: Buy replacement value coverage, not marketc:......


value coverage, on your home. ®
Replacement value coverage will pay whatever it costs to replace an asset that is
lost, destroyed or stolen. Market value coverage will pay only the current value of the
asset after age and wear and tear are deducted. If your five-year old, $1,000 video
player is stolen, the replacement value coverage will pay you $1,000, but market
value coverage may net you only $200. Surprisingly, replacement value coverage
costs only about $10 more per year.

Make sure your fire insurance is a replacement cost policy, not a market value
policy. The value of your home may fluctuate with real estate market conditions, and
a market value policy may pay you less than the replacement cost. Ask for an
automatic appreciation clause in your policy that will raise your coverage limits each
year without the necessity of checking with your agent.

© Charles J. Givens Organization 1990 R 1 Page 2-81


Strategy #2-39: Carry as fire insuranc~ at least (but not
more- than) 80% of the replacement cost
of your home .

. Carry enough insurance to cover at least 80%, but not 100%, of the replacement
value of your home. You are automatically covered for up to 100% of a loss, as long
as the policy is written for 80% or more of the value of your home. Never
under-insure because if coverage is less than 80% of replacement cost and you
have a loss, the policy will pay only a percentage of the loss. Never over-insure
because you will be paying premium dollars from which you can never collect.

r )

Page 2-82 © Charles J. Givens Organization 1990 R1


Getting Homeowner's Insurance Quotes

Insurer 1 Insurer 2 Insurer 3


Premiums/Limits

Company

Policy Type

House

Detached Buildings

Trees, Shrubs, Plants

Personal Property
On Premises

Off Premises

Additional Living
Expenses

Comprehensive
Personal Liability

Medical Expense
Payments

Scheduled Items
Endorsements

Extended Thrift

Inflation Guard
Replacement Cost

Other

Deductibles

Total Annual Premium

r
© Charles J. Givens Organization 1990 R1 Page 2-83
Tenant's Insurance

Strategy #2-40: Buy a special tenant's policy, HO-4, if you


rent a home or an apartment.

The tenants policy (HO-4) is designed for those who rent an apartment or house or
own a cooperative apartment. It insures household contents and personal
belongings against all of the perils included in the broad form (HO-2), plus additional
living expenses. Renters policies provide a minimum of $4,000 coverage on personal
property, and a minimum of $800 for additional living expenses in case the unit
becomes uninhabitable. Renters' policies also provide liability coverage for injuries,
property damage and legal expenses.

Owners, landlords, And


Tenant's Liability Insurance (OLT)

Strategy #2-41: Protect your rental properties with an owners~


lan(tlords and t~nant's policy (OlT). ®
Insurance for landlords falls under the general category of public liability insurance.
OLT policies cover the liability arising from the ownership and maintenance of a
'rental property. OLT policies are relatively inexpensive and can be added as a
supplement to the fire insurance policy on a rental home or sometimes to your
homeowner's insurance.

Page 2-84 © Charles J. Givens Organization 1990 R1


Loan Insurance - Credit Life and Disability

----------------------------------------------------------~6--
Strategy#2-42: Say no to loan .insurance - Credit Life and
Disability.

You can save $1,000 every time you borrow $10,000 for an automobile or for any
purpose by declining the Credit Life and Disability insurance. Let's say you're buying
a $10,000 automobile and financing it at the bank or credit union. The last question
the loan officer will ask, right before he approves your application, is, "By the way,
you do want the credit life and disability insurance, don't you?" You look up, caught
off guard, and ask, "What's credit life?" "Well," he says, "credit life pays off your loan
if you die, and disability insurance makes the loan payments if you can't work." It all
sounds logical until you consider the cost. If you say yes to the insurance, you are
overpaying by 800%! Sixty percent of the premiums go as a commission to the
financial institution.

Credit life insurance only pays the balance of the loan at the time the insured dies
and is, therefore, expensive decreasing term insurance. If your car costs $12,000
and you die owing only one payment of $327, the insurance pays only $327. Your
heirs got nothing from the policy; only the financial institution collects.

If you want a personal loan paid off if something happens to you, don't buy loan
insurance, buy inexpensive annually renewable term life insurance. You will save
75% of the premiums.

© Charles J. Givens Organization 1990 R 1 Page 2-85


Mortgage Life Insurance

Strategy #2-43: Replace expensive mortgage life insurance >-


-.~
with inexpensive term insurance ~

Mortgage insurance pays off your home mortgage if you die. The logic of mortgage
insurance is sound. You want your family to be relieved of mortgage payments if you
are not around. The problem is the high cost of the insurance compared to the risk.

At age 54, $80,000 of mortgage life insurance can cost as much as $1,128 per year.
At the same age, you can buy an $80,000 annually renewable term policy to
accomplish the same thing for $200 per year, saving $900 a year. Mortgage
Insurance proceeds go directly to the mortgage company, but ART proceeds go to
your heirs. By correctly investing these proceeds, $~O,OOO in our example, the
mortgage payments can be made until the home is paid for while completely
preserving the principal.

Page 2-86 © Charles J. Givens Organization 1990 R1


Medical Insurance

Strategy #2-44: Raise the deductible on your medical


insurance to $1,000 or even $2,500.

Up to 50% of the hospitalization insurance premiums you pay are paid to insure just
the first $1,000 to $2,500 of a claim. The insurance you really need is the kind that
will pay major medical expenses, those that could cost you thousands or even tens
of thousands of dollars and use up the assets you have accumulated. Insurance that
covers only your big risks is called major medical and is the only health or
hospitalization insurance that makes sense cost-wise, other than the free plan your
employer may provide.

Even a small claim costs an insurance company hundreds of dollars to process and
those costs are added to the premiums. If you have a claim, you have already lost
the equivalent of the hospital bill through overpriced premiums. If you pay any
occasional small hospital bills out of your own pocket, you will save money. You are
{" not paying the cost of administration and paperwork the insurance company must
incur.

© Charles J. Givens Organization 1990 R1 Page 2-87


Disability Insurance

Strategy #2-45: Buy disability insurance only if you are in


poor health or are accident prone.

For people in reasonably good health, putting money in a good investment plan will
pay far greater long-term rewards than dumping it into a disability insurance policy.
Disability insurance promises to pay you cash if you become disabled and can't
wor~\. The concept is great, but once again, the costs far outweigh the potential
benefits. The restrictions and definitions of disability are so confining that few
policyholders ever collect.

Should you decide you want disability insurance anyway, you can cut the high
premiums by 50% by increasing the waiting period. By increasing the waiting period
to six months or one year, the premiums drop as much as 50%, while still giving you
protection against long-ter . d~sability.

Disability insurance is sold by nearly all life insurance companies. These policies pay
i~
about 60% of your gross annaul while you are disabled due to sickness for injury. I

Disability insurance policies require some waiting period (the time between the date
.. disability begins and the time when benefits begin.

i
Page 2·88 © Charles J. Givens Organization 1_990 R1
Specialty Insurance
~
r
... "

Strategy #2-46: Don't buy specialty health and life insurance c......
...... "'"
policies. ®
Avoid health and life insurance policies hyped on television and through the mail.
The most popular versions are those that:

• Pick up where Medicare leaves off,


• Promise low-cost life insurance to those age 55 to 75,
• Pay $50 a day, in addition to your hospitalization,
• Insure against one disease, such as cancer, or
• Provide coverage for special groups such as veterans.
The premiums are 400% - too high for the potential pay-off and the restrictions
guarantee that few will collect. Many of the ads play on the fears rather than the good
sense of retired people.

CELEBRITY-AD INSURANCE COMPANIES TO PAY FINES


By John C. Van Gieson, Sentinel Tallahassee Bureau

Fidelity Life of Trevose, Pa. these commercials are directed,


TALLAHASSEE-Two Albert was featured in the aregiven an accurate and
insurance companies have Continental American ads, while complete picture of the
agreed to pay fines of $10,000 White appeared in Union product's limitations as well as
each for misleading consumers Fidelity's commercials. its benefits."
in TV commercials that featured
celebrities Betty White and The ads are no longer appearing The other three companies have
Eddie Albert. in Florida. . requested hearings on the
complaints Gunter filed against
Insurance Commissioner Bill Gunter said the two companies them. They are National Benefit
Gunter filed complaints against have agreed to submit all Life of New York, National
the two companies in November, commercials that will be aired Home Life of Jefferson City,
saying that their ads over the next six months to the Mo., and Colonial Penn of
misrepresented the actual costs Insurance Department for its Philadelphia.
and benefits of their life and approval before they are
Medicare supplement insurance broadcast in Florida. The celebrities who appear in
policies. Similar complaints these ads are Dick Van Dyke for
against three other companies "This is an important first step National Benefit Life,
are pending. toward our goal of ensuring that Tennessee Ernie Ford for
there is truth in insurance National Home Life and Ed
The companies that agreed to advertising," Gunter said. "We McMahon for Colonial Penn.
pay the $10,000 fines are need to be sure that prospective
Continental American Life of policy buyers, particularly the The Orlano Sentinel
Wilmington, Del., and Union elderly consumers at whom May 25,1988

© Charles J. Givens Organization 1990 R1 Page 2-89


YOUR MEMBER , I:

(
\
C:

HEALTH INSURANCE QUESTIONNAIRE

(Please Print Entire Form)

1) NAME: 2) SPOUSE: _____________________

3) ADDRESS:

4) CITY: _______________________ 5) STATE: 6) ZIP:

7) DAY PHONE: ( - ) 8) NIGHT PHONE: (__)

9) SMOKER: SELF Yes No 10) SPOUSE Yes No

11) AGE: SELF 12) SPOUSE:

13) OCCUPATION: SELF 14) SPOUSE:

15) CHOOSE DEDUCTIBLE AMOUNT (Charles J. Givens recommends $1000)

$500 $1000 $2500 $5000

16) COVERAGE DESIRED: Family, Individual only, Spouse & Child only

17) CHECK FAMILY MEMBERS TO BE INSURED: HUSBAND _____ WIFE _____

CHILDREN HOW MANY CHILDREN

18) NAME OF PRESENT INSURANCE COMPANY

19) AMOUNT YOU ARE NOW PAYING PER MONTH $

20) LIST ANY MEDICAL PROBLEMS:

MAIL TO: Health Insurance Clearinghouse


921 Douglas Avenue, suite 108
Altamonte springs, Florida 32714
800-477-7472 FAX' 407-774-0840
I: Home Office Use Only
Fill in Your CJG Member # C: Home Office Use Only

DIREC1IONS FOR FILLING OUT THE HEALTH INSURANCE QUESTIONNAIRE


(Please Print Entire Form)

1) Your full name


2) Your spouses full name
3) Your COMPLETE street or mailing address
4) The City in which you live
5) The State in which you live
6) Your Zip Code
7) A telephone number where you can be reached during the day
8) A telephone number where you can be reached at night
9) Do you smoke - circle yes or no
10) Does your spouse smoke - circle yes or no

11) Your age

12) Your spouses age

13) Your occupation

14) Your spouses occupation

15) What deductible do you want - $500, $1000, $2500, $5000

16) Do you want to cover: A) your whole family B) just you


and your spouse C) only a child or D) just yourself
17) Put a check next to the people in your family to be insured,
if you are insuring children we need to know how many children
18) Put the name of your present health insurance company

19) Put the amount you now pay per month for your health insurance

20) List any medical problems you have had in the past 5 years

MAIL TO: Health Insurance Clearinghouse


921 Douglas Avenue, suite 108
Altamonte Springs, Florida 32714 ~
800-477-7472 AX # 407-774-0840 )
Auto Insurance Requirements By State
Alabama Georgia
BI/PO Minimum 20/40/10 BI/PO Minimum 15/30/10
Med. Pay (PIP) Required No Med. Pay (PIP) Required Yes
Uninsured Motorist Min. Not Req. Uninsured Motorist Min. Not Req.

Alaska Hawaii
BI/PO Minimum 50/100/25 BI/PO Minimum 35/unlimited/10
Med. Pay (PIP) Required No Med. Pay (PIP) Required Yes
Uninsured Motorist Min. 50/100/25 Uninsured Motorist Min. Not Req.

Arizona Idaho
BI/PO Minimum 15/30/10 BI/PO Minimum 25/50/15
Med. Pay (PIP) Required No Med. Pay (PIP) Required No
Uninsured Motorist Min. 15/30 Uninsured Motorist Min. Not Req.

Arkansas Illinois
BI/PO Minimum 25/50/15 BI/PO Minimum 15/30/10
Med. Pay (PIP) Required No Med. Pay (PIP) Required No
Uninsured Motorist Min. Not Req. Uninsured Motorist Min. 20/40

California Indiana
BI/PO Minimum 15/30/5 BI/PO Minimum 25/50/10
Med. Pay (PIP) Required No Med. Pay (PIP) Rdquired No
Uninsured Motorist Min . Not Req. Uninsured Motorist Min. Not Req.

.colorado Iowa
BI/PO Minimum 25/50/15 BI/PO Minimum 20/40/15
Med. Pay (PIP) Required Yes Med. Pay (PIP) Required No
Uninsured Motorist Min. Not Req. Uninsured Motorist Min. Not Req.

Connecticut Kansas
BI/PO Minimum 20/40/10 BI/PO Minimum 25/50/10
Med. Pay (PIP) Required Yes Med. Pay (PIP) Required Yes
Uninsured Motorist Min. 20/40 Uninsured Motorist Min. 25/50

Delaware Kentucky
BI/PO Minimum 15/30/10 BI/PO Minimum 10/20/5
Med. Pay (PIP) Required No Med. Pay (PIP) Required Yes
Uninsured Motorist Min. Not Req. Uninsured Motorist Min. Not Req.

Florida Louisiana
BI/PO Minimum 10/20/5 BI/PO Minimum 10/20/10
Med. Pay (PIP) Required Yes Med. Pay (PIP) Required No
Uninsured Motorist Min. Not Req. Uninsured Motorist Min. Not Req.

Key:
BI/PO Minimum = Bodily Injury/Property Damage Minimum Required
Med. Pay (PIP) Required = Medical Payments, Personal Injury Protection Required
Uninsured Motorist Min. = Uninsured Motorists Coverage Required
Maine New Hampshire
BI/PO Minimum 20/40/10 BI/PO Minimum 25/50/25
Med. Pay (PIP) Required No Med. Pay (PIP) Required No .~
Uninsured Motorist Min. 20/40 Uninsured Motorist Min. 25/50

Maryland New Jersey


BI/PO Minimum 20/40/10 BI/PO Minimum 15/30/5
Med. Pay (PIP) Required No Med. Pay (PIP) Required Yes
Uninsured Motorist Min. 20/40 Uninsured Motorist Min. 15/30/5

Massachusetts New Mexico


BI/PO Minimum 10/20/5 BI/PO Minimum 25/50/10
Med. Pay (PiP) Required Yes Med. Pay (PIP) Required No
Uninsured Motorist Min. 10/20 Uninsured Motorist Min. Not Req.

Michigan New York


BI/PO Minimum 20/40/10 BI/PO Minimum 10/20/5
Med. Pay (PIP) Required Yes Med. Pay (PIP) Required Yes
Uninsured Motorist Min. No Provisions Uninsured Motorist Min. 10/20

Minnesota North Carolina


BI/PO Minimum 30/60/10 BI/PO Minimum 25/50/10
Med. Pay (PIP) Required Yes Med. Pay (PIP) Required No
Uninsured Motorist Min. 25/50 Uninsured Motorist Min. Not Req.

Mississippi North Dakota ..


/
BI/PO Minimum 10/20/5 BI/PO Minimum 25/50/25
Med. Pay (PIP) Required No Med. Pay (PiP) Required Yes
Uninsured Motorist Min. Not Req. Uninsured Motorist Min. 25/50

Missouri Ohio
BI/PO Minimum 25/50/10 BI/PO Minimum 12.5/25/7.5
Med. Pay (PiP) Required No Med. Pay (PIP) Required No
Uninsured Motorist Min. 25/50 Uninsured Motorist Min. Not Req.

Montana Oklahoma
BI/PO Minimum 25/50/5 BI/PO Minimum 10/20/10
Med. Pay (PIP) Required No Med. Pay (PIP) Required No
Uninsured Motorist Min. Not Req. Uninsured Motorist Min. Not Req.

Nebraska Oregon
BI/PO Minimum 25/50/25 BI/PO Minimum 25/50/10
Med. Pay (PIP) Required No Med. Pay (PIP) Required No
Uninsured Motorist Min. Not Req. Uninsured Motorist Min. 25/50/10

Nevada Pennsylvania
BI/PO Minimum 15/30/10 BI/PO Minimum 15/30/5
Med. Pay (PIP) Required No Med. Pay (PIP) Required No
Uninsured Motorist Min. Not Req. Uninsured Motorist Min. Not Req.
Rhode Island Wisconsin

r BI/PO Minimum
Med. Pay (PIP) Required
Uninsured Motorist Min.
25/50/10
No
Not Req.
BI/PO Minimum
Med. Pay (PIP) Required
Uninsured Motorist Min.
25/50/10
No
25/50

South Carolina Wyoming


BI/PO Minimum 15/30/5 BI/PO Minimum 25/50/20
Med. Pay (PIP) Required No Med. Pay (PIP) Required No
Uninsured Motorist Min. 15/30/5 Uninsured Motorist Min. 25/50

SoLrth Dakota Washington, D.C.


BI/PO Minimum 25/50/25 BI/PO Minimum 25/50/10
Med. Pay (PIP) Required No Med. Pay (PIP) Required No
Uninsured Motorist Min. 25/50 Uninsured Motorist Min. 25/50

Tennessee Puerto Rico


BI/PO Minimum 20/40/0 BI/PO Minimum No Provisions
Med. Pay (PIP) Required No Med. Pay (PIP) Required Yes
Uninsured Motorist Min. Not Req. Uninsured Motorist Min. No Provisions

Texas
BI/PO Minimum 20/40/15
Med. Pay (PIP) Required No
Uninsured Motorist Min. Not Req.

Utah
BI/PO Minimum 20/40/10
Med. Pay (PIP) Required Yes
Uninsured Motorist Min. . Not Req.

Vermont
BI/PO Minimum 20/40/10
Med. Pay (PIP) Required No
Uninsured Motorist Min. 20/40/10

Virginia
B~/PO Minimum 25/50/10
Med. Pay (PIP) Required No
Uninsured Motorist Min. 25/50/10

Washington
BI/PO Minimum 25/50/10
Med. Pay (PIP) Required No
Uninsured Motorist Min. Not Req.

West Virginia
BI/PO Minimum 20/40/10
Med. Pay (PIP) Required No
Uninsured Motorist Min. Not Req.
SECTION III

BUYING AND
BORROWING STRATEGIES

~ This symbol designates


(.c:~'?:::.. ' strategies which are on
~ both video and audio tapes
Part 1 - Basic Borrowing Super Strategies

Page 3-2 © Charles J. Givens Organization 1990 R1


Strategy: Get to know a loan officer at a bank for more
fl nancial clout.

Enter here the names of the bank loan officers you already know
or have dealt with, if any.
Name/Bank Degree of Rapport

Begin cultivating a better relationship with those you already know


or take the opportunity to begin a new banking friendship. Check
off when you feel you have accomplished this.

If you have no current banking relationship stop in at two or three


neighborhood branches and open a dialogue with a loan officer by
asking about the bank's current terms on automobiles loans just to
break the ice. Ask the banker personal questions from this list:

"How long have you been with this bank?"


"What got you interested in banking?"
"What are your goals in the financial world?"
"How many kids do you have?"
"Where do you borrow money when you need it?"
"Do you ever have good deals on bank repo cars?"

List here the name of one or two bankers you feel you would
have the easiest time getting to know.
Name Bank

@ Charles J. Givens Organization 1990 R1 Page 3-3


Strategy #3-1 : When borrowing money, never take "no" for ~
an answer. ~

Check here if you have been turned down for a loan or credit card.

Get the reason for the rejection in writing.

Correct any errors on your credit file.

Determine from the rejection if there is a better way to disclose


the information on your. application.

List here other potential sources for the loan or credit card you
want.

Name
1
2
3
4 )
5

Psge3-4 © Charles J. Givens Organization 1990 R1


Strategy #3...1.1 : If Y@lIl 81l"8 turned down f(Ql1f' a mortgage, or have an
um.astUlsll mortgage situation, contact a mortgage
lOfi"ok~lI'.

Check here if you have had a mortgage application turned down


or if you have an unusual mortgage situation.

From your yellow pages or by asking a Realtor, list several


mortgage brokers.

Name Of Company Contact Phone #

Explain in detail your situation and ask if they feel they can help.
Again, don't take no for an answer, and contact several mortgage
brokers if necessary until you get the loan you're after. The
mortgage source pays the commission to the mortgage broker.

Amount needed For Date needed (if any)

$ ----------------------------------------
$---------------------------------------

@ Charles J. Givens Organization 1990 R1 Page 3-5


Strategy #3-1.2: Avoid signing a mortgage agreement that contains
a prepayment penalty lasting over 5 years.

Use this strategy any time you are obtaining a new home mortgage.

Before completing a mortgage application, ask if there is a prepay-


ment penalty. If so, and if they won't remove it, look for a lender with
better terms. When looking for a mortgage you have five to 50
choices of different companies, depending on the size of your city.

If you have already applied for a mortgage, read the mortgage


agreement to ascertain if there is a prepayment penalty after five
years.

Ask to have the prepayment penalty changed or stricken from the


agreement. You will most likely have to speak to someone higher
up than the mortgage clerk with whom you are working.

Psge3-6 © Charles J. Givens Organization 1990 R1


Strategy #3-1.3: Don t cha.nge your fixed rate mortgage to an
7

adjUlstab~e mortgage because your bank says it's a


goed odes.

When mortgage interest rates are rising, the 11 million American homeowners with
adjustable rate mortgages begin to worry. From April 1988 through April 1989 those with
1-year ARM saw their payments increase by $150 dollars a month per $100,000 of
mortgage. The natural tendency is to convert your adjustable rate mortgage to a fixed rate
mortgage and the bank or mortgage company will write you a letter telling you how easy
they will make it for you to do so. In April 1989, an adjustable rate mortgage could be
converted to 11.5% fixed.

The scam: The bank knows that if you convert to a fixed rate at 11.5% over the course of
the next few years there is a 95% chance that you will pay more in interest than you would
have paid on your adjustable rate mortgage. Even though the interest rates on the ARM
are higher now since rates are cyclical, they will be lower in a couple of years.

r
@ CharIss J. Givsns Organization 1990 R1 Page 3-7
Strategy #3-1.4: Never payoff a low interestmortgage because the
bank offers you a discount.

When mortgage interest rates get higher, banks and mortgage companies send letters to
those who have low interest mortgages, offering a discount of 5% to 25% for paying off
their mortgage early. Anything your bank or mortgage company wants you to do is probably
in their best interest, but not in yours. If you have an 8% or less fixed rate mortgage and
the current mortgage rates are 12% or higher, the bank can make more money if you pay
off your mortgage in a lump sum and then loan the money again at a higher interest rate.
The higher interest is so lucrative that the bank can afford to give you a big discount as an
Incentive. The bank will earn thousands of dollars of extra interest over the next 30 years
by giving the money to someone else at a higher rate. If you receive the discount letter
from your mortgage company, trash it. The discount of 10% to 20% is never enough to
offset the amount of interest dollars you are saving with your low rate mortgage.

In addition, the IRS has a special rule known as debt forgiveness. If your mortgage balance
is $30,000 but your bank lets you pay it off for $25,000 cash, the IRS considers the $5,000
debt forgiveness as income, which is taxable.

Page3-S © Charles J. Givens Organization 1990 R1


Strategy #3-1.5: Never buy or finance extended warranties.

r Another rip-off encountered when purchasing electronics, appliances or automobiles is


repair insurance or extended warranties. The real purpose of an extended warranty is to
add to the dealers profit at your expense. The extended warranty will pay the cost of
repairing the item you buy after the manufacturer's warranty runs out.

What happened to the good old days when manufacturers tried to·get us to believe that
their products were fail proof? Audio and video equipment usually comes with a gO-day
manufacturer's warranty; appliances, like washers, dryers and microwaves, usually have
a year to break down at the manufacturer's expense and automobiles are guaranteed from
one to five years, depending on how difficult the car market is at that time. The extended
warranty created and sold by the retail store, not the manufacturer, kicks in when the
manufacturer's warranty expires. There are a number of good reasons why extended
warranties are a financial mistake.

1. If you finance the amount of the extended warranty, you will be paying interest
on the cost agreement that won't be in effect for one to three years.

(::' 2. You pay for the warranty in advance even though it won't be in effect for one to
three years.
3. You may have sold, lost or replaced the item on which you bought the warranty.

4. The warranty is a limited guarantee and does not cover normal wear and tear or
rough handling or in the case of a video recorder or camera, dropping the
equipment. These are the major causes of repairs.

5. The cost of the warranty is astronomical compared to the amount of money the
de.aler actually pays for the real repairs. Less than 20% of all the extended
warranty monies collected by a dealer are paid out in repairs. The rest is profit.

6. Salesmen are normally paid a big commission for intimidating you into saying
yes to extended warranties.

Why then do people fall for the extended warranty scheme so easily? Two reasons: Most
people will mistakenly buy anything that seems to contribute to peace of mind or a sense
of security with no idea of how to calculate value.

@ Charles J. Givens Organization 1990 R1 Page 3-9


Strategy #3-2: If the return on a potential Investment is less ~
than tlfe interest om a loalrn~ pay cash. If the •
return is more, borrow to buy and Invest your cash.

Should you finance an automobile or other purchase, or pay cash?

Of course, to have a decision to make, you must have the cash on hand.

You must first understand an important financial measuring stick called "opportunity cost,"
or "opportunity lost." If you pay cash, you automatically lose the opportunity to invest that
cash. If you could borrow at 12% to buy an automobile, but instead pay cash, your
opportunity cost is what you could have earned by investing that same amount of money,
minus the 12% interest. If you could have earned 20% in no-load mutual funds (you'll learn
how later), you will lose your opportunity for earning an additional 8%. In this case, the
greater profit would come from borrowing to buy the automobile and investing your dollars
in the mutual fund. However, if a 9% bank certificate of deposit is the best investment you
know of, you would be better off paying cash for the car.

Page 3·10 © Charles J. Givens Organization 1990 R1


14'&*

Strategy #3-2.1: Aiways convert addmon interest to the APR factor


r bef©re agreeing to the terms of a loan.

If you borrow money to make a purchase of certain goods and services, how much will it
cost you? Add-on interest is a method used by banks and finance companies to quote a
low Interest rate while ripping you off with a high interest rate.

Interest rates on these loans are calculated using two totally different methods:

1. Simple Intewest Method: The method of computing interest that charges you
Interest only on your monthly principal balance.

2. Add-on Method: The more expensive method and the more common method.
Your interest is not the outstanding balance each month. How much is the interest
charge? Since you do not have the use of the entire amount of money that you
borrow for the number of months you borrow it, you are paying interest on the
entire amount you borrowed. Therefore the interest rate is much higher. See the
comparison table below comparing the simple interest and add-on methods using
a $1 ,000 loan for one year at 12% interest.

_hod interest Rate Quoted Flnall1ce Charges Approximate APR

Simple Interest 12.0% $66.20 12.0%

. Add-On 12.0% $120.00 21.5%

As you can see, there is quite a difference in the effective interest rate (12% vs. 21.5%).

@ Charles J. Givens Organization 1990 R1 Page 3-11


Strategy #3-2.2: Never sign a loan agreement containing the rule
of 78~so "'-i
In most installment loans you are allowed to pay the loan off prior to its maturity. Since the
interest is normally prepaid, the loan agreement provides for a refund of interest based on
the rule of 78. It is the portion of the total insurance charges the lender receives when you
payoff your loan early.

Example: You borrow $1 ,000 for 12 months paid back in equal installments. If you pay it
off in 3 months and the total finance charge is $80, the amount the lender will receive is
determined below.

Add the numbers 1 through 12, the total is 78. (1 + 2 + 3 + 4 + 5 + 6 + 7 + 8 + 9 + 10 + 11


+ 12 = 78)

If the loan is repaid after one month, the lender will receive 1~8 of the total interest.

If you pay it off after two months, the lender receives 23178 (12 + 11 divided by 78).

In our example the loan is paid off after three months, so the lender gets 33178 of the total "'~'J
interest (12 + 11 + 1a divided by 78).

This comes out to be $33.85 ( [33 divided by 78] x $80).

,...,.
...•..

Pags3-12 © Charles J. Givens Organization 1990 R1


"
Strategy #3-3: Finance furniture, stereo equipment and other j

personal assets no longer than 24 months; ~


automobiles no longer than 36 months. ~

Choosing a shorter loan term, as with a mortgage, can save you thousands.

When It comes to borrowing, the only two questions Americans have learned to ask are:
"How much is my down payment?" and "What are my monthly payments?" The most
Important element of a loan is you r total payments; that's what eats into your lifetime wealth.
"The longer the term, the lower the monthly payments" is a true statement, but the law of
diminishing returns raises the total cost far beyond the benefit of lower payments.

For example, you buy an automobile on which you obtain a$1 0,000 loan at 14%. You have
a choice of terms ranging from 24 to 60 months.

Effect of Choice of Terms


e. b. c. d. e. f.
36 Month Comparison

Monthly Total Total Interest Increased


Term Payment Paid Interest Saved With Payment

24 Mos. $480 $11,520 $1,520

36 Mos. 341 12,300 2,300

48 Mos. 273 13,100 3,100 $800 $68

60 Mos. 233 13,960 3,960 1,660 108


The chart shows the real cost of a loan for terms ranging from 24 to 60 months. Notice that
by financing for 60 months instead of 24 months, you will pay $2,440 additional interest or
25% more for your car (Column d $3,960-$1,520). Another way to use the chart is to
compare a 36-month loan with a 60-month loan. If you get a 36-month loan instead of a
SO-month loan you save a total of $1,660 and your payments are only $1 08 more per month
(Columns e & f). In addition, you stop making payments 24 months earlier. The lender
always wins with 48- and 60-month loans. You win with 24- or 36-month loans. Use the
chart to plan your next financed purchase.

@) Charles J. Givens Organization 1990 R1 Page 3-13


Computing Annual Car Costs

Cost of the Car $,_ _ _ _ __


(to be used to determine depreciation)

Miles Driven Per Year A-----


Fixed Costs:
Depreciation $_------
Insurance
Interest on Loan
Other (licensing, taxes, registration, garage, tolls)

Total Fixed Costs


B$,_____
Variable Costs
Gasoline
011
Lube
Tires
Maintenance/Repairs
Total Variable Costs C $,-----
Total Annual Costs D $,-----
(add total fixed costs to total variable costs)

Fixed Costs Per Mile (8 divided by A) $_------


Variable Costs Per Mile (C divided by A) $_------
Total Costs Per Mile (0 divided by A) $,------

Pags 3-14 © Charles J. Givens Organization 1990 R1


Part 2 - Credit Profile &
Credit Bureau Strategies

@ Charles J. Givens Organization 1990 R1 Page 3-15


Building A Positive Credit Profile

Strategy #3·4: Develop a positive credit profile with the


"Big 8."

The "Big 8"


Elements of a Positive Credit Profile
(In order of importance)
YOURS

1. A positive credit report (all R-1 's)


2. A home with a mortgage
3. An American Express Card
and/or Diner's Club Card
4. A job you've held for a year or more
5. A current or paid off bank loan
6. A Mastercard or VISA
7. A department store credit card
8. A telephone in your name.

The more checks you have, the easier it is to borrow money.

You can survive in America if you have poorcredit-orworse yet-no credit, but poor credit
is a definite handicap to wealth building. To develop a positive credit profile, qualify yourself
in as many categories as you can based on the above chart. The more categories under
which you qualify, the easier it is to get credit.

Page 3·16 @ Charles J. Givens Organization 1990 R1


Here Is a model of a credit-scoring process taken directly from the procedures book of a
finance company that will let you score yourself.

Loan and mortgage applications are usually approved or rejected based on a point system.
One to six points are assigned to each item in eight different categories. If the number of
points you score overall exceeds a certain total determined by the lender, your loan is
approved; if you score less than the required total, your loan is automatically rejected.
About 18 points is the minimum score required to pass the credit test. The more you score
the better your chances of obtaining credit.

fAC'uun., POiNTS ~QUR FACTORS POINTS YOUR


SCORE SCORE
Monthl~ loam"
Marital Status Credit d. Plt:mts
.Married 1 Zero to $200.00 1
Not Married 0 O'\fer $200.0«J 0

As. Credit History


21 to 25 0 loan ~ most banks 2
26 to 64 1
85 and over 0

Monthllincome Residence
Up to $600 1 Rent Unfurnished 1
$600 to $800 2 Own without Mtge 4
$800 to $1,000 4 Own with Mtge 3
over $1,000 6 Any other 0

In /l\ddltlon PrevloLlls Residence


Phon. In Your O~5 years fOl
Name 2
6 Years and Up 1
Checking
or Savings 2
TOTAL POINTS

r
@ Charles J. Givens Organization 1990 R1 Page 3-17
Strategy #3..4.1 : Total and pay all perishable purchases that appear
on your monthly credit card statement.

Check here if you use or will use a credit card for perishable
purchases.

Beginning now, as you receive each credit card statement, mark


with a "p" and total all perishable purchases and include that
amount in your payment. If you have been using Strategy 3-16, the
money for the payment is already deducted from your checking
account balance.
Perishable purchases include:
Gas Restaurant charges
Car maintenance Clothes
Medical payments Entertainment Expenses
Groceries Sundries
Liquor Make-up/toiletries
Charges for all other items that have no lasting residual value.

Keep track of your perishable purchases and payment for the next
year to measure your success with credit control.

MonthWear Total Perishable Total MonthWear Total Parlshable Total

Purchases Paid Purchases Paid

1. $ $ 7. $ $
2. $ $ 8. $ $
3. $ $ 9. $ $
4. $ $ 10. $ $
5. $ $ 11. $ $
6. $ $ 12. $ $

Page 3-18 @CharlesJ. Givens Organization 1990 R1


Strategy #3..4.2: Compute your interest savings to determine if a
(" low interest credit card is worth the yearly fee.

MasterCard and VISA all have eitherayearlyfee ranging from $15to $40 or an exceedingly
high Interest rate, Most cards have both but no credit cards have a zero yearly fee and a
low Interest rate.

How you use or intend to use your credit cards determines which is best for you. If you pay
off your balance each month there is no question that a no fee card(s) is best for you; you
don't care what the interest rate is since you don't pay interest. If you do keep a balance
or if you are using the debt strategy, the lower the interest rate, the better off you generally
are. The higher your debt the less the yearly fee becomes as a percentage of total cost.

If you keep smaller balances on your MasterCard or VISA there is a point at which the
yearly fee becomes a factor in determining which card to use. Each $10 of fee adds 1% to
the total cost of the card if you have an average $1,000 balance, 2% on a $500 average
balance or only 1/2% on a $2,000 balance. The add on interest for a card with a $30.00
annual fee is 6% if you carry only a $500 balance, 3% on a $1,000 average balance and
1% on a 3% balance.

To convert your yearly fee to equivalent interest you must know or estimate only your
average monthly balance for the year. The formula is simple. The yearly fee divided by
your average balance is the amount of interest to add to the interest rate charged to
determine the true interest cost. The less your balance the less the add on interest.

Example: 18% card, $30 yearly fee, $4,000 average balance

yearly fee/average balance = add on interest + actual interest = true interest rate
$30/$4,000 = .75% + 18% = 18.75%

Example: 18% card, $30 yearly fee, $500 average balance

$30/$500 = 6% + 18% = 24%


When the true cost of a lost interest rate card exceeds the true cost to you of a no or low
fee card, you are better off financially to carry the low fee card and cancel your other cards
with higher fees.

@Char/esJ. Givens Organization 1990 R1 Page 3-19


Strategy #3-4.3: Use no-fee long-float credit cards if you payoff
your balance each month to use the bank's )
money free.

Check here if you payoff your credit card balance each month.

Using the list in this section choose one or two MasterCards or


VISAs that have no fee and a long float. Changes to this list will be
published periodically in your Charles J. Givens Financial Digest.

Strategy #3-4.4: Begin a credit rehabilitation program with secured


credit cards.

Check here if you have credit problems i.e., late payment history,
bankruptcy or have been turned down for a credit card.

Pull a current copy of your credit report from your local credit
bureau to asses the actual damage.

Using the list in this section, apply for one or more secured credit cards.

Complete a consumer dispute form by calling or visiting your local


credit bureau listed under "Credit Reporting Agencies" in your yel-
low pages. If you have more than one major credit bureau in your
area complete a consumer dispute form for each.

Check again 30 days later to be certain the new account has been
added. The credit bureau by law has just 21 days to get the new in-
formation added to your file.

Page 3-20 © Charles J. Givens Organization 1990 R1


Controlling Your Credit File
The credit bureau is the first place your potential creditors and employers will check to find
r out who you are, how you ru n your life and if you told the truth in completi ng your application.

The credit bureau is the name given to any private credit data gathering and reporting
agency. The two largest in the nation are TRW and CBI, which each have nationwide
computer systems. They can follow you anywhere - great if your credit is good, a nemesis
and a nuisance if you've had credit problems.

Credit bureaus are financed by "members" who include local companies, stores, banks,
finance and mortgage companies and other issuers of credit. Members pay a yearly
membership fee and a fee for each inquiry of as little as $3. Only members can pull your
credit file, although almost anyone with a legitimate business can become a member. I
became a member of a credit bureau once in the '70s solely to check on the references of
my rental property prospective tenants.

The most Important principle in working with credit bureaus is to realize that a complete,
correct, up-to-date credit file is your responsibility and not that of the credit bureau. An

,
/~ accurate credit file is something you create through your knowledge of the strategies that
follow.

The credit bureau simply takes all information from members about you, your accounts
and payment habits, and records them in your file. If a creditor gives the agency wrong
Information it is put into your file as given. A credit bureau does not evaluate your credit
worthiness, or approve or disapprove you for loans. The agency simply sends a copy of
your file to members who request it.

Prlorto the Fair Credit Reporting Act of 1970 no one had any legal right to know what was
in their credit file or was able to correct any wrong information.

One Incident that triggered Congress into adopting the Fair Credit Reporting Act was the
case of a man who, because of totally inaccurate data in his credit file, lost his credit and
his job and couldn't get another. There was nothing he could do to get the bad information
removed from his file or convince anyone else it was incorrect. He become so despondent,
his wife divorced him and he finally committed suicide.

@ Charles J. Givens Organization 1990 R1 Page 3-21


With the FCRA laws you have tremendous clout, but only if you know how to use it.

The FCRA won't give you the power to get current, accurate information about late
payments, repossession or judgment off your credit file, but will give you the powerto make
the impact less devastating. An equally damaging problem is the endless incorrect data
that creeps into the files for those with good or nearly good credit.

Page 3-22 © Charles J. Givens Organization 1990 R1


Your Credit File "Bill of Rights"

C Strategy #3...4.5: Exercise your credit file "Bill of Rights."

Read the following list of rights you have under the Fair Credit
Reporting Act and other laws. Use this list as a checklist in making
certain you are exercising maximum control over your credit file.

According to the Fair Credit Reporting Act and other acts, you have the right:

1. To obtain from any credit bureau a report of what's in your credit file.

2. To know who has inquired into your credit filEr-stores, banks, employers, etc.

3. To dispute any information in your file with a Consumer Dispute Form, which
requires the agency to recheck and correct information within 21 days.

4. To get missing data added to your file.

5. To have detrimental credit information removed from your file after seven years
and bankruptcy information after 10 years.

6. To receive the same, good credit rating as a former spouse.

7. To put your side of the story in your credit file.

8. To privacy of the information in your file from anyone other than legitimate
members of the credit reporting agency.

9. To have your credit report transferred from one city to another anytime
you move.

10. To use small claims court to resolve any disputes with the credit bureau about
Incorrect, inaccurate information in your file.

11. To know exactly why you were refused credit.

12. To remain silent about poor credit information that does not currently appear in
your file.

@ Charles J. Givens Organization 1990 R1 Page 3-23


Strategy #3-4.6: Pull your credit file now and once per year.
"..
List the credit bureaus or credit reporting agencies here. There )
may be just one or several depending on the size of the city in
which you live. You will find the phone number and locations listed
under "Credit Reporting Agencies" in your yellow pages.

Name Telephone # Address Contact Procedure for Cost


Pulling File

1.

2.
3.
4.
Call each agency to get their procedures for obtaining a copy of
your credit file. Enter in the table above along with the cost, which
is usually around $10. Some agencies you can work with by mail,
others may require you to visit the office.

Read the rules from the Fair Credit Reporting Act Statute so that you ~ I

know exactly what you are entitled to.

Enter here the date you requested your first report, and for the 2nd
through the 5th year enter the anniversary date upon which you will
request your next report at yearly intervals.
Month Year Date Received
Date first filed request: _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __

2nd Year
3rd Year
---------------------
-------------------------
4th Year
-~--------------------------
5th Year
---------------------------------
File your report in your RMS when complete.

Use the TRW Credentials service to gain unlimited access to


your TRW credit file.

Page 3-24 @ Charles J. Givens Organization 1990 R1


Strategy '3-4.7: Use the TRW Credentials Service for maximum
credit file control.

Order the application for the TRW Credentials service by calling


your local TRW office listed under "Credit Reporting Agencies" in
your yellow pages.
TRW local office number:

Complete the application using, in part, the data you gathered for
creating your financial statement in Section I.

Mail in the completed application and enter date when you receive
your membership card and first complete report.

Check your report for completeness and accuracy.

Pull a new report (it's no additional charge) before you apply for new
credit or a mortgage and after you make any changes to your file.

Update your file as your financial situation improves and


your assets grow.

@ Charles J. Givens Organization 1990 R1 Page 3-25


Strategy #3-5: Correct all personal data errors In your
credit file.

Check the credit report you pulled using Strategy # 3-4.6 for
incorrect personal data.
Personal data includes:

• Address
• Previous address
• Social Security number
• Employment history
• Income
• Date of birth
• Telephone number
List here personal information that needs to be changed.
Current information in file Change to
1.
2.
3.
.~
4.
5.
Obtain and complete a consumer dispute form using the information
above and file it with the credit bureau requesting that they make
all changes requested.

Check your file in 30 days by pulling another report to be certain the


requested changes have been made.

Page 3-26 @ Charles J. Givens Organization 1990 R1


Strategy #3-6: Have the credit bureau re-verify and correct ~
any incorrect credit data. ~
Check the credit report you pulled for incorrect information.

Check each account for accuracy and circle and make notes about
required corrections directly on your report.

List here the information that you think is incorrect, the accounts
which are not yours or payments shown as late that were not.
Account Account Number Description of Problem
1. _____________________________________________
2. _____________________________________________
3. _____________________________________________
4. _____________________________________________
5. ___________________________________________

Using a consumer dispute form, request that the credit bureau


check the accounts requested and correct your file.

Check your file in 30 days by pulling another report to be certain


the corrections have been entered.

@ Charles J. Givens Organization 1990 R1 Page 3-27


Strategy #3-7: Have all missing positive credit data added
to your credit file.
~
.......
' '

Check the credit report you pulled for missing data.

Compare what is on the report to all credit card, loan, and


mortgage accounts that you have or have had, during the past five
years.

List here the accounts that do not appear on your credit file.

Account Account number Balance Check


(If you want to
add to file)
1
2
3
4
5
6
7
8
9
10

Obtain and complete. a consumer dispute form using the above


information.

Send or take the form to the credit bureau(s).

Request another credit report in 30 days to be certain the information is


added to your file.

Page3-2B © Charles J. Givens Organization 1990 R1


Strategy #3-8: Add the rest of the story to your credit file.

Check here if, after reviewing your credit file, you feel you need
to add some important information to your filEr-your side of the
story.

List the accounts that you are having trouble getting corrected
or that require additional information from you.

Strategy #3..9: Have the credit bureau remove any


derogatory Information outside the statutory ~
Umits.

Check here if there is information on your credit file that you believe
to be oversev.en years old or outside of the statute of limitations.

USing the consumer dispute form, request that the credit bureau
remove any data in your file that is outside the statutory limits.

Check your file again in 30 days to be certain the requested infor-


mation has been removed.

@ Charles J. Givens Organization 1990 R1 Page 3-29


Strategy #3-9.1: Use small claims court, consumer reporters and
state agencies to reso~ve credit disputes. ")

Check here if you have attempted to get a creditor to change in-


correct, derogatory information in your credit file(s) but you seem to
be having no success.

Notify the creditor in writing using the sample letter that follows
stating that if wrong information is not corrected in seven days you
will:
1. File a suit in small claims court.
2. Contact the consumer reporters of your local newspaper and
television station.
3. Contact the Better Business Bureau.
4. Contact your state trade commission and state consumer office.
Send your letter certified-return receipt requested. You will not
believe how quickly you receive a response. Don't be intimidated
if you get a call from their attorney, just smile and repeat over the
telephone what you put in your letter.

If you do not hear from them in the requested time:


1. Go to the court house and get the blank forms to file your suit in
small claims court.
2. Write your story in detail and send it to your local consumer
reporters. Call the TV stations and your newspaper to find out
names.
Name Consumer Reporters Telephone Results

Newspaper
TV Station
TV Station

) .....• ')

Page 3-30 © Charles J. Givens Organization 1990 R1


Strategies When Credit Is Tough To Get
j riB\N! Q! " &

Strategy #3-10: If you are refused credit 9 get the reason in


writing.

Check here when you have been denied credit.

Using the form letter on the next page request that the financial
institution give you a complete explanation of why you were
refused. A statement often given like "because of information in
your credit file" is not sufficient and you should demand more.
If you receive a statement like "insufficent credit information" ask
the financial institution what they would consider sufficient. Keep im-
proving your credit and applying again and again intil you are ap-
proved.

List credit denial and reasons so you can improve credit applications,
as well as your credit file.

Name Amount Date Date More Info. Date

Requested Denied Requested Received

r
@ Char/as J. Givens Organization 1990 R1 Page 3-31
To: From:

Recently I applied for credit and was turned down.

As required by law, please furnish me, in writing, a complete explanation of why credit was
denied. The information I have been given so far is insufficient.

Thank you.

@ Charles J. Givens Organization 1990 R1


Strategy #3-10.1: Exercise your right to the same good credit as
your spouse or former spouse.

Check here if you are not certain that both spouses' names appear
on your credit file.

Pull a copy of your file.

If both spouses' names do not appear, use a consumer dispute form


to request that the second spouse's name be added ..

If you and your spouse are split up and your name does appear on
your spouse's credit file, use the consumer dispute form to request
the credit bureau to set up a separate file for you with a duplicate of
the information in the other file. The Equal Credit Opportunity Act
requires that you get the same credit file if you request it.

After using either step above, check your credit file in 30 days to be
certain the changes have been made.

r
@ Charles J. Givens Organization 1990 R1 Page 3-33
Strategy #3-11 : To get credit as a small business owner, ~
incorporate and list yourself as an employee. ~

If you've ever owned a business, you know that credit is tough to get until you can show
substantial income, assets and longevity.

list yourself as an employee of the company and not the owner, and have your accountant
verify your income. Another alternative is to incorporate your business. For less than $50,
you can incorporate your small business, without an attorney, by contacting your state
corporation commission for the forms and instructions. You then pay yourself a big salary
and deduct your expenses as employee business expenses, furnishing copies of W-2
forms instead of tax forms to a prospective lender. Give the lender the phone number of
your bookkeeper, accountant or other involved persons to verify your employment and
salary. If you want the credit you must learn to play the game.

Page 3-34 © Charles J. Givens Organization 1990 R1


Stra.tegies To RebuUd Your Credit
.. F9 MCIINW$i+Rf!'¥E , S&+p++

r Use a (Co=signer to help re-establish your


credit

By getting parents or friends to co-sign on mortgages, bank loans or credit cards, creditors
will extend credit to you that they might otherwise refuse. A positive payment record will
eventually qualify you for credit on your own.

! ?Wi¥

Strategy #3.. 13: 1@ rehabilitate credit, borrow the bank's


money and use it as security for a loan.

A banker is a person who will loan you all the money you want as soon as you can prove
you don't need it. Banks, however, love to make fully secured loans-to almost anyone.
Here Is how you get a bank to participate in your credit-building plan. Look the loan officer
straight in the eye and say, "Mr. Banker, I need your help. I'd like to borrow $1,000. But,
before you check my credit, let me tell you that you won't like what you see. I would like
you to put the $1,000 in a savings account here in your bank and you can put a hold on
the money. You will have no risk since you have the money, and by making monthly
payments, I can (re)establish my credit."

The cost to you is minimal. Although you are paying interest on the loan, the bank is paying
you Interest on your savings account. Don't take "no" for an answer. Keep reaffirming that
you need the banker's help and will eventually become an excellent customer of the bank.
Persistence always overcomes barriers. Once you find a bank that will make the loan,
make two payments within the first 30 days. Go to a second bank and repeat the entire
process. You can show the loan officer at the second bank the one good credit reference
you now have at the first bank. Make two payments at the second bank as well. Now you
have two excellent credit references. After 90 days, use the money in your savings account
to payoff the balance of the loan. Have the credit bureau check your bank loan accounts;
which now show that your payments were made on time and the loans paid off early.

@ Charles J. Givens Organization 1990 R1 Page 3-35


Strategy #3-13.1: File Chapter 13 instead of personal bankruptcy
when your debts far outweigh your ability to pay. /)

Check here if you are deep enough in financial trouble to be


considering bankruptcy.

Call or visit your local courthouse to get the necessary papers and
information on how to file Chapter 13.

Once you have read the rules, decide if you think you need an
attorney. You can do it yourself. Call the Givens Organization Hot-
line if you have questions.

Complete all paperwork listing your creditors, amount of debt and


other required information.

File your case with the court .


Enter aSSigned court date here

Enter the court approved information here:


Total amount of debt $ _ _ _ __
Monthly payment $ _ _ _ __
Number of months $ _ _ _ __
Date debt will be completely paid
Other requirements: _ _ _ _ _ _ _ _ _ _ _ _ _ _ __

Pags3-36 @ Charles J. Givens Organization 1990 R1


Understanding Your Credit Report
Credit reports are easy to read once you get the hang of it,_ and most come with explicit
r Instructions. If you still have trouble, the credit agency is required by law to spend time with
you at its office explaining your report.

The credit bureau uses a rating system with the letters "0", "R" or "I", followed by a number
from 0 to 9. "0" is a 30-to-90 day open account. "R" represents "revolving accounts" such
as credit cards and department store accounts, and "I" is used for "installment credit," such
as an automobile or furniture loan. R-1 is the best, R-9 usually means the account was
writtl9n off by the creditor because of a bankruptcy. Your goal, of course, is to get all of
your accounts to R-1 or 1-1 status. When you do, the credit world is yours. A few prompt
payments will usually upgrade any account. Refer to the sample credit report and
explanation on the following pages.

r
@ Charles J. Givens Organization 1990 R1
Credit Report Codes
The following codes are used on a standard credit report like the example shown on the
next page, "Credit History." " )

ECOA - The Equal Credit Opportunity Act designators explain who is


responsible for the account and the type of participation you have with the
account
J - Joint M - Maker
I - Individual C - Co-Maker
U - Undesignated B - On Behalf of another person
A - Authorized User S - Shared
T - Terminated

Type Of Accou nt
Open Account (30 days or 90 days) o
Revolving or Option (open-end account) R
Installment (fixed number of payments)

Cu rrent Manner Of Payment


Too new to rate; approved but not used 0
Pays account as agreed 1
Pays 30 to 60 days late, one payment late 2
Pays 60 to 90 days late, two payments late 3
Pays 90 to 120 days late, three payments late 4
Pays later than 120 days 5
Filed Chapter 11 or similar arrangement 7
Repossession 8
Bad debt; placed for collection 9

The "Type Of Account" and "Current MannerOf Payment" are shown together in the "Credit
History" section of a credit report under present status; i.e. R1 means "revolving account,
pays as agreed". ~

Page 3-38 © Charles J. Givens Organization 1990 R1


CONSUMER DISPUTE FORM
A ...... Code Tlliephone No.

onal IdentIfIcation (Please Print or Type)

N~0 ________ ~ __________________ ~~~ __________________ ~~~~~ ____________________ ~=-~~--'~ ___


(1Ju1) (Flra.) (Middle Inltlsl) Sunlx (Jr•• 8r.• eU:.)

PN..mAddN.. __________________________________~------------------------~~----------------------~~----
(Sln.el) (Clly) (51410) (ZIp)

Fonn.rAddN.. ____________________________________________________________ ~--------------------------~----

(SlrHI) (City) (SIAI@) (ZIp)

Social Sacurlty Number _________________________


Dale of Birth ~~~--~_:_--__::_:___:_-
(Month) (OIlY) (Yoar)

I RECENTLY RECEIVED A COPY OF THE REPORT CONTAINING MY CREDIT HISTORY. AND I DISAGREE WITH THE FOLLOWING INFORMAT:ON:

CREDIT HISTORY

Name 0/ Bulinalll Account Number Specific nature 01 disagreement

Public Record And Oth.r Infonnatlon


Court or Buslnaas Case Number Natura 01 disagreement

Othar: (I.e. Inlormlllon


from othar credit bureaus, Item Natura of dlaaqreement
etc.)

..mend that Iha Information I haw dl.putad will ba raehaekod when nee",aluy lit Iha lioure., and I will ba notiliad of Iha relulla 01 Ihl. recheck.

r (Slgnalulll) (DOIlo)
NAME AND ADDRESS OF BUREAU MAKING REPORT in file _ single ref.
- - trade
CBI ATLANTA - EV&T - Full - Pres. Res.

oat. rec'o. date maiie( CBR rpl.


REGIONAL CENTER

3660 MAGUIRE BOULEVARD 09/22/K7 09/22/H7 inc. vl!rifit:d

ATLANTA,GA yl!s X no

CONFIDENTIAL REPORT inquired as: Joan Adams i 11 fi k; ::.illl:~

07/13/84

report on (surname) Joan Adams ss #: 265-71-4112 spouses name

Addn:ss 100 Blut! Lk Dr. cily: Atlanta slall!: GA zip code: rl!sid. sin~e

position: mth.lnc.
Prl!senl emploYl!r: Surprist! Gift Shop MGR $1,755 since 19H4

Dale of birth 12/15/55 numbl!r of dl!pndLs. owns I buying X I rcnts

Former address city slall! zipcodt: from to

Former employer: 1741, Riversedge, Dr. Atlanta, GA posilion hdd mlh inc. from 10

Other's employer Lal. vt:rified poslion hdd mlh inc. from Lo

Credit History

firm -- code date date credit term act. pres. times ecoa act. number
rpted opd. limit mths bal. status rev'd.
Freedom 4470Nl19 08/87 09/86 2000 61 2027 Rl 10J 1 300436618

Barnett 497BB108 08/87 01/87 13,000 230 12k 11 071 1 7099-33280185

GECC-RC 906FF278 08/87 02/87 1,800 79 1626 Rl 051 C CC735464-W21381

Robinson's 906DC86 07/87 12/86 195 178 R2 051 I 10627305

Visa 4910N24219 08/8705/87 1,500 64 1344 Rl 011 A 4060950001048946

Public Records and/or Summary of Other Information

Inquiries--
Con SVC 447AA36 09/22187 lstatMES 458BB2852 5/14/87

Navy - VISA 4910N24219 05/05/87 GECC 404FF304 03/01/87

Barnett BK 447BB2575 01/14/87 MD Nat. BK 801 BB1845 01/13/87

Chrysler 447FA50 01/13/87 Don Mealey 447AU348 01/13/87

44-004051-0-300
Part 3 - Credit Card Strategies

@ Charles J. Givens Organization 1990 R1 Page 3-41


The Three Uses of Credit
(listed here from worst to best)
,-.
)
/

WORST - to purchase perishables, such as meals, gas, groceries, airline tickets.


BETTER - to purchase depreclables, such as automobiles, furniture, clothes.
BEST - to purchase appreclables, such as mutual funds, a home or other investments.

How Much Do You Have of EaCh?

Charging perishables is the least desirable and most misused form


of credit. Payments linger long after the goods or services are gone. One month after you
charge a meal you pay for the potatoes, the next month the steak and, finally, the dessert.
While buying this month's food, you're paying for last month's feasts.

Depreciable purchases include goods and services that will never again be worth what you
paid forthem. A better use of credit, yes, but stacking up long-term payments will eventually
bury you.

AMOUNT PAYMENT OTHER


AUTOMOBILE LOAN (1) $ $ $
(2) $ $ $
FURNITURE (1) $ $ $
(2) $ $ $

The best use of credit is borrowing money at a low rate and investing at a higher rate of
return. Appreciables include a home with a mortgage, margined mutual fund shares, rental
real estate, and a leveraged business or IRA. Leverage is the use of borrowed money to
make money-often called using OPM (other people's money).

List the investments you own that use borrowed money:

AMT. BORROWED DESCRIPTION PAYMENT EARNINGS


INVESTED
$ $ $
$ $ $
$ $ $

Pags3-42 © Charles J. Givens Organization 1990 R1


Get Out of Credit Card Debt in Half the Time

~/~"" Strategy #3·14: To eliminate high interest credit card debt, make
extra principal payments each month of $25 to
$100, plus the minimum payment, plus the
amount of your purchases.

If your lender requires you to pay in increments of full payment amounts, in our example
$268.27, make extra principal payments in that amount every other month.

Credit card interest is often 18% or 11;2% per month, and should be a primary target for
the "extra principal payment" strategy.

Let's say, for example, your MasterCard balance is $1,1 00, your required monthly payment
Is $60 and you purchased $110 this month. You must send in a check for $220 as follows.

New Purchases Amount $110


Required Monthly Payment + $60
Additional Optional Payment +$50
TOTAL PAYMENT $220
NEW BALANCE $880
You'll payoff your balance in half the time.

@ Charles J. Givens Organization 1990 R1 Page 3-43


Choosing the Best Credit Card for You
Your best credit card is chosen by viewing the annual fee (if one exists) as an added
percentage rate of interest (called a fee%). This percentage will vary depending on your / .)
monthly balance. The table below will help you decide.

Annual Fee Average Monthly Balance Fee %


$20 $1,000 2.00%
$20 $2,000 1.00%
$20 $3,000 0.66%
$30 $1,000 3.00%
$30 $2,000 1.50%
$30 $3,000 1.00%
$40 $1,000 4.00%
$40 $2,000 2.00%
$40 $3,000 0.75%
Find the fee % of the credit cards you are considering and add it to the annual percentage
rate that the card charges. Pick the card with the lowest overall interest rate.

Interest Rate + Fee Percentage = Overall Interest Rate

Page 3-44 @ Charles J. Givens Organization 1990 R1


Strategy #3-14.1: To payoff your credit cards in half the time, with
r" the same monthly payment, use debt shifting.

Check here if you keep monthly balances on MasterCard or VISA


or other credit card accounts.

List the accounts and current balances of all credit cards you
possess on which you make monthly payments.
Name of card or store Current balance Interest rate per year
1 ____________________________________________
2 ____________________________________________
3 ____________________________________________
4 ____________________________________________
5 ____________________________________________
6 ____________________________________________
7 ____________________________________________
8 ____________________________________________
9 ____________________________________________
10 ___________________________________________
Total Balance >0<.$_ _ _ _ _ _ _ __

Shift all or as much of this debt as possible to a lower rate.

Apply for the Givens Organization/Arkansas Federal Card and the


highest limit for which you qualify. In the space marked, "credit
limit" enter maximum/Gold Card.

Be certain your credit bureau report is in good condition before


you apply.

After you receive your Givens Organization card, obtain other low
interest cards to shift the rest of your charge account debt to a
lower rate.

NOTE: If you are turned down for this or any other credit, don't take
it personally and don't let that stop you from applying for other
cards.

@ Charles J. Givens Organization 1990 R1 Page 3-45


Strategy #3-15: Replace all your high interest credit cards
and charge accounts with low interest credit. / .. ~

I
~~. ~

Money Saved With A Low Interest Credit Card


AVERAGE INTEREST INTEREST AMOUNT
BALANCE @18%YEAR @12%YR S.AVED

$1,000 $180 120 $ 60


2,000 360 240 120

3,000 540 360 180

4,000 720 480 240

5,000 900 600 300

6,000 1,080 720 360

7,000 1,260 840 420

8,000 1,440 960 480

9,000 1,620 1080 540

10,000 1,800 1,200 600

Use this strategy to obtain and track low interest credit cards.

On the following page is a list of the lowest interest rate credit cards
available as of this writing, other than the Givens Organization
Card, Check those that interest you and write or call for an applica-
tion. Be certain to note if there is a charge for a cash advance if
you intend to use the. debt shifting strategy.

Psge3-46 @Charles J. Givens Organization 1990 R1


Here Is a list of the best credit card sources as of December 1989.
INTEREST TYPE OF YEARLY OUT OF GRACE
I"f -~ ... NAME OF BANK RATES CARD FEES STATE PERIOD
\
The Charle. J. Givens Organization Credit Card
Arkansas Federal Savings"· Issuer
Charles J. Givens Organization· Agent
P.O. Box 3111
Orlando, FL 32802 11.75*** VISA/MC $35 Yes odays
SJM)C1a1 Rate For Givens
Orgjanlzatlon Members Only
People's Bank
P.O. Box 637 13.50 VISA/MC $25 Yes 25 days
B:Heport, CT 06601 (Gold Card)
App cation requests:
(800) 423-3273
First Tennessee
Credit Card Service Center Prime** MC $35 Yes 25 days
P.O. Box 1545 Rate (Gold Card)
Memphis, TN 38101 Plus 2%
~lIcatlon Requests:
(9 1) 523-4883
Rerobllc Savings
82 0 W. Brown Deer 13.92 VISA/MC $10 No odays
. Milwaukee, WI 53223
(414) 354·1660
USAA Federal Savings Bank
Bank Card Center 14.46** MC $0 Yes 25 days
P.O. Box 21658 (Except PA)
Tulsa, OK 74121
~lIcatlon requests:
t""'" (8 0) 922·9092
Oak Brook Bank
P.O. Box 5033 15.00 MC $18 Yes 25 days
Oak Brook, II 60522
oorcllcatlon Requests:
( 0) 666-1011
Horizon Savings
Box 9600 15.10 VISA/MC $0 Yes 25 days
Austin, TX 78767
(512) 338·9433
Manufacturer's Bank
P.O. Box 15147 15.80 VISA/MC $0 Yes None
Wilmington, DE 19850
Application Requests:
(800) 346-1300

·Speclal applications available free from the Charles J. Givens Organization at the address shown.
*·'nterest rates vary monthly. Call to receive the latest rate .
....Rate equals federal discount rate plus 4.75%.

@ Charles J. Givens Organization 1990 R1 Page 3-47


INTEREST TYPE OF YEARLY OUT OF GRACE
NAME OF BANK RATES CARD FEES STATE PERIOD
Mercantile Bank
Credit Card Center 15.90 VISNMC $20 Yes 25 days
P.O. Box 306
St. Louis, MO 63166
Application. Requests:
(800) 362-9140
Cham~IOn Federal
Box 2 00 15.90 VISNMC $20 Yes 30 days
Bloomington, Illinois 61702
(309) 829-0456
Oak Brook Bank
MasterCard 16.80 MC $0 Yes 25 days
P.O. Box 5033 (Gold Card)
Oak Brook, IL 60522
Application Requests:
(800) 666-1011
Dauphin Deposit Bank
P.O. Box 4332 17.90 VISNMC $15 Yes 25 days
Harrisburg, PA 17111
~lIcatlon Requests:
( 17) 255-2366
First Tennessee
Credit Card Service Center 17.90 VISNMC $18 Yes 30 days
P.O. Box 1545
Memphis, TN 38101
(901) 523-5800
Security Bank and Trust
P.O. Box 1156 18.50 VISNMC $0 Yes 25 days
Southgate, MI 48195-9990 ~
Application Requests:
(800) 424-1 060
Prlmerlca
774 Christiana Rd. 18.90 VISNMC ($15 Yes 25 days
Newark, DE 19713 ~0.5%+ Gold)
Application Requests: rime rate) ($0
(800) 772-7775 reg.)
First Signature
P.O. Box 7090 19.67** VISA $0 Yes 25 days
190 Commerce Way (Gold Card)
Portsmouth, NH 03801-7090
A&rcllcatlon Requests:
( 0) 522-1776
Harris Trust Charge-It System
P.O. Box 4682 19.80 VISNMC $0 Yes 25 days
N. Suburban, IL 60197-4682
Application Requests:
(800) 445-4631

Page 3-48 @ Charles J. Givens Organization 1990 R1


Strategy #3-15.1 : Decline or cancel the charge card insurance on all
.r!""'"' MasterCard, VISA and other charge accounts.

Check here if you currently have and/or applying for MasterCard


or VISA cards or other installment cards.

Get out of your Records Management System credit card


statements or agreements and list by bank, department store etc.
and note those on which you have Chargegard or a similar in-
surance.
Credit card name Chargeguard? Date Statement
Yes No Letter sent OK

1 DO
2 DO
3 DO
4 DO
5 DD
6 DO
t"""" 7 DD
8 DO
9 DO
10 DO
Using copies of the letter on the next page, notify each credit card
issuer from which you have taken the insurance to immediately
cancel the insurance and to stop charging you for it.

As an alternative, write the note on the following page on your next


monthly statement.

@Charles J. Givens Organization 1990 R1 Page 3-49


To: From:

/~\
1

Please cancel immediately any and all forms of credit life insurance such as Chargeguard
that I may be carrying on my account and stop charging me for it.

Thank you.

~ /

PageS-50 @ Charles J. Givens prganization 1990 R1


Strategy #3-16: Deduct a credit card charge from your bank ~
balance in your check register for credit ~
control.

Check here if you use or will use credit cards.

Beginning with your next credit card purchase, enter the amount in
your check register and deduct from your bank balance.

Enter under check number "cc" for credit card purchase or develop
a code system similar to the following if you use multiple cards.
V =VISA
MC = MasterCard
AX = American Express
D = Discover

Your bank balance shown in your checkbook is the correct balance


as if you had made your credit card purchases as cash purchases.
Never allow your adjusted balance to be less than 0, even though
you know you still have money in the bank.

When you receive each statement, match the charge amounts on


the statement to the entries in your check register. Cross off or
check the entries in your check register that you are now paying by
check to the credit card company. Since you have already
deducted these amounts from your bank balance, do not subtract
the check amount again from your balance. Any entries not check-
ed off in your register are still outstanding but there is no need to
be concerned, you have already deducted them from your balance
and they will appear on your next statement.

© Charles J. Givens Organization 1990 R1 Page 3-51


Strategy #3·17: Overcome poor credit with a secured credit ~
card. ~
The easiest way to establish or re-establish your credit is through a secured MasterCard
or VISA card. Secured means that you have made a deposit equal to the amount of credit
you want, from $300 to $3,000. With some banks or agencies, your deposit is put into an
Interest-earning CD~ There is usually an agency fee of about $30 for getting you the credit
approval and handling the transaction-well worth it. After you have made regular, timely
payments for six months or so, the security requirement is dropped and your deposit
returned to you. After you have made payments, have your account reverified and your
credit file updated by the credit bureau.

Contact these companies for secured cards.

1. Charles J. Givens Organization (Agent) 2. Key Federal Savings Bank


Century Financial (Issuer) 626 Revolution Street
Secured Card Havre de Grace, MD 21078
P.O. 80)("3111 (301) 939-0400
Orlando, FL 32802 Cards offered: Mastercard &VISA
(407) 774-3400 Fee: $0
Cards offered: MasterCard &VISA
Fee: $35

3. United Credit Network, Inc. 4. First Consumers


8306 Wilshire Blvd., Suite 19 Lincoln Tower
Beverly Hills, CA 90211 10260 SW Greenberg Rd.
(213) 549-9669 Portland, OR 97223
Cards offered: MasterCard &VISA (800) 876-1220
Fee: $35 Cards offered: MasterCard & VISA
Fee: $20

5. Home Trust 6. Bank of Hoven


P.O. Box 37 P.O. Box 9068
Brookings, SO 57006 Vani, CA 91409
(605) 692-9555 (818) 880-2290
Cards offered: MasterCard &VISA Cards offered: MasterCard & VISA
Fee: $40 Fee: $65

7. Berthound National
"801 Springdale Drive
Exton, PA 19341
(215) 524-8740
Cards offered: MasterCard & VISA
Fee: $35

Page 3-52 © Charles J. Givens Organization 1990 R1


Part 3 ~ How To Choose A Mortgage

@ Charles J. Givens Organization 1990 R1 Page 3-53


.
Strategy #3-17.1: Shop around to find your best deal on a mongage.
All mortgages are not created equal and in the same city at the same time there will be
greatly different mortgage rates and terms.

Your best source for all current rates in an area is a local Realtor®.

Usually a Realtor® will have a complete comparison chart listing every mortgage lender
In an area and all of the rates and terms, including points.

This strategy applies whether you are buying or refinancing.

H %A .e
Strategy #3..17.2: Structure a mortgsge so that your monthly
payments don't exceed 300/0 of your gross income.

Using the Income rule table below may give you some idea of how much of a mortgage
you may be able to afford.

Annual Monthly Gross Maximum Monthly


Income Income Income Rule Housing Expel1ldhure 1"' ...
)
$25,000 $2,083.33 .30 $625
$50,000 $4,166.67 .30 $1,250
$ 70,000 $6,250.00 .30 $1,875
$100,000 $ 8,333.33 .30 $ 2,500

© Charles J. Givens Organization 1990 R1


!

Strategy #3-17.3: Get a conventional mongage only when you


ca.nnot qualify for an FHA or VA mortgage.

When you get a mortgage to buy a home you will have three basic choices: FHA, VA or
conventional. These are not offered by three different types of lenders but normally all three
will be offered by the same mortgage company.

FHA and VA are forms of government insurance that allow you, the mortgagor, to make
less than a 20% down payment. The insurance pays the lender's loss between your down
payment and 20% of the mortgage amount in case you default.

A conventional mortgage is any mortgage that is not an FHA or VA. There are three choices
for a down payment on a conventional mortgage: 20%, 10%, or 5%. If you choose less
than 20% as your down payment, you pay private mortgage insurance, also called PMI.

The biggest of the private mortgage insurers is also called PMI. The amount of the
Insurance is now added to your mortgage amount and paid by you in monthly payments.
Of course, interest is also paid on the insurance, making private mortgage insurance an
unavoidable scam.

The VA mortgage is the best choice when getting a mortgage because the borrower makes
no down payment, although other closing costs may run as high as $2,000. Only those
who have served 12 months of active duty in the armed services and certain widows of
servicemen qualify for a VA mortgage. The U.S. government sets the interest rate and
qualification requirements on VA mortgages, and VA rates change as other interest rates
change.

@ Charles J. Givens Organization 1990 R1 Page 3-55


Strategy #3..17.4: Convert points to interest equivalent in order to
compare mortgage rates.

When shopping for a mortgage you will find three factors that determine the real interest
rates charged by different lenders.

1. Interest Rate-The percentage interest charged for the loan. The rate can be
fixed for the life or the loan or variable and you will have a choice. --
2. Points-One point is 1% of the mortgage amount and the number of pOints
charged on a mortgage can range from 0 to 8. To effectively compare mortgage
rates you- must convert points, which are charged up front, to interest, which is
charged over the life of the loan. A good rule of thumb is that 8 points are the
equivalent of 1% interest. In other words, an 11 % mortgage with no points is the
equivalent of a 10% mortgage with 8 points or a 10 1;2% with 4 points. It is best
to have the points, if any, added to your mortgage, even though you will be
charged interest, since your objective is to minimize your down payment.

3. Term-The term of an amortized mortgage is the number of years you make


payments until the loan is completely paid off. You will find that there is usually
a difference of 114% to 1;2% between the 15 and30-year mortgage rates with the
15-year mortgage having the lower rate.

PagB3-56 @ Charles J. Givens Organization 1990 R1


Strategy #3-17.5: Bid on a VA repo if you want a bargain priced
(*' house you can fix up.

If you qualify for a VA mortgage, you will also be first in line for any VA repossession you
bid on.

VA repossessions are usually in poor condition and require a lot of fix up. Required repairs
are normally cosmetic, not structural, including cleaning, painting, replacing dQors and,
sometimes, broken windows. Part of the damage is from the previous owners, but vandals
also dotheTr share while the property is vacant.

To find VA repossessions, call your local Veteran's Administration office listed under U.S.
Government in the phone book.' They will refer you to local Realtors® who list and will
show. you the VA repossession.

You make a bid on any property in which you are interested and priority goes first to VA
qualifiers who plan to live in the home. Those not quali'fied for a VA mortgage may also
bid.

Be certain to find out from the Realtor® what other properties in the same area in good
condition are selling for so you can determine what kind of a deal you are getting. Look for
a price 15% to 20% less than a property in good condition goes for. The VA pays the
Realtor® the commission. Look over at least five properties to get a-good idea of what's
available.

@ Charles J. Given$ Organization 1990 R1 Page 3-57


Strategy'3-18: If the fixed rate mortgage interest is over 93;40/0,
take the ARM. If the fixed rate mortgage ~ "...}
interest is under 93/4%, take the FRM. ~
Check here only when you are looking for a new mortgage.

Check five mortgage lenders to determin~ what is available.

Company Years FRM FRM Actual Int. Company Years ARM ARM Actuallnt.

% Points Rate % Points Rate

Enter lowest actual FRM mortgage rate _ _ %


_ _ Check here if 9 3/4% or less and get the FRM mortgage.
_ _ Check here if over 9 3/4% and get the ARM mortgage.

Page 3-58 @ Charles J. Givens Organization 1990 R1


Strategy #3..18.1: Convert your ARM to an FRM only when the new
FRM rate would be 100/0 or less.

Check here only if you have an adjustable rate mortgage.

Call any local mortgage company or Realtor® to determine the


current fixed rate mortgage interest rates in your area.
Enter here %

Read your ARM contract to determine how or when you may


convert to an FRM. Each mortgage has different rules. Enter a
synopsis of your mortgage conversion rules here.

If FRM rates are 10% or less call or write your mortgage company
immediately referring to the conversion rules above and begin the
conversion process.
Enter phone number and address of mortgage company.

If FRM rates are currently above 10%, watch the mortgage rates
on the financial pages of your newspaper or in your Charles J.
Givens Financial Digest and begin the conversion process when
the rates do fall to 10% or less. Eventually they always will.

@ Charles J. Givens Organization 1990 R1 Page 3-59


Strategy #3-19: Use a graduated payment mortgage to buy
more home with smaller month Iy payments.

Graduated Payment Mortgage (GPM)


A GPM is a mortgage feature of either a fixed rate or adjustable rate 30-year mortgage,
and It offers lower payments in early years to allow more buyers to qualify. Since the
payments are often less than the accrued interest, the unpaid interest is added to the
principal, resulting in "negative amortization." Payments go up slightly each year until the
mortgage converts to positive amortization and is paid off at the end of the 30-year term.

The smaller payments in the early years of a GPM can help you qualify for or afford a home
costing as much as 30% more. As your career flourishes and your income increases over
the years, you will be able to afford the increase in payments of a GPM.

Strategy #3-20: Use a growing equity mortgage to payoff your


home in half the time with payments you can ~
afford. e
Growing Equity Mortgage (GEM)
There Is a second alternative for saving money on mortgages. Some mortgage lending
institutions are now offering a little-known, special 30-year mortgage called a Growing
Equity Mortgage (GEM). The first year's payments are about the same as a 30-year
mortgage. Payments then go up each year, but the extra amount of the payment is applied
only to the principal so that your mortgage is actually paid off in 15 years, saving thousands
In Interest payments. The GEM becomes a 15-year mortgage with lower payments in the
early years when you need them.

Page3-BO @Charles J. Givens Organization 1990 R1


Strategy #3-21: Get a bigger mortgage to create a better
investment.

Your home is more than a place to live, it is one of the best investments you'll ever make.

There are four positive uses of a mortgage:

1. To increase the return on a real estate investment through the power of leverage.

2. To buy a home without paying cash.

3. To free up real estate equity for higher return investments.

4. To payoff non-deductible consumer loans with tax-deductible equity loans.

Leverage is the use of other people's money (OPM) and a home mortgage is an easy
method of putting OPM to work. Earning $10,000 in a savings account would require an
investment of $50,000 for two years at 10%. Thirty percent of your interest would be lost
to taxes. Buy a $1 00,000 home with $10,000 down payment and if the home appreciates
5% per year you have earned the same $10,000 in two years with no taxes. Your
investment return is 50% per year instead of 10%.

@ Charles J. Givens Organization 1990 R1 Page 3-61


Building Wealth With Shorter Mortgages

Strategy #3-22: Get a 15-year mortgage instead of a 30-year


mortgage to cut total payments as much
as 45°A».

You can save tens of thousands in mortgage interest by putting the time value of money
on your side. The mortgage company will automatically give you a 30-year term if you don't.
object. Why? Because 30-year mortgages make mortgage companies rich.

For every $50,000 you borrow at 12% interest for 30 years, your principal and interest will
be $515 a month. At the end offive years (60 payments), you will have paid in $30,900,
but reduced your principal by only $1,000. After 10 years (120 payments), you have paid
the mortgage company $62,00o-more than the original mortgage amount-but have paid
·off only about $5,000 of the principall

Get a 15-year instead of a 30-year mortgage and your monthly payments go up only about
16%.· But for every $50,000 you borrow, you will save $80,000 in total interest payments.
With the cost of homes today, the shorter mortgage can save you tens of thousands during
your lifetime.

Pags3-62 . j
© Charles J. Givens Organization 1990 R1
Strategy #3-23: Cut your mongage term in half with extra
principal payments.

Refinancing an existing 30-year mortgage for 15 years would result in thousands of dollars
In new closing costs. You can payoff your 30-year mortgage in half the time witho~t

refinancing by making extra principal payments.

On the first ofthe month when you write your regular mortgage check, write a second check
for the "principal only" portion of the next month's payment.

Here Is a section of a typical amortization schedule showing the breakdown of payment


numbers 60 through 63 of a 30-year (360 payment) mortgage.

Notice how the principal increases slightly each month and the interest decreases by the
same amount.
Principal
Palment# Payment Principal Interest Balance
60 ~ 20.00 480.00 49,000.00 FIRST

~. 61 $500 @ 479.70 48,979.70 MONTH

62 20.70 479.30 48,959.00 SECOND

63 478.80 48,937.80 MONTH

When you write a check for payment 60 of $500, write a second check for $20.30
representing the principal only portion of payment number 61 (a). The following month, write
a check for payment number 63(b). Mathematically you are movi ng down your amortization
schedule two months at a time. You never pay interest on a payment whose principal is
prepaid. The interest on the principal-only payment is the amount you will save over the
life of the mortgage.

@ Charles J. Givens Organization 1990 R1 Page 3-63


Strategy #3-23.1: If you don't qualify for a 15-year mortgage, get a
30-year mortgage and make extra principal /

payments.

Getting a 15-year mortgage will force you into a wealth-building mortgage reduction plan.
You are committed to the payments.

If you are buying your first home or barely qualify for the mortgage on the home, you may
qualify for a 30-year mortgage but not a 15-year mortgage because of the difference in
monthly payments. In that case, you may accomplish nearly the same thing by getting the
30-year mortgage and making extra principal payment.

During the first few years of a 30-year mortgage, the extra principal payment amount each
month will be less than the extra monthly payment on a 15-year mortgage, giving you some
slack now when you need it most. During the last few years, as the monthly principal
becomes the larger part of a 30-yearmortgage payment, the extra·principal will exceed
the extra payment on a 15-year mortgage.

Page 3-64 @Charles J. Givens Organization 1990 R1


Strategy #3-23.2: Ask 5%-80/0 more for your home when you sell if
(~ you have an FHA or VA loan.

Check here and use this strategy anytime you are selling your
home or rental property and you have an FHA or VA mortgage.

Check, using a Realtor® computer, the selling prices of three similar


homes in the area.

Enter the average selling price here:


$

If these properties sold with FHA or VA assumable mortgages,


your selling price should be similar.

If these properties required new financing add 5% to 8% to their


average price in order to determine the premium price you should
get for your home.

$ Price of comparable property sold without an assumable


mortgage.
X 1.05
$ Reasonable price to ask for your property with your
assumable mortgage.

Make certain you and your sales agent make a big deal out of the
fact that the buyer will save in pOints and closing costs.

@ Charles J. Givens Organization 1990 R1 Page 3-65


Strategy #3-23.3: Don't make extra principal payments on a mona
gage or loan with an interest rate of less than 90/0. "')

There comes a point at which the interest rate on a mortgage or loan is so low that it does
not pay to prepay. When the interest rate on your loan is low you will always better by
taking the money allocated for extra principal payments and invest in a mutual fund family.

Strategy #3-23.4: Don't let a prepayment penalty scare you out of


paying a mongage off early.

Mention the word penalty and most Americans tremble without analyzing what a penalty
really means .

. For Instance, and cutting your mortgage term in half with extra principal payments will
automatically cut an existing 30-year mortgage down to a 15-year mortgage, saving you
tens of thousands of dollars in unnecessary payments and interest.

Let'a8SSume the prepayment penalty is 1% of the amount paid off early. The penalty is
not assessed against each extra principal payment as you make it but only charged 15 ~
years later when the entire mortgage is paid off. If the original mortgage was $80,000 and
the amount paid off early was $40,000, the prepayment penalty would amount to only $400,
a small price to pay for savings tens of thousands of dollars.

Strategy #3-23.5: Don't make extra principal payments on rental


property mongages.

Check only if you own rental properties.

When buying a rental property, finance for as long as possible.

Make only the regular mortgage payment on your rental properties,


not extra principal payments.

@ Charles J. Givens Organization 1990 R1


Strategy 13..23.6: If you possess great discipline, Invest the amount
of your extra mortgage principal payments In a
mutual fund.

Check here only if you have a 30-year mortgage and possess great
financial discipline.

Using you amortization schedule, determine the next 12 months


of extra principal payments.

Payment number Date Due Principal Amount Amount invested in Date


Mutual fund Account Invested

$
$
$
$
$
$
$
$
$
1-year totals $====

If you follow the mutual fund alternative investment plan faithfully


for the next 12 months, it will certainly make you wealthier. If you
find you missed investments or simply forgot, begin adding the
extra principal payments monthly to your mortgage checks.

r
\

@ Charles J. Givens Organization 1990 R1 Page 3-67


Strategy #3-23.7: Obtain an amortization schedule for allyour
mortgages and loans.

Check here if you have any mortgages of installment loans.

List all mortgages and loans here (exclude rental properties and
credit cards).

Lender Original Current Interest Original Term Balance of

Amount Balance Rate MonthNear Term-Mo.Near

$ $ %
$ $ %
$ $ %
$ $ %
$ $ %
$ $ %
$ $ %

In addition to amortization information, this strategy will give you a


picture of your total mortgage and installment loan liabilities.

Check far lefthand lines if each the mortgage or loan applies to you.
Check the right hand line if you have or after you have obtained
your amortization schedule.

Use these schedules to form a plan to get you out of debt in half
the time.

Page 3-68 © Charles J. Givens Organization 1990 R1


Strategy #3·24: Never use a mortgage grace period; it will
damage you r cred it.

Check here if you have a home mortgage.

Check your credit report to see if you have been reported late on
your mortgage by using the grace period.

Begin immediately sending in your mortgage checks on the 25th


of the month so your payment will arrive by the 1st.

If you own rental properties, begin paying the first of the month
whether or not your rents are collected.

Strategy #3-25: Refinance your home at a lower interest rate


any time the new interest rate is at least 2% ~
less than the old interest rate. ~
Check here only if you currently have a home mortgage.

Complete the rate you would have to get to make refinancing


profitable.
_ _ _ % Your current mortgage interest rate
_ _ _2% The difference that makes refinancing profitable.

---% The new interest rate needed to refinance.

Check here whenever refinancing becomes profitable and follow


all strategies for obtaining a new mortgage.

@ Charles J. Givens Organization 1990 R1 Page 3-69


Strategy'3.26: Borrow your home equity free by combining ~
an equity loan with a good investment plan. ~

Check here if you have a mortgage balance.

Determine the total equity in your home:


$ ____ approximate value of your home
_ _ _ _ your current mortgage balance.

$-~-- total home equity

Determine the maximum you can borrow using an equity loan


(at 80% loan to value ratio).
$ _ _ _ _ approximate value of your home
X .8 to compute 80% of market value
$ _____ 80% of market value
_____ current mortgage balance
$ _____ approximate maximum amount you can borrow
using a home equity loan.
;41\)
Check the interest rate and terms of several lenders.
Name of Phone Appraisal Interest Terms
Lender Number Fee Rate

Circle the one with the best rate and terms.


If you believe the company's appraisal of your property is
too low ask for a second appraisal.

Enter here the amount of commitment you got from the mortgage
company (maximum amount of equity loan).
$_------

Pags3-70 @CharlesJ. Givens Organization 1990 R'I


Determine how you are going to use the money.

$,_ _ _ _ _ _ _ _Mutual funds

$_ _ _ _ _ _ _-Discounted mortgages

$,_ _ _ _ _ _ _ _ Payment of non-deductible loans

$,_ _ _ _ _ _Other

$,_ _ _ _ _ _ _ Other

r
@ Charles J. Givens Organization 1990 R1 Page 3-71
How To Invest Your Equity Loan Money
The next step is to formulate your investment plan. Your investments must provide a return
great enough to make the payments on your loan and give you additional income. Modify /)
the suggested plans to fit your specific investment needs: maximum growth, maximum
income or maximum tax shelter. Make your plan before you withdraw the money from your
equity loan account.

Borrow Your Home Equity Free-Investment Plan


Equity Loan 11% Interest 15 Years

Inveatment Amt. Expected cash Deferred


Invested Income Income Income
Amt. Borrowed/Invested = $20,000; Yearly Interest = $2,000*

Mutual Funda1 10,000 15% 1,500 Total Income $5,000


Dilcount. Mlg2 10,000 30% 1000 Interest pymts -2'ggg
1:000 Net Income $3,
Amt. Borrowed/Invested = $50,000; Yearly Interest =$5,000*

Mutual Funda1 25,000 15% 5,000 Total Income 12,500


Discount. Mlg2 25,000 30% 5~
1 ,
§"ggg Interest pymts
Net Income $7,
-5,:
Amt. Borrowed/Invested = $100,000; Yearly Interest =$10,000*

Mutual Funda1 50,000 15% 7,500 Total Income 25,000


DllCOUnt. Mlg2 50,000 30% 10,000 5,000 Interest pymts-10,000
20,000 5,000 Net Income $15,000

• Only the Interest portion of the monthly payments is shown since the principal portion of the mortgage payback is
JOur money.

1 Mutual Funds (See Investment Section)


No commIssIons using no-loads funds.
. Money Movement Strategy used to earn 15% to 20%lyear average.
AI/earnIngs can be either withdrawn to make mortgage payments or reinvested.

2 Discounted Mortgages
Mortgages purchased at 40% discount from face value.
20% Is current income from monthly interest received.
10% Income Is deferred until mortgage matures.

Psgs3-72 @ Charles J. Givens Organization 1990 R1


Part 5 - Send Your Kids To College Free

@ Charles J. Givens Organization 1990 R1 . Page 3-73


Strategy #3·27:

About three months before your child begins college, buy a four-bedroom home, condo or
duplex with as big a mortgage as possible within a few miles ofthe college campus. Furnish
your property in lIearly Salvation Army" and rent it to four students, with leases cosigned
by their parents. Then march yourself down to the college financial aid office and ask for
anttle-known type of college financing called the IIparent loan." Finance the entire education
using the parent loan plus one of the commercial loans listed at the end of this chapter.
Pay the loan off with the profit from the sale of the property when your child graduates.
During the four-year term, your property will appreciate dramatically because of the
shortage of off-campus housing in almost every college campus area.

Choose a property within a couple of miles of the campus, so that transportation for your
resident students is not a problem. The property should have four bedrooms for two
reasons: maximum rent wh~ you own the property, and maximum value when you sell.
The house should be in good condition, requiring only cosmetic, not major, surgery.

Now let's look at the details.

Pags3-74 © Charles J. Givens Organization 1990 R1


Stra~gy , 3·28: Use the "PLUS loan" to finance the first
$3,000 per year of college costs.

The parent loan for undergraduate students (PLUS Loan) is the easiest to obtain of all the
government educational assistance programs, yet the least known. Parent loans are
available to parents, grandparents and even financially independent undergraduate stu-
dents. They are handled through participating local banks or credit unions. The greatest
benefit of the PLUS loan is that you do not have to prove financial need as you would for
a guaranteed student loan. The PLUS loan is available to all income brackets, and is usually
made directly to parents instead of students. The repayment starts 60 days after the loan
Is obtained but the money can be borrowed as needed, and you pay only the interest until
your child graduates. The interest rate is tied to the gO-day Treasury-bill rate.

To learn more about PLUS loans, contact your high school guidance office, the college
financial aid office, or the Department of Education in your state. Ask for the PLUS loan
by name.

The PLUS loan will give you a maximum of $3,000 per year up to a total of $15,000. Should
you need additional money, use one of the commercially available education loans listed
at the end of this chapter to finance the balance. The commercial education loans from
Knight Insurance can be used for up to 100% of college costs and have no restrictions.

,-.
(

© Charles J. Givens Organization 1990 R1 Page 3-75


Strategy #3-29: Turn your property into a mini-student dorm.
/c-

Furnish your property with used, inexpensive furniture from any salvage store. You will )

want a bed, desk, chair, chest of drawers, lamps and a small bookcase for each bedroom,
and basic furnitu re forthe rest of the house. Let students supply their own Ii nens and kitchen
utensils. Don't be surprised if you can furnish the entire house for little more than $1,000.
All the furnishings are tax-deductible.

Strategy #3-30: Rent your property by the bedroom on a yearly


lease to individual students, cosigned by
parents.

Place ads underthe "share" column of the school and local newspapers, as well as posting
notices on the school bulletin board. Most college admissions or student housing offices
keep a registry of available housing in which you will want to list your property.

Rent by the bedroom on separate leases. Check with others who own rental property in
the area to determine the rent you should charge. You will find you can get $150 to $300 ~

per student, per month, depending on the city, cost of properties in the area and the
shortage of housing. The total rent of $600 to $1,200 per month will be more than adequate
to offset the mortgage, taxes and maintenance costs, and give you extra money for college
expenses.

Rent only on a full year's lease, not a lease that covers only nine months of the school
year. Give each student the option to sublease if he or she will not attend summer school.
Have parents cosign the lease. With a cosigner, you are protected from the problem of
coUectlng for damage or unpaid rent.

Page 3-76 @ Charles J. Givens Organization 1990 R1


Strategy #3-31 : Make your son or daughter the property
manager.

Pay your child a tax-deductible salary of about $100 a month, and let him or her handle
the regular duties of a property manager including:

G Collecting rents,
., Inspecting the property once a week for cleanliness and damage,
• Renting the property when there is a vacancy,
• Contracting any repair work that needs to be done,
" Reporting to you on the financial and physical condition of your property.
The $1,200 per year you pay your child is tax deductible, since the money is paid for
property management. The deduction should save you $360 per year in taxes (28%
bracket) or almost $1,500 over the four years. The tax-deductible money you pay your
student can be used for books, supplies or food expenses.

r
@ Charles J. Givens Organization 1990 R1 Page 3-77
Strategy #3-32: Use the real estate tax deductions to
generate extra cash. ,-
)
The depreciation deductions you claim each year for your mini-student dorm give you
immediate cash, which can be applied toward college expenses. Using 20% as an estimate
of the value of the land, 80% as the estimated value of the house, and assuming you are
In the 28% marginal tax bracket, the table below illustrates how much cash you will save
in taxes for the four years of college.

BASIS OF FIRST YEAR FOUR YEAR FOUR YEAR


PROPERTY DEPRECIATION DEPRECIATION TAX SAVINGS
$50,000 $1,800 $ 7,200 $2,016
$75,000 $2,700 $10,800 $3,024
$100,000 $3,600 $14,400 $4,032
$500,000 $5,400 $21,600 $6,048
The year you sell the property, be certain to use tax strategies to create enough additional
deductions to offset the depreciation recapture you will add to~your income. The financial
relief of a graduated student will give you the extra money to pay any taxes due on the
profits.

Psge3-78 © Charles J. Givens Organization 1990 R1


Strategy #3-33: Use the profits from your investment to pay ~
off your loans. ~
When your child graduates, the time has arrived to sell the property. At 8% per year
appreciation, the property will be worth $15,000 to $40,000 more at the end of four years,
depending on the original price. Because of the demand for housing in college areas, the
Increa.se In value of your property will be substantial. The best and simplest way of selling
the property for top dollar is to run the following advertisement in the school and city
newspapers:

"Send your child to college free-<:all me for details I"

You'll receive a dozen calls the first day alone. Since you have the proof you can send
your child to college free, you will have no problem selling the property to the parents of
an incoming freshman. In fact, you'll have several families bidding up the price.

In addition to the PLUS loan, there are several other sources of college financial aid. In
order to help you plan effectively, the following chart will show you the financing options
~ and sources for the best educational loans. You may use the college loans with or without
purchasing the real estate. Awareness of your alternatives and proper planning will save
you thousands of dollars when educating your children, your grandchildren or yourself.

@ Charles J. Givens Organization 1990 R1 Page 3-79


Best College Loan Sources
Interest Term
Rate (Years) Amount Restrictions
)
FEDEBALLOANS

NatIonal Direct
Student Loan (NDSL) 5% 10 $3,000/yr Generally, family
must have Income
under $30,000 and
meet other tests.

Stafford Student Loan


9% 10 $2,625 Family must have
1st 2 years Income under
$4,000 $30,000 and meet
next 2 years other tests.

Parent Loan for


Undergraduate
. Students (PLUS) 9.5% 10 $4,OOO/yr None

COMMERCIAL LOANS

Mellon Bank Edu-


Check Program 13.25% 6 100% Generally, family ~ i

Mellon Bank E. N.A. of college must have income


PO Box 7479 costs of $30,000 or over.
Phil., PA 19101-9990
(215) 553-3000

Knight Insurance
Extended
Repayment Plan 12.25% 10 100% None
Beacon St. ofcollege
Boaton, MA 02108-9901 costs
(617) 267-1500

Tuition Plan 15.95% 10 100% Available in


Donovan St. Ext. ofcollege 38 states.
Concord, NH 03301 costs
(603) 228-1161
Rates In effect as of January 9, 1990. While interest rates may change, these sources
should remain the best.

PageS-80 © Charles J. Givens Organization 1990 R1


SECTION IV

POWERFUL INVESTING

c-....,....
"....,:-
This symbol designates

®
_ ...... I' strategies which are on
both video and audio tapes
Investing is putting your money instead of your muscle to work; yet, if.there is any area
of managing and making money that most people foul up, not just once, but over an ~

entire lifetime, it is investing.

One of my personal fortunes was lost by listening to the Qubious advice of a financial
salesman. At 26, after losing a million dollars in my recording studio fire, I decided to build
my next fortune through investing. Genesco, the apparel conglomerate for which I
designed computer software systems, offered a magnificent stock incentive plan to its
management employees. My first 200 shares were bought for me by the company with
another 200 shares on the payment-a-month plan. After buying in at $21 per share, the
stock began to split periodically and grow rapidly in value. Being close to management
computer systems, I began to see loopholes that would legally allow me to get my hands
on hundreds of shares of Genesco stock financed totally by the company. With two
thousand shares of stock, for which I had paid nothing but a few monthly payments, I
was accumulating tens of thousands of dollars in stock equity during the company's most
expansive era, and the stock skyrocketed to $70 per share.

I was hooked on the stock market. I thought I couldn't lose. What a learning experience
I was in for! Borrowing money on everything I owned, including my home and cars, I
bought shares in all the new stock issues of the mid-60's. Margin accounts and
undercollateralized loans enabled me to run $60,000 of borrowed capital into a stock
fortune of $800,000 in just three years. I even considered a leisurely, full time career as
an investor. Then the roof fell in. Every morning, the newspaper would show my newly
found fortune dwindling at an ever increasing rate. Every afternoon, I was in contact with
the holders of my notes and margin accounts who wanted instant replacement for their
disappearing collateral. My margin calls seemed to have margin calls! Companies in
which I had invested heavily, like Performance Systems (Minnie Pearl Fried Chicken) and
Continental Strategics, went bankrupt leaving me only memories and worthless stock
certificates. I was forced to trade my new custom-designed Cadillac for a three-year-old
Volkswagen Beetle, rather than have the car repossessed for lack of payments. My home
was finally sold with barely enough equity to pay back most of the borrowed money. The
entire fortune was gone. I had tasted both the bitter and the sweet of investing and vowed
that I would never again risk my money until I knew how to win without the risk of losing.

Page 4-2 © Charles J. Givens Organization 1990 R1


The investment principles I discovered over the next few years were enough to build a
("'" lifetime investment fortune without investment mistakes and these principles can do the
same for you. Powerful investing is one of the easiest of all strategies to master, but the
misinformation, lack of information, potential for loss and outright fraud that exist in the
arena of investing are enough to destroy any good financial plan. Traditional investing
has become a mixture of storing money and legalizing gambling. Players are usual losers,
financial institutions the winners.

© Charles J. Givens Organization 1990 R1 Page 4-3


The Two Investment Approaches
There are two approaches to investing - putting your money to work, and putting other 1
people's money to work.

You Put Your Money to Work When You Invest In:

• Stocks,

• Bonds,

• Mutual Funds,

• Certificates of Deposit,

• IRAs,

• Treasury bills,

• Company retirement programs,

• Or any other direct investment using your own money.

You Put Other People's Money to Work When You:

• Buy a home with a mortgage,··

• Use a brokerage firm or mutual fund margin account,

• Take an option on a piece of real estate,

• Borrow money for your business,

• Invest in leveraged limited partnerships,

• Borrow the equity on your home to reinvest,

• Expect any financial rewards from the use of borrowed capital.

Putting your own money to work is direct and easy to understand, but limits your benefits
to the profits that can be generated by your own capital. Putting other people's money
to. work can be more profitable, but can also be more risky and difficult t01Jnderstand.
The main benefit of OPM (other people's money) is that you can create profits and/Or tax
deductions far beyond what your own capital can generate. Using OPM is a step you will
certainly want to consider once you have mastered the basics of investing your own
money.

© Charles J. Givens Organization-1990 R1


Strategy #4-1 : Use the ten best investments to average
20% per year.

Powerful investing is not like saving money. In America, savers die broke hoping for a
pitiful 6% to 10% return that is instantly eaten up by taxes and inflation. Smart investors,
on the other hand, have learned to earn 15% to 25% per year safely with no taxes and
no or low commissions. How? By using the ten best and safest investments in America,
those you normally won't find at banks or from investment salespeople.

The ten best investments and the average yearly returns you can expect are listed below.
In this section, you will learn all the strategies for successfully using each.

The Ten Best Investments


AVERAGE
ACTIVE/ YEARLY
INVESTMENT STRATEGY PASSIVE RETURN

1. Asset management Legal float and Active 8%-14%


checking account debit card
.»'"
2. No-load mutual funds Money Movement Passive 12%-25%
~
3. Mutual fund margin Leverage Passive 25%
account

4. IRA/Keogh account Self-directed accounts Passive 25%

5. Your own home Leverage & personal use Passive 20%

6. Employer's retirement Money Movement and Passive 20%


plan payroll deducted

7. Self-directed annuities Money Movement and Passive 25%


tax shelter

8. Discounted mortgages Guaranteed interest Active 30%


tax deferral

9. Tax Liens High government guaranteed Active 20%


interest and leverage

10. Residential real estate Leverage and tax shelter Active 30%

© Charles J. Givens Organization 1990 R 1 Page 4-5


Strategy #4-2: Pay no or low commissions by working
directly with government and financial
institutions.

You cannot split your money with everyone else and expect to end up with much for
yourself. Smart investors eliminate commissions by dealing directly with financial institu-
tions and eliminating the middlemen such as brokers and financial planners. Paying
unnecessary commissions is like throwing $20 bills into your fireplace to heat your home.
The job will get done but at far too great a cost.

Strategy #4-3: Use tax shelters and tax strategies to protect ~


"-'':'rr-.
your investment income. \.~~~)
-....L/

Most investors think the only strategies for investing without paying taxes are retirement
programs or low interest tax exempt bonds. Any investment income can be tax sheltered.
You have the choices of using automatically tax-sheltered investments, such as annuities
and real estate, or creating tax deductions to match your investment income using any )
of the tax strategies in Section V. Both methods can make your investments tax deferred
or even tax free.

Page 4-6 © Charles J. Givens Organization 1990 R1


, .

Part 1 ~ The Ten .Bigg~st .. ';

Investment Mistakes"

© Charles J. Givens Organization 1990 R1 Page 4-7


Strategy #4-4: Keep your money out of vacant land.

Undeveloped land, sometimes called vacant or raw land, will continue to be a depressed
investment for the next five years. The lowered value is caused by the shift in agricultural
production from small farms to major farming operations. In addition, land, unless leased,
produces no income but does create negative cash flow through property taxes and loan
interest. A lot in an appreciating area, or one on which you eventually intend to build, is
an exception and can be a good investment.

Strategy #4-5: Don't throw money away in time-sharing.

Time-sharing is a real estate investment, usually one condominium unit, co-owned by as


many -as 25 investors. Each investor may personally use his unit during designated
weeks, which are chosen as part of the transaction. Two unit weeks are usually sold for
between $8,000 and $25,000. Owners, instead of being confined to the use of their own
unit usually have the right to trade for the use of other units in other complexes.

Time-sharing has a bad reputation because of developer defaults and bankruptcies. To


combat the well-deserved negative press, developers have coined a new term, "interval
ownership," to replace "time-sharing".

Strategy #4-6: Never use life insurance as an investment.

Buy life insurance as if you were going to die tomorrow, and invest as if you going to live
forever. Life insurance and investing, both necessary parts of a good financial plan, have
little in common. Life insurance companies got into the investment business for one major
reason: There are bigger profits in selling investments than in selling insurance.
Your strategy is to buy term insurance and build your investment wealth by choosing the
correct investments and strategies yourself. (See Section II)

Page 4-8 © Charles J. Givens Organization 1990 R 1


·~ Strategy #4-7: Stay away from individual stocks and bonds. ® ~

\
Buying 100 to 1000 shares of a stock, or pumping $1,000 to $25,000 into one or two
bond issues, is eight times riskier than investing in stocks and bonds through mutual
funds. Buying individual stocks and bonds also means paying commissions. You pay no
commissions by using one of over 300 no-load mutual funds you will learn about later.

Bond investments include:

A. Individual Bonds -corporate, tax exempt, zero coupon, GNMAs.

B. Bond Mutual Funds-high yield, fixed income, government securities.

Strategy #4-8: Never invest in bonds when interest rates are ~


. . ,c:-rr,
rlsmg. __~~)
~
-..&
Bonds are good investments only when they are appreciating due to declining interest
rates. When the Prime Rate is rising, any long-term bond will lose 10% of its principal
value for every 1% increase in the Prime Rate. From March, 1987, to October, 1987, while
the Prime Rate rose from 7 1/2 % to 9 1/4%, bond investments dropped 10% to 20% in
value. Stay away from financial advisers who tell you bonds are always a good safe
investment for those who want income.

Strategy #4-9: Don't invest in inflation hedges such as


precious metals.

Precious metals (gold and silver) are investments only for the most aggressive investors.
Traditionally, gold and silver have been called a hedge against inflation. Inflation hedges
are always investment losers. For instance, when adjusted for inflation the real value of
gold hasn't changed in a hundred years. Your loss in an inflation hedge comes when you
sell your investment and pay 28% capital gains tax on your profits.

© Charles J. Givens Organization 1990 R1 Page 4-9


Strategy #4-10: Don't fall for investment phone pitches ..

Now you can buy your investments over the phone, but don't! Dozens of phone "boiler
rooms" have been created to sell off-the-wall investments. High pressure sales pitches
are conducted by highly commissioned phone room managers using minimum wage
telephone solicitors. The bait is the belief you are being let in on some new investment
secret or opportunity not generally known to the public. Included in the wide range of
these investment pitches are:

precious metals cellular phone lotteries


commodities industrial grade diamonds
bids on government land leases tracts of land in desolate areas

These schemes make big promises and deliver little, other than opportunity to lose your
money. Incredibly enough, tens of thousands of investors fall for these investment
gimmicks every year.

Strategy #4-11: Never use a commissioned financial sales- c:......


~~~
~I
person as a financial adviser. ®
Paying big commissions will turn almost any winning investment plan into a marginal one
at best, often into a loser. Today's smart investor learns to work directly with financial
institutions like no-load mutual fund families, eliminating the need for the middleman.

Page 4-10 © Charles J. Givens Organization 1990 R1


Strategy #4-12: Don't over leverage in volatile investments
like commodities.

Commodities are the riskiest of all legal investments. Greed is the commodities' drawing
card. Investors can put up as little as 5% of the purchase price of the investment in order
to control the entire investment. An investor can buy a $10,000 commodities contract for
only $500. The leverage seems interesting until you look at the validity of the investment.
The average price fluctuation in the commodities market is 1% per day. If the investor
puts up only 5% and is leveraged by a factor of 20 to 1, the value of his investment will
fluctuate an average of 20% per day -great news if the price goes up, disaster if the price
of the commodity drops. Even if the price drop is small, the investor's capital may be
wiped out.

There is no safe strategy for profiting in commodities. When the value of the investment
drops below the 5% margin requirement, the investor is required to put up more money
or lose the investment and receive a bill for the difference. These margin calls have wiped

(
..... out the entire assets of many investors .

© Charles J. Givens Organization 1990 R1 Page 4-11


Strategy #4-12.1: Don't buy overly speculative investments like
penny stocks.

Penny stocks are securities sold by fast talking brokers and securities representatives
that are highly speculative. They are usually sold over the telephone for less than $10 a
share. These are stocks of companies that have no earning history and could even be
fictitious.

Imagine, 20,000 shares of stock at only pennies per share. What a deal, right? Wrong!
Authorities estimate that the epidemic of penny stocks is costing the public hundreds of
millions of dollars per year.

Penny stocks normally sell for less than $1 per share, although sometimes the price can
be bid up to where it exceeds a dollar. Very often, the company that issues the stock
public will hype the stock with about new inventions, discoveries, or technological
breakthroughs made by the company. Penny stockholders often suggest to their
prospects that they can double or triple their money in a short period of time. It's an
opportunity that "can't wait," and the prospect doesn't have time to think about it or confer ~
with an advisor - he must act now! This is the high pressure sales pitch often used by
penny stockbrokers.

With many penny stocks there is as much as a 100% difference between the "ask", which
is the price at which the broker will sell the stock to the investor, and the "bid", which is
the price at which the broker will buy the stock from the investor. In this scenario, the
stock would have to double to allow the investor to break even!

Penny stock brokerage firms control as much as 95% of the market activity of a single
stock allowing them to manipulate the price. Because most penny stock cannot be found
in the newspaper listings, it's very difficult for the investor to determine what a penny
stock is really worth.

Page 4-12 © Charles J. Givens Organization 1990 R1


A Typical Stock Manipulation Scheme
Brokers are instructed to come up with twice as many buy orders as sell orders, thus
moving the price of the stock up. Meanwhile, investors are strongly discouraged from
selling the stock. Before the "story" behind the stock fades, the "insiders" who bought
the stock at a much lower price sell their stock at the now inflated price. The price of the
stock then collapses and investors are left with stocks with little or no value.

Penny stocks are extremely risky and, therefore, should only be sold to qualified investors
who can afford to lose all of the money invested. Most of the time the stocks are sold to
investors with high pressure phone pitches without sufficient qualification. The S. E.C. is
currently considering a stricter qualification requirement for those stocks which fall into
this category.

The only people who consistently make money in penny stocks are the brokerage firms,
brokers, and "insiders". The next time a smooth-talking penny stockbroker calls to let
you buy from his "bargain basement", just politely decline. Remember, if it sounds too
good to be true, it probably is.

© Charles J. Givens Organization 1990 R1 Page 4-13


Strategy #4-13: Avoid options as a leveraged or hedged
investment.

An option is a right to buy or sell a specified number of shares of stock at a specified


price on or before a specific day. A put is the right to sell. A call is the right to buy.

The investor pays a price for the option, which is forfeited if he or she does not exercise
the option. The price an investor pays for the option is usually 2% to 10% of the price of
the stock. Seventy-two percent of options are never exercised. The only realistic use of
an option for a conservative investor would be to protect the profit on a stock already
owned that could not or should not be sold at the present time.

Examples:

A. An employee is going to leave a company in six months and wants to cash in


his stock, but cannot sell until he leaves. He is concerned that the price will drop
during that period. He buys a "put" on his company stock, which gives him the
right to sell at a guaranteed price. The cost of the option is like buying insurance.

B. An investor has a huge profit on a stock, is concerned the market is about to


drop, but wants to sell the following year to defer the capital gains tax for 12
months. He buys a put to protect his profits from a market drop. If the market
drops he exercises his rightto sell at the higher price, otherwise his risk is limited
to losing the money he paid for the option.

There are now many mutual funds that use options as their primary investment or as a
hedge against fluctuating prices. The mutual funds that use options as a hedge have poor
overall performance records.

Page 4"'14 © Charles J. Givens Organization 1990 R1


Strategy #4-14: Don't fall for investment lies told by
investment salespeople.

"Stocks and bonds are a good long-term investment."

There is no such thing as a good long-term securities investment. The


best investments change as the economy and interest rates change.

"We'll diversify into different investments-some stocks, some bonds for safety."

Stocks or bonds are good investments at different times but not at the
same time.

"Government securities are always a good safe investment for those who want income."

Government securities are bonds. Bonds drop about 10% in principal


value for every 1% increase inthe Prime Rate. Never invest in government
securities when the Prime Rate is going up.

"Tax-exempt bonds are a good investment any time you want tax-free income."

Tax-exempt bonds usually pay only 7% to 8% tax-free interest. It would


be better to invest in a mutual fund earning 25%, pay the taxes of about
8% maximum, and end up with,a 17% profit after taxes.

"It always requires bigger risks to make bigger profits."

Only amateur financial advisers believe this. Bigger profits in the range
of 20% to 30% can easily be attained using knowledge and not risk. The
ten investment strategies in this section will all earn you over 20% safely.

"This investment is a hedge against inflation."

If you just keep pace with inflation, your before-tax profit is zero. After
you pay capital gains taxes on the phantom gains, you end up with a
guaranteed 28% loss.

© Charles J. Givens Organization 1990 R1 Page 4-15


"By using dollar cost averaging, we can avoid the fluctuations in the market and end up with
potentially bigger profits."

Dollar cost averaging is the practice of making equal investments at equal


intervals in the same stock, bond, or mutual fund. This strategy violates
two rules of successful investing:

1. There is no such thing as a good long-term investment.


2. Every economy has one best type of investment.

"I've got a hot tip on a good stock."

Hot tips ruin most unaware investors. Stock brokers are always the least
informed in a brokerage firm hierarchy and their "hot tips" usually lose
investors' money.

"Single-premium life insurance is one of the best tax shelters."

Single-premium life insurance is a second-class tax shelter because you


must buy whole life insurance before you can make the rnvestment. The
best tax shelter, usually available from the same company, is a self-
directed annuity, which allows you to invest in tax-sheltered mutual funds
without the requirement of buying insurance. Salesmen often neglect to
tell you about the annuities because they pay only a fraction of the
commission earned through the sales of single-premium life insurance
plans.

"Zero coupon bonds are a great investment for your children."

Zero coupon bonds are sold as investments for tax shelters and children
because salesmen know you'll buy them. If not in a tax shelter, you or
the kids would pay taxes on interest you do not receive. The best way to
invest for children under 14 is mutual funds, averaging over 20% until
the child earns over $1,000 a year and then through self-directed
annuities as a tax shelter. Even with a 10% one-time withdrawal penalty
the child's account will average over 20% per year instead of 10% per
year earned with zero coupon bonds.

Page 4-16 © Charles J. Givens Organization 1990 R1


"life insurance proceeds are tax-exempt."

Since deceased people don't pay income taxes there is no income tax
to pay, but even insurance proceeds are subject to estate taxes. (See
Section II.)

"You should pay commissions because you get better financial advice."

A good financial adviser or money manager will earn you 25% per year
after commissions but those of this caliber only manage portfolios of
$1,000,000 or more and spend most of their time on the ski slopes of
Aspen. If you have less than a million, you won't qualify to work with the
best portfolio managers. One reason this book was written is to give you
the same caliber of help, even if you don't have the big dollars.

"We should make some conservative investments and then take a few risks."

No risks are necessary for a knowledgeable investor. Using the winning


investment strategies in this book, even a novice investor can expect to
earn 20% to 30% per year while avoiding pitfalls and risks.

"A bank trust department should become the trustee for your estate."

Bank trust departments have the worst track records of any estate
managers, often losing 60% of an estate in five to ten years. Use as your
trustee an attorney, friend, or relative who will follow exactly the strategies
you are learning now for building and preserving your estate.

"It is not possible to average 20% per year safely."

Nonsense. Tens of thousands of investors who have followed my


strategies for two years or more have averaged 20% to 40% safely. These
strategies work, work for everyone, and work all the time.

© Charles J. Givens Organization 1990 R1 Page 4-17


Strategy #4-15: Use the 10% solution to go from paycheck to ~
prosperity. ®
Ninety percent of the families in America are still living paycheck-to-paycheck, always
finding too much month left over at the end of the money. Paycheck-to-paycheck is a
symptom, not of a lack of income, but of a lack of skills needed to build wealth. You begin
to feel as if there is no level of income you cannot out spend.

Beginning with your next paycheck, take 10% right off the top and send it to a mutual
fund family. Do the same with every paycheck for the rest of your life. Write yourself the
first check each month before you pay the rent, mortgage, car payment, or buy the
groceries.

Always pay yourself first. The less money you think you have, the more important the
strategy. Make the 10% Solution a personal challenge. Do it now. Don't wait for it to
happen.

The one mutual fund family that will allow you to invest with no minimums is Twentieth
Century Investors, Kansas City, MO. Send 10% out of each paycheck to Twentieth
Century and use the Money Movement Strategy to choose the right kind of mutual fund
for the current economy. You will double your money every three to four years. Do like
everyone else does and put the same 10% of your check in a bank or credit union account
and you will double your money only once every ten years! Twentieth Century will now
debit your bank account automatically every month for the amount you want to invest-
automatic wealth building.

Page 4-18 © Charles J. Givens Organization 1990 R1


Strategy #4-16: Store 20% of one year's income as attitude
money.

Have you ever noticed how directly your attitude is related to your bank account balance?
You have if you are still on the paycheck-to-paycheck treadmill. A positive attitude and
financial self-confidence are two of the most important wealth-building tools. The easiest
method of maintaining the winning attitude that comes from cash in the bank is never to
be without it.

Using the 10% Solution, make deposits in your mutual fund account until the balance is
equal to 20% of one year's take-home pay. In writing, promise yourself you will never
touch the money - not for overdue bills, emergencies, or any other logical reason. Why?
As soon as the money goes, so does your attitude. You will find it far easier, attitude-wise,
to have overdue bills with money available to pay them if you wanted to, than to have
your bills totally paid and be back in the paycheck-to-paycheck rut.

You will always encounter tough months where the money goes out faster than it comes
in. Your 20% is your attitude money, your dependable shelter during financial storms-
never, never touch it no matter how tough it gets. Your more stable attitude will propel
you past your short-term financial dilemmas.

Once you have reached the 20% quota, you won't have to deposit another dime in the
account. If your goal is to double your income every four years or so, your 20% account
invested correctly also will double in the same amount of time. Open a separate account
for your future 10% deposits.

© Charles J. Givens Organization 1990R1 Page 4-19


Strategy #4-17: Use the "Rule o1,76 n to determine the
doubling power of your money.

How long does it take to double your money in an investment? -'-:- a long time in a 7% bank
account, not so long if you're earning over 20% per year in a mutual fund family. But
how long? The "Rule of 76" is the easiest way to determine the answer. Divide the number
76 by the expected return on your investment and the result is the number of years
required to double your money if all of the earnings are reinvested and compounded.
The short-term doubling power of money invested at 15% to 25% should give you the
motivation to get your 10% Solution strategy started immediately.

The Ru Ie of 76
Investment Time Required to Double Your Money
Invested @ Number of Years
25% 3.0
20% 3.8
15% 5.0
10% 7.6
9% 8.4
8% 9.5
7% 10.8
6% 12.7
Using investment strategies like mutual funds and Money Movement covered in this
section you will soon be doubling your money every three to four years, even starting
with only 10% out of every paycheck.

Page 4-20 © Charles J. Givens Organization 1990 R1


Using The 10% Solution
Let's look at it another way. For every $1,000 you invest this year at 15% to 25%, the
following chart will showyou how much you will have accumulated during periods ranging
from five to twenty years. What you see in the chart can be accomplished with just $83.33
per month ($1,000 per year), the amount that someone with a net income of $833.00 per
month would deposit using the 10% Solution. Who said you have to have big money to
make big money?

Begin your 10% Solution with your next paycheck!

For Each $1,000 You Invest


Investment Amount After:
Return 5 yrs 10 yrs 15 yrs 20 yrs

15% $2,010 $4,050 $8,150 $16,380


20% 2,480 6,190 15,400 38,340
25% 3,051 9,313 28,422 86,736

© Charles J. Givens Organization 1990 R1 Page 4-21


Part 2 - Asset Management Accounts

/)

Page 4-22 © Charles J. Givens Organization 1990 R1


Strategy #4-18: Use an Asset Management Account to double
the interest you receive from a bank ~
.c;;,~
checking account. 'Q::5'
There are 15 government-insured, no-minimum checking accounts in which you can
often earn twice the interest your bank will pay. These Asset Management Accounts
(AMAs) cannot be found at banks, savings and loans, or credit unions. They are national
checking accounts and represent money management systems of the future that are
available today.

Asset management accounts are available through brokerage firms, mutual funds, or
other large financial institutions. Some AMAs require no minimum deposit, while others,
like those offered at Merrill Lynch, E.F. Hutton, and Shearson, want $10,000 to $25,000
just to open the account. Edward D. Jones' "Full Service" account requires only a $1,000
deposit and as little as a $500 minimum balance. Additional deposits can be made at any
time. Asset management accounts have no minimum check requirement or limit to the
number of checks you can write. Money market funds and bank money market accounts
offer only limited checking.

There are two profits in an asset management account. The first is the variable interest
paid on your account balance. Interest rates in asset management accounts have
averaged between 6.5% and 18% since 1980 and often pay 2% to 5% more than CDs.
The second profit is an additional 1/2% to 1% created by the daily compounding.

© Charles J. Givens Organization 1990 R1 Page 4-23


Strategy #4-19: Choose an Asset Management Account that c:-.
.c:-(}'
gives you maximum legal float. ®
AMAs are national checking accounts and often your checks must travel thousands of
miles before they are processed. When you write a check from your AM A, you'll discover
that it takes 4 to 7 days before the amount is deducted from your account balance. During
the entire time, you're earning interest on money you've already spent! This delay is called
legal float - the investor's dream. Some of the accounts like Merrill Lynch's AMA account
now process checks locally, reducing the legal 'float to that of a local bank check, two
days. Others, like Edward D. Jones and the CAM account, still give you maximum float
time.

Although legal float may never earn you millions, it is a painless way of earning extra
interest.

Strategy #4-20: Write all your bill-paying checks,from your


Asset Management Account. )

To take advantage of legal float, simply write all your checks from your AMA. An AMA
should not be used as a place to store money unless the current interest rate is over 10
1/2%. Deposit each month just enough to cover the checks you intend to write. Over the
past five years, you would have earned in an Asset Management Account 2 1/2 times
what you earned in a bank checking account. Here is a comparison:

BANK CHECKING ACCOUNT ASSET MANAGEMENT ACCOUNT


COMPOUNDED LEGAL TOTAL
YEAR INTEREST INTEREST FLOAT =INTEREST
1982 5.25% 15% + 3% = 18%
1983 5.25 12 +3 = 15
1984 5.25 10 +3 = 13
1985 5.50 8 +2 = 10
1986 5.50 7 +2 = 9
1987 5.50 7 +2 = 9
1988 5.50 7 +2 = 9
1989 5.50 8 +2 = 10
TOTAL 37.75% 74% +19% = 93%
r~

Page 4-24 © Charles J. Givens Organization 1990 R1


Strategy #4-21: Choose an Asset Management Account that c......
offers a debit card. @
The debit card is a plastic check which has the universal acceptance of a credit card but
no end-of-the-month bill. A debit card looks like a VISA card, runs through the merchant's
machine like a VISA card, but doesn't charge anything. The merchant can't tell the
difference. When the merchant slip gets to your asset management account, the amount
you paid is deducted directly from your account balance - no monthly bill and no check
to write.

Nine of the asset management accounts issue VISA debit cards, while others, including
Shearson, Paine Weber, and Smith Barney issue American Express credit cards which
cannot be used as a debit card. The debit card is too good a financial management tool
to be without and should be a consideration in determining which AMA is for you.

© Charles J. Givens Organization 1990 R1 Page 4-25


S trategy #4-22: Choose an AMA with a low yearly fee.
>
C~

Yearly fees of $0 to $65 are charged on all AMA accounts, except the Charles Schwab
"

and IDS accounts, which have no fee. Charles Schwab, however, requires you to trade
in other securities to keep your AMA open. A yearly fee of over $50 is unreasonable since
there are alternatives. Because your asset management account is really an investment
account, the yearly fees are tax deductible as a miscellaneous investment expense.

To choose your asset management account, use the comparison chart on the following
page. One important decision is determining if you have the required initial deposit
amount and can main..tain the required balance ..

After you have made your initial deposit, a much smaller minimum balance is usually
required to keep the account open and earning interest. Check the chart to determine
the minimum balance requirements of the various accounts. All the accounts are good.
Simply pick the one that fits you best, with the convenience and services you need.

Call the toll-free telephone number listed or the local office in your area for the accounts
)
in which you are interested. Refer to the account by name and ask them to send you a
prospectus. Contained in the prospectus is everything you need to know about the
account. To open your account, simply fill out the account application card and mail with
a check for at least the minimum deposit. You will receive a checkbook similar to your
bank checkbook along with your initial deposit receipt.

Strategy #4-23: Use an Asset Management Account for your c........


small business checking account. ~~~
~

Many of the AMAs also offer checking privileges to small businesses. From the "Asset
Management Account Comparison Chart" you'll notice that those who offer business
accounts include Edward D. Jones, IDS, Fidelity, Citibank, and most of the brokerage
firm accounts. You can enjoy the legal float and debit card privileges for your small
business by opening a separate business account at the AMA of your choice.

~
I

Page 4-26 © Charles J. Givens Organization 1990 R1


Asset Management Account Comparison Chart

r Sponsor's
Name
Account
Name
Information
Number
Minimum Minimum
Initial
Deposit
Balance Checks
Required Returned
Debitl
Yearly Credit
Fee Card
Margin
Accounts
Available
Bus.
Accounts
Available

Consol idated CAM 800 423-2345 Any None No 0* None No Yes


Asset Mgmt

Edward D. Full Service (314)851-2000 1,000 500 Yes 25 VISA No Yes


Jones

Kemper Money Plus 800 621-1048 5,000 0 Yes 65 VISA No No

IDS Financial IDS Cash 800 328-8300 2,000 300 No 0 None No Yes
Services Mgmt

Schwab Schwab 800 421-4488 5,000 0 No 0 VISA Yes Yes


One

Fidelity Asset 800 343-8721 25,000 10,000 Yes 60 MC Yes Yes


Mgr

Fidelity Daily 800343-8721 5,000 1,000 Yes 0 None No Yes


Income

Citibank Focus 800 752-0800 25,000 10,000 Yes 100 VISA Yes No
f
Dean Witter Active 800 869-DEAN 10,000 None No 80 VISA Yes Yes
Asset

Pru-Bache Command 800 222-4321 15,900 None No 75 VISA Yes Yes

Shearson Financial 800 221-3636 10,000 5,000 No 50 None Yes Yes


AMEX Mgmt 100 VISA

Paine Resource 800 937-7071 15,000 None Yes 60 None Yes Yes
Webber Mgmt 100 MC

Merrill Lynch Cash Mgmt 800 262-4636 20,000 None No 80 VISA Yes Yes

Smith Barney Vantage 800 221-3434 10,000 None Yes 0 None Yes Yes
75 AMEX

A.G. Edwards Total Asset 800 325-8380 20,000 0 No 50 VISA Yes No

*Balance under $2,500: $1.25 per month fee plus $5.00 fee If over 5 checks are written per month.
Balance of $2,500-$5,000: No monthly fee, $5.00 fee if over 5 checks are written per month.
Balance over $5,000: No fees, unlimited checking.

© Charles J. Givens Organization 1990 R1 Page 4-27


Part 3 - The Money Movement Strategy
For Mutual Fund Investing

Page 4-28 © Charles J. Givens Organization 1990 R1


Strategy #4-24: Never store money.

A futile effort made by most conservative investors is the search for a good long-term
investment. There are good investments and there are long-term investments, but when
it comes to stocks and bonds there are no good long-term investments. The best
investment this year will become the worst investment in twC? or three years as inflation
and interest rates change. To become a successful investor, you must be willing to move
your money, but only once every year or two.

Strategy #4-25: Invest in stocks, bonds and money market


instrlUments only through mutual funds.

A mutual fund is a group of a hundred or more stocks, bonds or money market


investments, all managed by the same company. When you invest in mutual funds, you
own a small share of the fund's entire investment portfolio. Mutual funds give you the
benefits of a diversified portfolio of stocks, bonds, or money market instruments without
the risks, costs, or required expertise. The benefits of mutual fund investing make such
a strong case that there is virtually no reason to invest in individual stocks, bonds, or
money market instruments.

© Charles J. Givens Organization 1990 R1 Page 4-29


Rea'sons For Using Mutual Funds'
1. Professional Management-Mutual fund managers are among the most ~
knowledgeable financial people in the country. A full-time professional, not you, "
is responsible for choosing the stocks, bonds, or other investments. '

2. Diversification -A mutual fund is a group or portfolio of overthe hundred stock,


bond, or money market instruments all managed by the same company. You,
as an investor, own shares in the entire portfolio. Because of the incredible
diversification, a mutual fund investment is mathematically eighttimes safer than
investing in any one stock or bond.

3. lEasy-to-Evaluate - The track record of every mutual fund, is a matter of public


record. You simply check your newspaper for the previous day's closing price
(net asset value per share) just.~~ you would for a stock. There is currently no
effective way to evaluate stock brokers, financial planners, or investment
counselors.

4. Control-Only those who are willing to exercise a measure of control over their
investments can safely and consistently earn big profits. Those who turn control
over to abroker,'financial planner,' or other investment salespers()n generally
do poorly. Mutual fUr.lds, are an excellent vehicle for exercising control.

5. Income - You can choose to receive periodic income from any type of mutual
fund: stock, bond,or money market. ~

6. Liq~idity - You can withdraw partorall of your money any time you wish and
receive it within 24 hours.

7. Investment Options - Your investment options are almost limitless through


mutual funds. You can invest in stocks, bonds, money market instruments,
overseas companies, and even precious metals.

~
J

Page 4-30 © Charles J.Givens Organization 1990 R1


Strategy #4-26: Use only no-load mutual funds.

A true no-load. mutual fund charges no commissions when you invest, and no commis-
sions when you withdraw your money. Out of the over 1,000 mutual funds, 300 are
no-load,

All mutual funds, whether they charge commissions or not, charge about 1% per year
for management fees and expenses. For this low fee the mutual fund:

., Chooses the investments

., Watches the markets for you eight hours a day

• Keeps all necessary records of your account

• Sends you periodiC statements, usually monthly, about your account

No-load funds give you a great deal of investment help for very little money. The net asset
value per share (NAV), quoted in the newspaper or on your statement, already reflects
the deduction of the management fee.

A load is a sales commission and not a management fee. The load is paid to a broker,
brokerage firm, financial planner, insurance agent, or anyone else who "sells" you the
investment. By working directly wit~ a no-load mutual fund and eliminating the mid-
dleman, you save upto 9% in commissions. Remember, you can't be splitting your money
with everyone else and end up with much for yourself.

The important question is: Does paying a commission in any way earn you extra profits?
The answer is no. Studies for over 20 years have shown that no-load and load funds
p~rform equally well when the sales charge is disregarded. Often there are more no-load
than load funds in the list of top 20 best performing funds. When you do include sales
commissions in calculating- mutual fund performance, load funds earn less.

© Charles J. Givens Organization 1990 R1 Page 4-31


The Three Classifications Of Load Mutual Funds
High-Load Mutual Funds

Those that charge 4%-9% commissions paid from the money you invest or withdraw. A
front-end load means you pay commissions when you invest, reducing your principal. A
back-end load means you pay commissions when you withdraw your money, reducing
your earnings. Many back-end load funds become no-load funds after your money has
been invested for five years or more.

Is there ever a time when your best choice of mutual funds might be a load fund? Yes,
but only a back-end load fund. Let's say you want ongoing advice from a certain
successful financial adviser but want to avoid paying commissions for the advice. When
you invest in a back-end load fund, the adviser gets paid a commission by the mutual
fund instead of you. As long as you stay with the fund for at least five years, you pay no
commissions even when you withdraw your money. If you withdraw your money during
the first five years, you are charged a yearly decreasing commission which enables the
fund to recoup some of the money it paid to the adviser.

When using the Money Movement Strategy in your employer-sponsored retirement plan,
you may have no choice but to use the load funds offered in the plan. The tax benefits
will offset by many times the penalty of the load. You will also use back-end load mutual
funds if you invest in self-directed annuities.

Low-Load Mutual funds

Those that charge 3% or less when you invest or withdraw your money. There are
low-load funds that do make good choices for aggressive investors, like Fidelity's sector
funds. Conservative investors should avoid low-load funds altogether. Most low-load
funds do not pay commissions to salesmen but keep the money for advertiSing and extra
profits.

Page 4-32 © Charles J. Givens Organization 1990 R1


r
12b-1 Funds

Mutual funds that charge an extra 1% per year to offset marketing costs but are otherwise
no-load. Even though the Securities and Exchange Commission has permitted the 12b-1
charge for several years, very few mutual funds actually apply it. Those who sell load
mutual funds will lead you to believe that it is better to pay 60/0-9% up front rather than
the 1% 12b-1 fee each year. Mathematically that is not true. When you pay an 8%
commission up front, only 92% of your money is actually invested. If you used a 12b-1
fund, 100% of your money is invested and the 1% fee is deducted from the earnings.
Avoid the 12b-1 funds in favor of the no-load funds.

The Mutual Fund Family Fact Sheets indicate whether a fund charges a load of any type.
Those that are high-load are omitted.

© Charles J. Givens Organization 1990 R1 Page 4-33


Strategy #4-27: Choose the right type of mutual fund for
each economy.

If the secret to safely investing in stocks and bonds is mutual funds, then the secret to
making money in mutual funds is knowing that there are three entirely different types of
funds - stock, bond, and money market. The Money Movement Strategy matches the
right investment to the right economic climate creating an average investment return of
over 20% per year.

Strategy #4-28: Invest in only one type of mutual fund at a


time.

One and only one type of mutual fund is right for each economy. One major mistake
made by most investors, often on the advice of an investment salesperson, is overdiver-
sification; dividing investment capital among stocks, bonds, government securities, and
money market funds. Overdiversification can cost as much in lost profits as underdiver-
sification. An overly diversified investment plan operates like a seesaw; when one side !
goes up, the other goes down.

Page 4-34 © Charles J. Givens Organization 1990 R1


Strategy #4-29: Use the prime interest rate to identify the
safest and best mutual fund investment for
each economy.

What factor identifies the current economy and therefore the correct investments?
Interest rates. More specifically the Prime Interest Rate. Eighty percent of the long-term
increase or decrease in the value of stocks, bonds, and money market instruments is
caused by changes in interest rates and is predictable. Short-term, nonpredictable
increases or decreases are caused by speculation. The Prime Rate is the easiest of the
. . . .
interest rates to follow. Any change makes front page headlines. The Prime Rate moves
slowly and does not change direction often as stock prices do.

You must watch two components of the Prime Rate to choose the right investment:

1. Prime Rate Level- High or Low.

2. Prime Rate Direction - Up or Down.

("'" Refer to the "Money Movement Strategy Chart!' and you~1I see a curve that represents
typical changes of prime interest rates over a three to five year period. This is one prime
rate cycle. On the chart we've smoothed out the curve to demonstrate how the Money
Movement Strategy works. The actual ,changes are shown on the graph of Prime Rate
Changes. The three shaded areas on the "Money Movement Strategy Chart" each
represent one of the three investment climates. Notice that there are three places during
the cycle where the shading changes. At each of these pOints you must move your money
from one investment to another to maintain maximum safety and continued profits.

© Charles J. Givens Organization 1990 R1 Page 4-35


r· ("' ('.'
MONEY MOVEMENT STRATEGY -i
a:::

140/0
PRIME RATE CHART
-
~
.~
c::
o&
12%" ~/ \ ~
(!j
MONEY --)
~
MARKET 1:::

FUNDS ~
@

10% --------------- 91f2 % ----------------

80/0
I
STOCK ~
Int.
Rate
t FUNDS
I~
~

"" 2 &
Years 1 3 4 I~
-
.Strategy #4-30: Invest in stocks mutual funds any time the
Prime Rate is below the Investor's Decision c:.......
line. l~~)
~

There is always one of the three types of mutual funds - stock, bond, or money
market -that will give you an average investment return of 20% per year or more. The
Prime Rate indicates which one ..

The points on the Money Movement Strategy Chart where the shading changes are the
pOints at which you must move your money. Two of the three points are on the horizontal
dotted line across the middle of the chart called the Investor's Decision Line (currently
shown at 9 1/2%). The Investor's Decision Line does change, but only once every few
years. The area below the Investor's Decision Line defines a bull market, a time when
most stocks and stock mutual funds are on the rise. It is the point at which. the big
institutional investors get into the stock market, when the Prime Rate is dropping, and
out of the stock market when the Prime Rate is rising. Currently over 80% of stocks are
owned by just three groups of institutional investors: mutual funds, pension funds, and
big corporations. When the big guys buy, stocks go up: when the big guys sell, stocks
go down.

When is the correct time to invest in a stock mutual fund? Any time the Prime Rate is
below the Investor's Decision Line. During those years, no matter how widely the Dow
Jones stock average fluctuates, the stock market and stock mutual funds will grow an
average of 20% or more for the period. During this period there will be unpredictable
corrections. The Money Movement Strategy allows you to react to these corrections
logically rather than emotionally.

© Charles J. Givens Organization 1990 R 1 Page 4-37


Dow Corrections Since 1982
The greatest stock market correction in history came as a shock to the world on October / ... ~

19, 1987 when the Dow dropped 508 pOints. During a bull market, however, major
corrections are a normal part of the cycle, not a cause for panic. Although big publicity
has been attached to the correction of October 19th, it is only one of six major corrections
since 1982. Here are the others which attracted far less attention:

Dow Dow %
Year Duration Begin End Drop

1982 Nov. 3 Nov. 23 1065 991 7%

1984 Jan. 6 July 24 1287 1087 16%

1986 July 2 Aug. 1 1909 1764 8%

1987 Apr. 6 May 20 2406 2216 8%

1987 Aug. 25 Oct. 15 2722 2413 ·11%

1987 Oct. 19 Oct. 19 2246 1738 23%

The important thing to remember is that during this same period the stock market overall
achieved record growth. Within months after each correction there was a major gain in
~)
the Dow average. For example, by March 1988 the Dow had recovered 60% of what it
lost on Oct. 19, 1987.

January 1985 was the last time the Prime Rate dropped below the current Investor's
Decision Line of 10 1/2%. If you were a member of my Organization at that time, you were
told in your monthly newsletter: "The Prime Rate is below 10 1/2%. Move your money to
stock mutual funds." Those that did made an average of 40% in 1985, 30% in 1986, and
an average of 3% in 1987 even with the biggest stock market drop in history. The total
three year return was 73% or 24% per year. That's how the Money Movement Strategy
will protect you and make you a wealthy investor.

Page "4-38 © Charles J. Givens Organization 1990 Rl


Strategy #4-31: Move your money to a money market fund when
the Prime Rate moves above the Investor's
Decision Line.

How do you know when a bull market is really over? When the Prime Rate is rising and
reaches the Investor's Decision Line. At that time, move your money out of stock mutual
funds and into money market mutual funds. When the Prime Rate is above the horizontal
Investor's Decision Line, money market funds will not only give you the best return but
will also be the safest investment.

Can you ever make money in a money market fund? Of course. In 1981, with the Prime
Rate averaging 18%, money market funds were paying as much as 20% interest! Of
course, when the Prime Rate is at 11 % and you are in a money market fund, you are
averaging only about 11 % on your money, but you are protected from the coming Bear
market in stocks and the radical drops in bond prices.

© Charles J. Givens Organization 1990 R1 Page 4-39


Strategy #4-32: Move your money to a bond fund when the
Prime Rate is high and coming down.

As long as the Prime Rate is over the Investor's Decision Line and moving up, stay in
money market funds. When the Prime Rate changes direction and starts downward, move
your money to the third and last investment in the Prime Rate cycle, a bond mutual fund.
Bond mutual funds are always the best investment when the Prime Rate is high and
coming down. During that period you will earn two profits from bonds - interest and
appreciation. The appreciation can be your big profit, averaging more than 20% per year.

There are two principles that guide this aspect of the Money Movement Strategy:

1. When the Prime Rate Drops 1%, Bonds Appreciate 10%.

Prime down."one," bonds and bond mutual funds up "ten." Ten to one is the best leverage
you'll ever get in a safe investment plan. A good example was 1982, when the Prime Rate
dropped 5%, from 16 1/2% to 11 1/2%, and the average bond mutual fund appreciated
40%. Tax-free bond funds actually out-performed the regular bond funds that year.

Why are bonds and government securities a poor investment so much of the time?
Because the opposite of th~ foregoing principle is also true.

2. When the Prime Rate Rises 1%, Bonds Depreciate 10%.

Prime up "one, bonds and bond mutual funds down "ten." Never invest in bonds, tax-
JJ

exempt bonds, GNMAs, or government securities when the Prime Rate is going up. Your
principal may be decreasing faster than you are earning interest. Most financial
salespeople will incorrectly tell you to hold onto 7% or 8% bonds even when principal is
falling because "you haven't lost anything unless you sell and, after all, you are still getting
the interest payments. You've lost the opportunity to reinvest your money in bonds
JJ

paying 12% to 13% when the Prime Rate goes up. Your bond or bond fund value can
drop as much as 50%, due to increasing interest rates, locking you into unwanted low
interest bonds.

Page 4-40 © Charles J. Givens Organization 1990 R 1


Money Movement Strategy Summary
r There is always one type of mutual fund in which you will earn an average of 20% or more
over time; in 1981 it was money market funds, in 1982 and 1984 it was bond mutual
funds. In 1983 and the average of 1985,1986,1987, and 1988, the right investment was
stock mutual funds. The Money Movement Strategy will always have you at the right place
at the right time and overcome the problem of short-term market drops.

The Money Movement Strategy will produce the greatest profits when the Prime Rate is
dropping, often 30% or more per year in stocks or bonds. When the Prime Rate is rising,
Money Movement becomes more of a defensive strategy and profits are in the 10% to
15% range. During these periods consider discounted mortgages as your source of 20%
return.

The Money Movement Strategy is not intended as a get-rich-quick scheme. It is a life-long


. strategy for reducing risk and maximizing investment profits. The Money Movement
Strategy will allow you to average 20% per year, year after year - without having to watch
your money day by day. It is the right mutual fund strategy for both conservative and
..~ aggressive investors.
\

There are four investments in which you can successfully use the Money Movement
Strategy in mutual fund families. Three are tax shelters -all are covered in this book.

1. No load mutual fund families


3. Self-directed annuities
2. Your IRA or Keogh account
4. Your employer's 401 (k) or 403 (b) retirement plan

© Charles J. Givens Organization 1990 R1 Page 4-41


Prime Rate Direction Changes Chart 1978 to 1990
.~
#OF

DATE FROM TO DIRECTION MOS.

Jan. 1978 to Apr. 1980 8.00% 20.00% up 28

Apr. 1980 to Aug. 1980 11.00% 11.00% down 4

Aug. 1980 to Jan. 1981 11.00% 21.50% up 5

Jan. 1981 to Apr. 1981 21.50% 17.00% down 3

Apr. 1981 to Jun. 1981 17.00% 20.00% up 2

June 1981 to Feb. 1982 20.00% 15.75% down 8

Feb. 1982 to Feb. 1982 15.75% 17.00% up 1

Feb. 1982 to Aug. 1983 17.00% 10.50% down 18

Aug. 1983 to Sep. 1984 10.50% 13.00% up 13

Sep. 1984 to Mar. 1987 13.00% 7.50% down 30

Mar. 1987 to Nov.1987 7.50% 9.25% up 8 /)


Nov. 1987 to May 1988 9.25% 8.50% down 4

May 1988 to Aug. 1988 8.50% 10.00% up 4

Aug. 1988 to Nov. 1988 10.00% 10.50% up 4

Nov. 1988 to Feb. 1989 10.50% 11.00% up 4

Feb. 1989 to June. 1989 11.00% 11.50% up 6

June 1989 to Aug. 1989 11.50% 11.00% down 3

Aug. 1989 to Jan. 1990 11.00% 10.50% down 4

Jan. 1990 - 10.50% 10.00% down

The chart on the following page lists the "Prime Rate History" from October 1977 to
January 1990. It also lists the correct investments during this period according to the
Money Movement Strategy. If you had made these investments, you would have profited
by an average of 20% per year.

~
}

Page 4-42 © Charles J. Givens Organization 1990 R1


Prime Rate History Chart
"'- YEAR DATE PRIME CORRECT
RATE INVESTMENT
YEAR DATE PRIME CORRECT
RATE INVESTMENT
\ March 10 18 SF :viM ;
1977 Oct. 7 71/2 MM MO:-.iEY
24 73/4 MM 17 17 1/2 SF 'v1ARKET
1978 Jan. 10 8 MM April 2 17 SF FC:\[)S
May 5 81/4 MM 24 171/2 SF
26 81/2 MM 30 18 MM SF =
June 16 83/4 MM May 4 19 MM STOCK
30 9 MM 11 191/2 MM FC~DS
Aug. 31 91/4 MM 19 20 MM
Sept. 15 91/2 MM 22 201/2 MM BF;
28 93/4 MM June 3 20 MM BO~D
Oct. 13 10 MM July 8 201/2 MM FC:\fDS
27 10 1/2 MM Sept. 15 20 MM
Nov. 1 10 1/2 MM 22 19 1/2 MM
6 103/4 MM Oct. 5 19 SF
17 11 MM 13 18 SF
24 11 1/2 MM Nov. 3 17 1/2 SF
Dec. 26 11 3/4 MM 9 17 SF
1979 June 19 11 1/2 MM 17 16 1/2 - 17 SF
July 27 11 3/4 MM 20 161/2 SF
Aug. 16 12 MM 24 16 SF
28 12 1/4 MM Dec. 1 153/4 SF
Sept. 7 123/4 MM 1982 Feb. 2 16 1/2 SF
14 13 MM 18 17 SF
21 12 1/4 MM 23 161/2 SF
28 131/2 MM July 20 16 SF
Oct. 9 14 1/2 MM 29 15 1/2 SF
23 15 MM Aug. 2 15 SF
Nov. 1 151/4 MM 16 14 1/2 SF
9 15 1/2 MM 18 14 SF
16 153/4 MM 23 13 1/2 SF
30 151/2 MM Sept. 30 13 1/2 SF
Dec. 7 151/4 MM Oct. 7 13 SF
14 12 SF

r 1980 Feb. 19 15 1/4 MM


22 161/2 MM Nov. 22 11 1/2 SF
29 163/4 MM 1983 Jan. 11 11 SF
March 4 17 1/4 MM Feb. 28 101/2 SF
7 173/4 MM Aug. 8 11 SF
14 18 1/2 MM 1984 March 19 11 1/2 MM
19 19 MM April 5 12 MM
28 19 1/2 MM May 8 12 1/2 MM
April 2 20 MM June 25 13 MM
18 191/2 MM Sept. 27 123/4 MM
May 1 19 SF Oct. 17 12 1/2 MM
2 18 1/2 SF 29 12 SF
7 171/2 SF Nov. 9 11 3/4 SF
16 161/2 SF 28 11 1/4 SF
23 14 1/2 SF Dec. 20 103/4 SF
30 14 SF 1985 Jan. 15 101/2 SF
June 13 SF May 20 10 SF
6
13 12 1/2 SF June 18 9 1/2 SF
20 12 SF 1986 March 7 9 SF
July 7 11 1/2 SF April 21 81/2 SF
Aug. 22 11 1/4 SF July 14 8 SF
27 11 1/2 SF Aug. 1 71/2 SF
Sept. 8 12 MM 1987 March 31 73/4 SF
12 1'2 1/2 MM May I 8 SF
May 15 81/4 SF
19 12 1/2 MM SF
Sept. 4 83/4
26 13 MM Oct. 6 9 1/4 SF
Oct. 1 13 1/2 MM Oct. 22 9 SF
17 14 MM Nov. 5 83/4 SF
29 141/2 MM 1988 Feb. 2 81/2 SF
Nov. 6 151/2 MM Aug. 15 10 SF
17 16 1/4 MM Nov. 28 10 1/2 MM
21 17 /oi1'' ' 1989 Feb. 10 11.0 MM
26 173/4 MM Feb. 23 11.5 MM
1980 Dec. 2 18 1/2 MM June 5 11.0 SF
5 19 MM Aug. 10.5 SF

r 1981 Jan.
Feb.
10
2
9
3
20
201/2
20
19 1/2
MM
MM
MM
SF
1990 Jan. 8 10.0 SF

23 19 SF

© Charles J. Givens Organization 1990 R1 Page 4-43


. -r---
f) (' ~

Average Annual Prime Rate Movements


20%~i----------------------------------------------~

18% I I- \

16% I / \

14 01-
~
~ r
I ,\

12% k- f ., 7\

10% L / ~! ~ wL

8%~ ),.,; /'

6%L'__ L_~_ __ L_ _L_~_ __ L_ _L_~_ __ L_ _L_~_ _~_ _~~_ _~_ _~~

73 76 79 82 85 88 89
Years
Part 4 - Mutual Fund Investing

© Charles J. Givens Organization 1990 R1 Page 4-45


Strategy #4-33: Use the Money Movement Strategy in no-load c........ "...."
mutua! fund families. ~

One of the easiest investments in which to apply the Money Movement Strategy is a
no-load mutual fund family. A mutual fund is an investment company registered with the
S.E.C. (Securities and Exchange Commission) and managed by a professional fund
manager. The mutual fund buys a portfolio of stocks, bonds, or money market instru-
ments and you, as an investor, own a share of the entire portfolio. Mutual funds are
open-ended, that is, they can sell unlimited numbers of shares to new investors. The
mutual fund promises to redeem shares upon notice at the current net asset value (NAV).
A mutual fund family is a group of mutual funds all under the same management.

Page 4-46 © Charles J. Givens Organization 1990 R1


Mutual Fund Definitions
r' To profit from mutual fund investments, there are 20 terms and definitions you must
understand. These are the mutual fund terms that allow you to maneuver your investment.

Account
Your investment arrangement and record with the mutual fund. Your account is initially the amount of your
investment minus any front-end commissions. Your account increases in value when the fund's assets
increase or when you invest more money. Your account decreases in value when the funds assets
decrease, you withdraw money, or the fund's management expense is deducted. You receive a periodic
statement of your account.

Adviser
An organization or person employed and paid by the mutual fund to give professional investment advice
to the fund.

Asked Price
The price at which you can buy shares in a mutual fund, also known as the offering price. This price is the
current net asset value per share (NAV) plus any sales charge.

Bid Price
The price at which the mutual fund will buy back your shares. The bid, also called the redemption price,
is the current net asset value per share (NAV). Back-end loads or commissions, If any, are subtracted from
the total amount you receive when you sell.

Capital Gains or Losses


Your profit or loss from the sale of your mutual fund shares. Capital gains and losses are created when
investments are sold by either you or the mutual fund. When the mutual fund sells investments, the profits
or losses are taxable transactions and your taxable share appears on your account statement. When you
sell your shares in a fund or move to another fund, you have created taxable gains or losses unless your
mutual fund is tax sheltered.

Cash Position
The amount of the fund's assets that are not invested in stocks or bonds but are put in the bank or in
short-term investments. If a stock fund manager thinks stocks may go down, he will sell stocks and maintain
a bigger "cash position" with the intent of buying stocks at a reduced price later. If the stock goes up and
the fund maintains a big cash position, it will be out-performed by those funds that stayed more "fully
invested."

Certificate
The printed record showing ownership of mutual fund shares, similar to a stock certificate. Because of a
unique computerized record of your account maintained by the fund, certificates are seldom issued unless
the shares are going to be pledged for a loan or margin account.

© Charles J. Givens Organization 1990 R1 Page 4-47


Distributions
The payments to shareholders of capital gains or dividends in the form of cash or additional mutual fund
shares.
Capital Gains Distributions. Payments made to mutual fund shareholders representing profits earned by
the fund when stocks or bonds are sold. These profits are paid at the shareholder's option, in cash or as
additional shares in the fund. In the past, capital gains were distributed once per year, but because mutual
funds must now distribute 90% of capital gains to avoid taxation; some will go to a quarterly distribution
system. You pay taxes on capital gains distributions even if the money is reinvested. All mutual fund capital
gains distributions are treated as long-term for tax purposes.

Although the total net asset value of the fund remains the same before and after a distribution, the per
share NAV drops as more shares are issued to each shareholder representing the capital gains per share.
For example:

Before Distribution
1,000,000 shares at $11 per share = $11,000,000 net assets of fund
Capital gains distribution $1,000,000
After Distribution
1,100,000 shares at $10 per share = $11,000,000 net assets of fund
The total assets remain the same but the number of shares and the NAV per share change proportionately.

Dividend Distributions. The distribution of dividends and interest from investments to the mutual fund
shareholders. The distribution methods are the same as with capital gains distributions.

Ex-dividend date. The date on which declared distributions are deducted from the fund's assets. On that
day the share price drops but since each shareholder receives more shares, the amount in the
shareholder's account remains the same.

Exchange Privilege
The right of a mutual fund shareholder to transfer his money from one fund to another within the same
family. The two types of exchanging are:

Telephone Switching - Your money can be moved by a telephone call.

Mail Exchanging - You write to the fund to move your money.

An exchange is actually the sale of shares in one fund and the purchase of shares in another. The
transaction is taxable unless your investment is protected by a tax shelter like an IRA or self-directed
annuity.

Management Company
The entity which manages the fund. Often a fund family itself will have different officials than those that
actually manage the fund. The "adviser" described earlier gives investment advice; the management
company handles the business.

Net Assets
A mutual fund's total assets minus current liabilities.

Net Asset Value Per Share (NAV)


The mutual fund's total assets minus current liabilities, divided by the number of shares outstanding.

Page 4-48 © Charles J. Givens Organization 1990 R1


Payroll Deduction Plan
.~ A plan where mutual fund contributions are deducted from your paycheck and sent by your employer
~. directly to the fund.

Performance
The percentage change in a fund's net asset value per share (NAV) over a period of time. Performance is
a method of comparing different mutual funds.

Portfolio
All the securities owned by a mutual fund.

Portfolio Turnover
The percentage of a mutual fund's investments that were changed during the year (sold and the money
reinvested). The total can be from 0 to over 100%. Most aggressive funds have higher portfolio turnovers.

Prospectus
The official brochure issued by a mutual fund that describes how the fund works, how it manages its
money, the objectives of the fund, how you invest and withdraw your money, and how much the fund
charges in fees and commissions. Much of the information is required by the Securities and Exchange
Commission. The important information from the prospectus for the recommended no-load families is in
the Mutual Fund Family Fact Sheets in Appendix I.

Reinvestment Privilege
The right of a mutual fund shareholder to have interest dividends and capital gains automatically used to
purchase additional shares of the fund.

In addition to these terms, you must know the three categories and many subcategories of mutual funds.
Knowing the difference and when to use each is the basic secret of mutual fund investment success.

© Charles J. Givens Organization 1990 R1 Page 4-49


Mutual Fund Categories
All mutual funds fall into three basic categories.

Stock Mutual Funds

Bond Mutual Funds

Money Market Mutual Funds


Each category has many subcategories that are identified by a two-digit code used
throughout this chapter in all references and charts.

Stock Mutual Funds


A stock represents ownership of a portion of a company's assets. Individual stocks are
bought and sold through stock brokers who are connected by computer to the major
exchanges, such as the New York or American Stock Exchanges. Stocks not listed on
the exchanges are traded broker-to-broker through the National Association of Securities
Dealers (NASD). The brokers receive commissions for handling investors' stock trades.
The per share price of a company's stock increases or decreases, based on supply and
demand. If there are more buyers than sellers, the price goes up. If there are more sellers
than buyers, the price drops.

A mutual fund that invests primarily in stocks is a stock mutual fund. Stock mutual funds
are classified into many subcategories and are named by their investment objectives and
the type of stocks in which they invest. Since few stock funds use the term "stock" in the
fund name, you, as the investor, must understand the terms that identify a stock fund
and its investment philosophy.

Page 4-50 © Charles J. Givens Organization 1990 R1


Growth Fund (SG)

(' A stock mutual fund that invests primarily in common stocks with good growth potential,
as determined by the fund manager.

Best Performing Growth Stock Funds


Ranked By Performance over Last 5 Years

FAMILY FUND GROWTH %


85 86 87 88 89
Boston Co. Capital Appreciation 35 23 .5 20 25
Neuberger & Berman Manhattan 37 17 .4 18 29
Neuberger & Berman Partners 30 17 4 15 23
T. Rowe Price New Era 23 16 18 10 24
Safeco Equity 32 13 -5 25 36
Babson Growth 30 19 3 16 22

Aggressive Growth Fund (SA)

A stock mutual fund that uses aggressive and sometimes volatile techniques in an attempt
;...... to increase profits. These aggressive techniques include leverage, short selling, and
buying warrants and options.

Best Performing Aggressive Growth Stock Funds


Ranked By Performance over Last 5 Years

FAMILY FUND GROWTH %

85 86 87 88 89

Fidelity Magellan 43 24 1 23 35
Scudder Capital Growth 37 17 -1 30 34
Twentieth Century Giftrust 55 28 9 11 50
GIT Special Growth 47 15 -2 25 25
. Fidelity Freedom 29 14 9 16 30
Stein Roe Special 29 . 15 4 20 38

r
© Charles J. Givens Organization 1990 R1 Page 4-51
Growth and Income Funds (51)

A stock fund that attempts to give investors capital growth and income at the same time.
The fund invests in stocks that are lower in price so that the dividend yield is higher.
Dividend yield is the amount of dividends paid per share divided by the priceof one share.
The lower the price, the higher the yield.

These conservative (SI) funds slightly outperformed the growth and aggressive growth
funds from 1981 to 1986. The average dividends paid by the three main types of stock
funds in 1986 stacked up like this:

Aggressive growth funds (SA) 1.0%

Growth funds (SG) 2.0%

Growth and income funds (SI) 3.3%

Because of the small difference in actual yield· between types of funds, the better
performance of growth and income funds was based on other' factors. To get higher
yields, (SI) fund managers looked for underpriced, undervalued
, stocks in good, solid,
well-established companies. The lower the price, the higher the percentage yield. This
approach creates a great potential for growth once the stock price begins to recover and
is the reason growth and income funds have performed so well. Although (SI) funds are
often considered the best choice for conservative investors, they are a good choice for
a:1I but aggressive investors.

Best Performing Growth & Income Funds


Ranked By Performance over Last 5 Years

FAMilY FUND GROWTH %

85 86 87 88 89

Vanguard 500 Portfolio Index 31 18 5 16 31


Founders Blue Chip 32 17 2 10 36
Scudlder Growth & Income 35 18 4 12 26
Fidelity Fund 28 16 3 18 29
Vanguard Windsor 28 20 1 29 15
Selected American Shares 33 17 0 22 20

Page 4-52 © Charles J. Givens Organization 1990 R1


Equity Income Funds (SE). Combination stock and bond funds that have a primary
~"~"'
\, goal of income and a secondary goal of growth. There are about 40 no-load and low-load
equity income funds whose assets on the average are invested as follows:

40% High dividend-paying stocks

50% Bonds

10% Cash

The equity income funds perform well when the prime rate is dropping because both
stocks and bonds are appreciating plus the stocks and bonds are earning interest and
dividends (i.e., average of 6.2% in 1986). Equity income funds are poor performers when
the prime rate is going up because any stock gains are automatically wiped out by bond
losses.

"Also included in the equity income funds category are the qualified dividend funds set up
for corporate investments only. Tax reform allows corporations to earn tax-free 70% of
dividends received from investments in other corporations (85% under pre-tax reform
rules).

Best Performing Equity Income Funds


Ranked By Performance over Last 5 Years

FAMILY FUND GROWTH %


85 86 87 88 89

Financial Industrial Income 31 14 5 16 32


Fidelity Puritan 29 21 -2 19 20
Safeco Income 32 21 -6 19 19
Axe-Houghton Fund B 33 23 -4 9 21
GIT Equity Income 26 19 -5 13 21
Vanguard Wellesley 27 28 -2 14 21

© Charles J. Givens Organization 1990 R1 Page 4-53


Specialty Stock Mutual Funds
Specialty stock mutual funds buy stock using a special selection process, leverage, or
other type of investment formula not used by the regular stock funds, and are generally
for only more knowledgeable and speculative investors. The following is a description of
major categories of specialty stock funds.

Option fund (SO). A mutual fund that buys stock options instead of stocks. An option
is the rig ht to buy or sell a specific number of shares of a stock at a fixed price by a specific
date. Some option funds buy stocks and then attempt to hedge against a price drop by
purchasing "puts" or options to sell on the same stock. Option funds have not been
particularly successful during the past ten years and should be avoided.

Index FlUnd (SX). A mutual fund that theoretically owns all of the stocks in the Standard
and Poor's 500 or other index. The growth, therefore, is the same as that of the index.
During the past five years, the S&P 500 average has outperformed the average growth
and aggressive growth mutual funds. Investors who guess at which mutual funds will be
good performers will generally earn less than an index fund. Investors who use knowledge
and good mutual fund advice like that in this program will always outperform the S&P ~
500 and the index funds. Vanguard's Index Trust is an example of an index fund.

8alanced Fund (S8). These mutual funds invest in a combination of stocks, bonds, and
preferred stocks and violate the rule: "Every economy has one best investment."

Best Performing Balanced Funds


Ranked By Performance over Last 5 Years

FAMILY FUND GROWTH %

85 86 87 88 89

Stein Roe Total Return Fund 26 17 0 4 20


Vanguard Star Fund 14 2 13 19
Strong Investment Fund 19 18 0 5 11
Fidelity Balanced Fund 18 2 11 19
Vanguard Wellington Fund 28 18 2 10 21

Page 4-54 © Charles J. Givens Organization 1990 R1


r Closed-end Fund. Closed-end funds, sometimes called "trusts," issue a fixed number
of shares and are publicly traded on the stock exchanges. Unlike the open-ended funds,
which are the more familiar mutual funds, closed-end funds do not issue or redeem
shares from investors. The current share price of a closed end fund is not the NAV (net
asset value per share), but a price based on supply and demand. Poor overall perfor-
mance is the best reason to avoid the closed-end funds.

Social Conscience Fund. There are two no-load funds that invest in stock of companies
organized for social good, or that seek to avoid companies involved in war materials,
liquor, tobacco, gambling, or South Africa. The two stock funds are PAX World Fund and
Dreyfus Third Century. These funds have had an average to poor track record and should
be used only by those whose social consciences match the objectives of the funds.

Industry Fund. Funds that purchase stocks related to only one industry are called
industry funds. Some industry funds, like the health funds, have been great performers
because of the overall growth or profits of that single industry. Others, like the high tech
funds, have been at times the big losers.
'--'
~ Industry funds are for aggressive investors, and should be used only during periods when
the Prime Rate is dropping. Some industry funds have never done well, like the "Gaming
Fund" (gambling stocks) organized in 1978 and liquidated in 1982.

Industries represented by industry funds include: high tech, computer software, drugs,
computers, bio tech, health, chemicals, energy, financial, housing, leisure, defense,
restaurants, life insurance, automotive, paper, broadcast media, banking, air transport,
and industrial materials.

Sector Funds (55). When you put several industry funds under one mutual fund family
and allow switching between these as well as money market funds, you have sector funds.
Sector fund investing allows the choosing of more specific stocks with the safety of
diversification. The Fidelity family has 35 sector funds called "Select" funds and Vanguard
has five Sector funds it calls "Special" funds. Sector Funds are good choices for
aggressive investors.

© Charles J. Givens Organization 1990 R1 Page 4-55


Emerging Company Growth Fund. Stock funds that buy shares in new companies with
good future potential. These funds are volatile and far riskier than regular stock funds
because of the unpredictability of small company performance, and should be avoided
by conservative investors. These funds were good performers the first six months of 1988
as the stock market recovered and interest rates remained low.

Best Performing Emerging Growth Funds


(In Recommended Families)

FAMILY FUND GROWTH %

85 86 87 88 89

8abson Enterprise 39 9 -9 33 22
Stein Roe Capital Opportunities 25 17 9 -3 37
T. Rowe Price New Horizons 24 0 -2 11 26
Scudder Development 20 8 -1 8 23
Fidelity O.T.C. 69 11 2 20 30

Precious Metal Fund (SP). These funds buy the stocks of mining companies involved
in the extraction of gold, silver, platinum, and other precious metals. They are volatile
funds and should be used only by more aggressive investors. Overall, the performance
of the gold funds has been greater than the growth or aggressive growth stock funds
even with some bad years. The increase or decrease in value of precious metal funds
follows the market price of the metals and not the prime rate, and makes these funds
unpredictable. Invest in precious metal funds only with good, dependable advice.

Multi-Fund (58). A multi-fund is a mutual fund that invests in shares of other mutual
funds. An example is Vanguard's Star Fund, which invests in other Vanguard stock, bond,
and money market funds. These funds have a poor track record because of overdiver-
sification. Multi-funds are sometimes classified as "balanced funds" discussed earlier.

Page 4-56 © Charles J. Givens Organization 1990 R1


Bond Mutual Funds
('" A bond investment represents a loan made by an investor to a corporation or government
agency for a term ranging from one to thirty years. Bonds normally pay guaranteed
interest rates like certificates of deposit, but unlike CDs, bond values go up and down
daily due to changes in marketplace interest rates. A bond may sell at a premium (more
than its face value) or at a discount (less than its face value). At the end of the term, the
issuer guarantees to pay the investor the face value of the bond.

A mutual fund that invests primarily in bonds is a bond mutual fund. These can be
classified into several subcategories.

High Yield Fund (BL)

A bond fund investing in corporate bonds with supposedly higher than usual interest
rates and often lower than usual ratings.

Fixed Income Funds (BL)

A bond fund that invests most of its assets in long-term bonds.

,.... GNMA Fund (BG)

A bond fund that invests in mortgage bonds issued by the Government National Mortgage
Association.

Government Securities Fund (BG)

A bond fund that invests in GNMA's and bonds issued by other agencies.

Best Performing Bond Mutual Funds


Ranked By Performance over Last 5 Years

FAMILY FUND GROWTH %


85 86 87 88 89

Axe-Houghton Income 27 16 2 9 10
Fidelity High Income 26 18 1 13 -3
Boston Co. Managed Income 22 15 6 10 6
Vanguard Fixed Inc. High Yld. 22 17 3 14 -2
Vanguard Fixed Invest. Grade 22 14 0 10 15
USAA Income 19 13 3 10 15

© Charles J. Givens Organization 1990 R1 Page 4-57


Money Market Mutual Funds
Money market funds are mutual funds that invest in short-term, supersafe, interest-bear- ~
)

ing instruments. The maturity date of these securities is between one day and one year.
The interest rates paid daily to money market fund investors is a composite of all the rates
on instruments held by the fund and has, in the last eight years, ranged from a low of 6%
to a high of 18% annually. Money market funds make good investments when interest
rates are over 9 1/2% and poor investments when interest rates are less.

Money market funds are not the same as money market accounts. Money market account
is a fancy name for bank savings plans that pay variable instead of fixed interest. The
banks use the name in an effort to confuse investors and to lure money away from the
money market funds.

Money market funds were originally created in 1972 with the birth of the Reserve Fund.
The objective was to offer small investors the opportunity to get better-than-bank rates
on money market instruments, formerly available only to investors with $100,000 or more.
In 1974 the Fidelity Daily Income Trust pioneered the concept of check-writing in a money
market fund. Many money market funds now allow you to write up to three checks per
month, with a $250 to $500 minimum.

The per share value of a money market fund is always $1; so your principal value does
not increase or decrease. The interest earned by your shares is added to your account
as additional $1 shares, unless you withdraw the money. Newspapers quote money
market funds in terms annualized by daily interest paid.

Money marketfunds have been created both by mutual fund families and stock brokerage
firms. The following descriptions center on those no-load money market funds which are
part of mutual fund families.

Page 4-58 © Charles J. Givens Organization 1990 R1


Regular Money Market Funds (MM)
Invest in:

u.s. Government Securities. Short-term debt instruments issued by the


U.S. Treasury and other government agencies.

Bank Jumbo Certificates of Deposit. Loans of $1,000,000 or more made


to banks.

Bankers' Acceptances. Short-term bank guarantees designed to finance


imports and exports. The importer does not want to pay a foreign company
until goods are received. An exporter does not want to ship the goods until
he is guaranteed he will receive his money when the goods are delivered.
Bankers' acceptances are the guarantees and are risk-free.

Commercial Paper. Unsecured but virtually risk-free short-term notes is-


sued by large credit-worthy corporations and finance companies. Maturity
dates are up to nine months.

Repurchase Agreements. A security sold by a brokerage firm to finance its


transactions with a written guarantee to repurchase the security on a
specific date, at the same price, plus interest. Repurchase agreements have
a maturity of less than one week.

Tax-Exempt Money Market Funds (MX)


r These special money market funds invest in tax-exempt municipal securities that mature
within one year. The average maturity of these tax-exempt securities is 75 days compared
with 45 days for a regular money market fund. Tax-exempt money market funds, because
of very low interest rates, are not good investments even for those in higher tax brackets.

Insured Money Market funds (MI)

Money market funds like Vanguard's money market trust and Vanguard's insured
portfolio are insured, but you pay the insurance with reduced interest. Money market
funds are already safe enough that the insurance is a waste of money.

Asset Management Accounts

The natural outgrowth of money market funds are the asset management accounts which
have unlimited checking and offer other financial services such as "debit cards."

Now that you have an overall picture of the diversity of mutual funds available, let's look
at the strategies that will put these funds to work for you.

r
© Charles J. Givens Organization 1990 R 1 Page 4-59
Strategy 4-34: Invest only in funds that have more than $25 /

million and less than $3 billion in assets.

If a fund has under $25 million in assets, there is a good chance it cannot afford to hire
or keep the best of the fund managers. You do not want your capital used to provide the
training ground for a new fund manager.

If a stock mutual fund has over $3 billion in assets, it loses flexibility. Much of the success
of a stock fund in beating the stock indices is created by portfolio turnover - moving
money in and out of cash positions in anticipation of market drops or gains. A fund
manager can't move money fast enough if the fund is too large. A good example is the
Fidelity Magellan Fund, which in 1987 grew to 11 billion dollars.

Big m'utual funds have an option. They can close the existing fund to new investors and
start a new one with new management but an identical investment philosophy.

In the Mutual Fund Family Fact Sheets at the end of this section, you'll find each fund's
total assets.

Funds and families with too little assets are shown in the "Not Recommended" Chart as
"too small."

Page 4-60 © Charles J. Givens Organization 1990 R 1


Strategy #4-35: Invest in good performing no-load funds with
telephone switching.

Choosing the right fund and fund family is easy once you know what you are looking for.
All the information you need is in the Fund Family Fact Sheets at the end of this section.
Following is a step-by-step process for choosing your mutual fund.

1. Choose for convenience a fund that is part of a family with at least one:

A. Stock fund

B. Bond fund

C. Money market fund

2. Choose a no-load or low... load fund.

3. Choose a mutual fund that has a minimum required initial deposit within
your investing limits.

4. Choose the right type of mutual fund for the current economy by using the Money
Movement Strategy.

5. Choose a fund that has assets of more than $25 million and less than $3 billion.

6. Choose a mutual fund based on its track record for the type of economy in which
you intend to use it, not its five-year or ten-year total performance record.

7. If you want income, choose a fund that offers a periodic withdrawal plan. The
minimum investment for periodic withdrawals is shown in the Fund Family Fact
Sheets. All types of funds have periodic withdrawal plans.

8. If your account is an IRA or Keogh, check the Fund Family Fact Sheets for
minimum required investment and yearly fee.

9. Choose a fund that qualifies for a Schwab Margin Account if you plan to use the
margin account strategy.

There are 28 fund families that meet these criteria. They are listed in the No-Load Mutual
Funds Recommended for Use with the Money Movement Strategy Chart.

© Charles J. Givens Organization 1990 R1 Page 4-61


Tracking Your Mutual Fund Investments
The current value in dollars of one share of a mutual fund is known as its net asset value ~
per share (NAV). You have daily access to the net asset value of any fund through the
financial pages of major newspapers. The NAV is listed under "Mutual Funds" near the
stock market quotes. The mutual funds are listed by family. For example, all of Value
Line's funds are listed together alphabetically under "V", all of the Fidelity funds are listed
alphabetically under "F" ..

Look to the right of the fund name and you'll find two price columns. Load funds will have
a price in both columns. The higher figure is the price at which you could purchase one
share, the lower figure represents the price at which you could sell one share. The
. .

difference between the two prices rep'resents the commission charged by loaded funds.
. .
If the commission is 8%, there will be an 8% difference between the two prices. No-load
funds have no commissions and only one column will show a price. The other column
,Will,contain a dash (-)or "N.L.'~ (no-load).

If you purchased you'r shares at $10.00 each (100 shares for each $1,000 you invested),
. and the share price increased over the next six months to $12.00 per share, you have
made a 20% profit on your money. When dividends are earned for one or more stocks
in your stock fund, or interest is earned and reinvested in a bond fund, you will be credited
with more shares unless you request a cash distribution.

Make note of how many shares you receive when you first invest. Even if it appears you
have ma,de only 10% on your money from the price change alone, you may discover that
you now have 15% more shares and have actually earned 25% total return. The current
net asset value per share (NAV) is not information enough to determine your profit or
loss. Profits from capital gains distributions, dividends, and interest are usually given to
investors as additional shares. On the distribution dates, the number of shares owne~

by each investor will increase, but if you look at NAV per share alone, your profit from
distributions will not be reflected. To find the true value of your investment, multiply the
number of shares shown on your last statement by the current NAV and compare to the
amount of money you originally invested. On many statements, the total current value of
your account is shown.

Page 4-62 © Charles J. Givens Organization 1990 R1


Although past performance is no guarantee of future performance, a mutual fund's track
("'" record should be an important factor in your choice. Use the performance histories in
the Mutual Fund Family Fact Sheets along with the Prime Rate Direction Changes Chart
to compare fund performance. For instance, if you want to know what would have
happened to the value of your shares in any fund during 1985 and 1986, first determine
where your money should have been invested according to the Prime Rate History Chart.
Both were years of declining interest rates and a time for stocks, so you would check
only stock fund performance. The Prime Rate fell from a high of 11 % to a low of 9% during
1985 and to 7 1/2% by August 1986. As you might expect from your understanding of
the Money Movement Strategy, one of the greatest surges in stock market history began
and lasted until October 1987. When the smoke cleared, recommended stock funds
appreciated 40% in 1985,30% in 1986, and about 3% in 1987, even after the stock market
drop of October 19th.

Money market funds averaged less than 7%. Government securities funds, heavily
pushed by brokers, averaged only 9% in 1985 and less in 1986, and lost 10% to 15% of
principal in the first half of 1987 because of rising interest rates. International stock funds
(""'" were big winners, averaging a total 100% in 1985 and 1986 due to the declining value of
the dollar. Bond mutual funds performed reasonably well during 1985 and 1986 with the
Prime Rate dropping, but lost much of their gains in 1987 and 1988 when the Prime Rate
began to rise.

© Charles J. Givens Organization 1990 R1 Page 4-63


The Bull Market Top Ten No-Load
And Low-Load Funds 8/82-8/87 /--;
Stocks registered above average performance from 1982 to 1987 up to the sharp decline
of October 19,1987. Although using the Money Movement Strategy you would not have
stayed strictly in stock funds, it is interesting to see how the best stock funds in the
recommended mutual fund families performed during the period.

S yr.
NL/ Growth Yrly
FUND TYPE LL* % Avg.
1. Vang uard World International NL 445 89

2. Fidelity Magellan Agg. growth LL 435 87

3. Loomis Sayles Capital Agg. growth NL 375 75

4. Scudder International International NL 360 72

5. Fidelity Select Health Sector LL, 355 71

6. T. Rowe Price International International NL 340 68


/' ~',
7. Newberger Manhattan Growth Nt 340 68

8. Twentieth Century Select Growth NL 335 67

9. Vanguard Windsor Federated Growth & income NL 330 66


10. Stock Trust Growth & income NL 320 64

* During the five-year period, of the Top 20 best performing mutual funds,
13 were no-load (NL) and 7 were load funds (LL).

Page 4-64 © Charles J. Givens Organization 1990 R1


Mutual Fund Performance 10 Years

Type of Fund 80 81 82 83 84 85 86 87 88 89
ALL
Stock funds 34 -1 24 21 -2 27 15 2 15 24
Bond funds 3 5 29 10 11 20 14. 2 7 11
Money market 13 17 13 9 10 8 6 6 7 9
Stock
Aggressive growth 48 -5 25 20 -10 28 11 1 15 27
Growth 32 -1 23 22 1 27 13 2 15 24
Growth - income 27 1 23 23 6 26 15 1 15 21
Precious metals 57 -26 43 -1 -28 -7 37 31 -18 25
International 38 -6 -1 33 -5 52 59 15 17 23
Bond
Fixed income 3 5 29 10 11 20 14 2 7 11
Tax free -12 -8 39 11 8 19 18 -1 10 9
~ Money Market
General 13 17 13 9 10 8 6 6 7 9
Tax free 7 7 5 6 5 4 4 5 6

© Charles J. Givens Organization 1990 R1 Page 4-65


Mutual Fund Returns
(5 Year and 10 Year)
RETURNS

TYPE OF FUND 5YR 10YR 10 YEAR


AVERAGE
All
Stock funds 92 191 19
Bond funds 55 96 10
Money market funds 37 98 10
Stock
Aggressive growth 84 210 21
Growth 93 189 19
Growth -Income 95 173 17
Precious metals 74 309 31
International 177 248 25
Bond
Fixed income 55 96 10 j
Tax free 55 70 7
Income 80 147 15
Money Market
General 37 98 10
Tax free 23

Page 4-66 © Charles J. Givens Organization 1990 R1


Mutual Fund Tracking Chart

Use this page to track mutual funds over the next few years.
Type of Fund '90 '91 '92 '93 '94 '95 '96 '97 '98 '99
ALL
Stock funds
Bond funds
Money market
Stock
Aggressive growth
Growth
Growth - income
Precious metals
International
Bond
Fixed income
,
/~
Tax free
Income
Money Market
General
Tax free

© Charles J. Givens Organization 1990 R1 Page 4-67


Strategy #4-36: Use the fund family fact sheets to choose the best ~
fund and fund family for you.

From the Fund Family Fact Sheets at the end of this chapter, choose two or three mutual
fund families that meet the above criteria and your own special needs and objectives.

If you're beginning with 10% of your paycheck, or opening a small account for children
or grandchildren, the logical choice is the Twentieth Century family of funds which has
no minimum investment.

If you are an aggressive investor, looking for maximum flexibility with aggressive growth
or sector funds, your choice may be the Fidelity funds. Stein Roe and Scudder funds also
tend to lean more toward the aggressive side.

For conservative investors, Vanguard or Dreyfus funds might be ideal choices.

Call the mutual fund family's number and request a prospectus for each fund by name.
All of the recommended fund families have toll-free numbers.- (shown in the "recom-
mended funds" list). If you live in the state in which a fund is located, use the in-state /~
number.

The prospectus will tell you everything about the fund, including the investments owned.
It is not necessary to read through all the required technical gibberish, but read carefully
the instructions pertaining to investing, moving, and withdrawing your money.

To save you countless hours of researching the mutual fund'families, you will find all·of
this information in the Mutual Fund Family Fact Sheets at the end of this section. To open
an account, complete and "Send the application with your check to the address listed in
the prospectus. Specify by name the fund in which you want your money initially invested.

Page 4-68 © Charles J. Givens Organization 1990 R1


Strategy #4-36.1: Open your no-load mutual fund using six simple
steps.

Listed below are the steps you should follow in order to open a mutual fund account.

1. Decide on the basic groups of mutual funds, i.e., growth funds, income funds,
etc.

2. Telephone the fund representatives about each fund you decide upon, using
their toll-free number.

3. Ask the representative to send you a prospectus and an application.

4. After receiving the prospectus and the application, read the prospectus and fill
out the application once you've made a decision.

5. Send a check along with the application to the mutual fund company.

6. You should receive confirmation in about a week or so as well as monthly


statements.

© Charles J. Givens Organization 1990 R1 Page 4-69


NO-LOAD MUTUAL FUNDS RECOMMENDED FOR USE WITH THE MONEY MOVEMENT STRATEGY
·
#OF PHONE
NAME FUNDS TOll-FREE IN STATE ADDRESS CITY STATE ZIP
1. AARP 7 (800)253-AARP (800)253-AARP PO BOX 2540 BOSTON MA 02208-2540
2. AMA ADVISORS 9 (800) 523-0864 (800) 523-0864 5 SENTRY PARKWAY w.. SUITE120 BLUEBELL PA 19422
3. AXE HOUGHTON MGMT. 4 (800) 431-1030 (914) 333-5200 400 BENEDICT AVE. TERRYTOWN NY 10591
4. BABSON 12 (800)4BABSON (816) 471-5200 3 CROWN CENTER, SUITE 15 KANSAS CITY MO 64108
5. BOSTON COMPANY 24 (800) 225-5267 (617) 722-7000 WELLINGTON II, 20 CABOT RD. MEDFORD MA 02155
6. BULL AND BEAR 10 (800) 847-4200 (212) 363-1100 11 HANOVER SQUARE NEW YORK NY 10005
7. CALVERT 6 (800) 368-2748 (301) 951-4820 4550 MONTGOMERY AVE 1000 N. BETHESDA MD 20814
8. COLUMBIA 6 (800) 547-1037 (503) 222-3600 PO BOX 1350, 1301 S.w. 5TH AVE PORTLAND OR 97201
9. DREYFUS 40 (800) 645-6561 (718) 895-1206 666 OLD COUNTRY RD. GARDEN CITY NY 11530
10. FIDELITY 88 (800) 544-6666 (800) 544-6666 PO BOX 193 BOSTON MA 02109-80237
11. FINANCIAL PROGRAMS 18 (800) 525-8085 (303) 779-1233 PO BOX 2040 DENVER CO 80201
12. FOUNDERS 9 (800) 525-2440 (303) 394-4404 3033 EAST FIRST AVE, SUITE 810 DENVER CO 80206
13. GOV. INVESTORS TRUST 10 (800) 336-3063 (703) 528-3600 1655 NO. FORT MYER DRIVE ARLINGTON VA 22209
14. LEXINGTON 11 (800) 526-0056 (201) 845-7300 PARK 80 w.. PLAZA 2, PO BOX 1515 SADDLE BROOK NJ 07662
15. MONEY MGMT ASSOC. 12 (800) 343-3355 (301) 657-1500 4922 FAIRMONT AVE BETHESDA MD 20814
16. NEUBERGER AND BERMAN 11 (800) 877-9700 (800) 877-9700 342 MADISON AVE., SUITE 1620 NEW YORK NY 10173
17. NEWTON 3 (800) 242-7229 (800) 242-7229 330 E. KILBOURN, 2 PLAZA EAST MILWAUKEE WI 53202
18. T. ROWE PRICE 29 (800) 638-5660 (301) 547-2308 100 E. PRATT ST. BALTIMORE MD 21202
19. SAFECO 10 (800) 624-5711 (800) 624-5711 PO BOX 34890 SEATTLE WA 98124-1890
20. SCUDDER 26 (800) 225-2470 (617) 439-4640 160 FEDERAL ST. BOSTON MA 02110
21. SELECTED FUNDS 6 (800) 553-5533 (312) 641-7862 230 w. MONROE, SUITE 2800 CHICAGO IL 60606
22. STEIN ROE 16 (800) 338-2550 (800) 338-2550 PO BOX 1143 CHICAGO IL 60690
23. STRONG 11 (800) 368-3863 (414) 359-1400 P.O. BOX 2936 MILWAUKEE WI 53201
24. TWENTIETH CENTURY 12 (800) 345-2021 (816) 531-5575 PO BOX 419200 KANSAS CITY MO 64141-6200
25. UNITED SERVICE 11 (800) 873-8637 (512) 696-1234 PO BOX 29467 SAN ANTONIO TX 78229
26. USAA 13 (800) 531-8000 (512) 498-8000 4800 FREDRICKSBURG RD. SAN ANTONIO TX 78284
27. VALUE LINE 10 (800) 223-0818 (212) 687-3965 711 THIRD AVE NEW YORK NY 10017
28. VANGUARD 55 (800) 662-7447 (215) 648-6000 PO BOX 2600 VALLEY FORGE PA 19482

"

J J ',....:iii.... i'
Mutual Fund Families Not Recommended For
Use With The Money Movement Strategy

MUTUAL FUND FAMilY .................. REASON


Bankers System Financial Services ........... Too small
Bartlett and Company ..................... No stock or MM fund
Benham Management ..................... No stock fund
Claremont Company ...................... No money market fund
Decision Funds .......................... Not open to all investors
Depositors Investment Trust ................ No money market
Dividend Funds .......................... Too small
Federated Research ...................... Closed-end Trust
Fiduciary Management .................... No money market fund
Flex Fund ............................... Poor overall performance
General Funds ........................... Not open to all investors
Gentel Equity Mortgage .................... No money market fund
Gradision & Company ..................... No bond funds
Heine Securities .......................... No money market fund
Ivy .................................... No money market fund
Janus Capital ............................ No bond fund
Legg Mason ............................. No bond fund
Lehman Management ..................... No bond fund
Lepercq, de Neufize & Co. . ................ Too small/ No MM fund
Loomis Gayles & Co ....................... S. fund closed to new investors
Horace Man Funds ....................... Not open to all investors
M.A.S. Funds ............................ Not open to all investors
Meritor Investor Co ........................ Family too new/too small
New Beginnings Fund ..................... No money market fund
Nicholas Co., Inc. . ....................... No money marketfund
North Star .............................. No money market fund
Prudential-Bache ......................... No stock fund
Quest Advisory Corp ...................... No money market fund
Reich & Tang ............................ No bond fund
Reserve Management Co ................... No bond fund
State Farm Investment Mgmt. ............... Not open to all investors
Sleadman Security Corp .................... Too small/No MM Fund
Unified Management Corp .................. Too small
United Missouri Bank ..................... Too small
United State Trust Co. . .................... Too small
Weiss Peck & Greer ....................... No money market fund

© Charles J. Givens Organization 1990 R 1 Page 4-71


Fund Family Fact Sheets
Explanation Of Terms And Abbreviations Used

FAMILY: The name of the mutual fund family, the company which creates and manages
the mutual funds listed.

FUND NAME: The name of the individual funds that make up the fund family.

TYPE: The two letter code used by the Givens Organization to identify the mutual
fund type. The first letter is the major classification.

S = Stock Mutual Fund

B = Bond Mutual Fund

M = Money Market Mutual Fund


The second letter is the sub-classification. Refer to the Mutual Fund Category
Codes List on page 4-74 for a complete description of the codes used.

ASSET MIL.: The amount of assets in millions managed by each fund.

DOWSMB: The Dow Jones computer access symbol for those who track mutual
funds by computer.

MIN. INVEST.:

INT. The initial minimum investment required to open the account.

ADD. The minimum additional amount which may be added to the account at
any time. "0" means that there is no minimum, any amount can be added.

LOADS AND FEES:

IN% The amount of front-end load or commissions deducted from your


initial investment. Shown as a percentage.

OUT% The amount of back end load or commission deducted from any
'amount you withdraw from your account. Shown as a percentage.

MGT. The percentage deducted from your account each year for management fees.

12b1 The percentage deducted from your account each year supposedly
for advertising and promotional expenses of the fund Mutual Fund Category Codes

SCWB Availability of a Charles Schwab margin account.

Withdrawal Options: The methods for withdrawing the money from your account.

Phone: Indicates if your money can be withdrawn with a telephone call.

Wire: Indicates if your money can be wire transferred from your mutual
fund account to your bank account. Other than check writing, wire transfer is the
quickest way to get access to your money. Check the bottom of the page for
minimum required amount for a wire transfer.

Check: Indicates if you can write checks on your mutual fund account. Any amount
shown is the minimum amount for which a check can be drawn.

Page 4-72 © Charles J. Givens Organization 1990 R1


Income: Indicates if you can choose to receive monthly checks as income from your
mutual fund account. Check the additional Fund Family Information at the bottom
of the page for the family's minimum investment required in order to receive
monthly income checks.

Annual Return: Indicates the percentage growth or decline in the value of each mutual fund share
for the five years indicated. A dash in place of a number indicates that the fund
was not in existence that year.

Phone Switch: Indicates whether you can move your money from one fund to another by calling
the mutual fund.

# Switches The number of times you may move your money from one fund to another by
Per Year: calling the mutual fund.

IRA Minimum: The minimum amount of initial deposit required to open an IRA account in any
of the family's funds.

IRA Fee: The amount of the trustee's fee per year for an IRA account.

Keogh Min. The minimum amount of initial deposit required to open a Keogh
Investment: account.

Minimum Wire The minimum amount which can be transferred to your bank account by
Withdrawal: wire.

Min. Investmt. Of The minimum initial investment required if you want to receive monthly income
Mnthly. Income. checks from the fund.

© Charles J. Givens Organization 1990 R1 Page 4-73


Mutual Fund Category Codes ~.
)

Stock Funds Code

Stock - growth .............................. SG


Stock - aggressive Growth ..................... SA
Stock - sector ......................... '.' .... SS
Stock - precious metals ....................... SP
Stock - growth & income ...................... SI
Stock -equity income ......................... SE
Stock - balanced ............................ SB
Stock - option ............................... SO
Stock - index ............................... SX
Bond Funds

Bond -long term corporate .................... BL


Bond -short/medium terms corporate ............ BS
Bond -long term tax exempt ................... BX
Bond -short/medium tax exempt ................ BY
Bond -government/GNMA ..................... BG
Money Market Funds

Money market-regular ....................... MM


Money market-tax exempt .................... MX
Money market - government ................... MG
Money market - insured ....................... MI

Page 4-74 © Charles J. Givens Organization 1990 R1


~ ~.
) ,1
y
'--,
@I AMA ADVISORS
0
::;,-
Q) Min Inv Loads and Fees Withdrawal Options Annual Return
~
Q)
(J)
Asset Dow 5cwb
Fund Name Type Mil 5mb Int Add In% Out% Mgt 12b-1 Marg Phone Wire Chek Income 85 86 87 88 89
~
Classic Growth SG 33 AMGFX 1000 0 0 0 .75 0.5 Yes Yes Yes No Yes
-.
G)

~
Global Growth SG 106
Growth & Inc. SI 15
AMASX 1000
1000
0
0
0 0
0
.85
.75
0.5
0.5
No Yes Yes No Yes
22.9 11.4 -1.7 9.6
17.5
20.0
21.6
~ 0 No Yes Yes No Yes 12.5
(J) 20.4
Income BL 39 PROTX 1000 0 0 0 .75 0.5 Yes Yes No No Yes 8.3 12.7 -0.6
0 6.1 8.8
cOQ) Mon Fnd Port MM 71 2000 100 0 0 .50 0.5 No Yes Yes 50 Yes 6.2 6.1
~ 7.0 8.3
~. Mon Fnd Treas MG 15 2000 100 0 0 .50 0.0 No Yes Yes 50 Yes 5.6 6.5 7.7
::t PHONE SWITCH - All Funds #SWITCHES/YEAR - Unlimited IRA MINIMUM INVESTMENT -$500.00 IRA FEE - $10.00
0
~ KEOGH MIN. INVEST. -$300.00 MIN. WIRE WITHDRAWAL-$1.000.00 MIN. INVEST. FOR MONTHLY INCOME-$5,000.00-$10,000.00
-...
(0
(0
0
:0
-... I
AMERICAN ASSOCIATION OF RETIRED PERSONS (AARP)
Min Inv Loads and Fees Withdrawal Options Annual Return
Asset Dow Scw~
Fund Name Type Mil 5mb Int Add In% Out% Mgt 12b-1 Marg Phone Wire Chek Income 85 86 87 88 89
Capital Growth SG 89 ACGFX 250 0 0 0 .62 0 No Yes Yes No Yes 28.8 16.7 .2 27.3 33.5
Growth & Inc. SU 209 AGIFX 250 0 0 0 .49 0 No Yes Yes No Yes 30.2 16.6 .8 10.9 26.5

General Bond BL 122 AGBFX 250 0 0 0 .49 0 No Yes Yes No Yes 15.8 10.7 1.2 8.1 12.3
Ins. Tax Free BX 353 ATIGX 250 0 0 0 .49 0 No Yes Yes No Yes 10.2 16.3 -1.5 12.2 10.8
GNMA & Treas. BG 2745 AGNMX 250 0 0 0 45 0 No Yes Yes No Yes 17.9 10.4 2.0 7.1 11.7
Ins Tx Fr Short BY 79 AITSX 250 0 0 0 .49 0 No Yes Yes No Yes 5.7 7,9 3,3 4.5 6.2

Money Fund MM 255 ARPXX 250 0 0 0 .48 0 No Yes Yes 100 Yes 6.0 5.4 6.6 8.1
~ PHONE SWITCH -All Funds #SWITCHES/YEAR - 4 IRA MINIMUM INVESTMENT -$250.00 IRA FEE-O
<0
Q) KEOGH MIN. INVEST. -$250.00 MINIMUM WIRE WITHDRAWAL- No Min. MIN. INVEST FOR MONTHLY INCOME-$10,OOO.OO
.t..
I

~
~I AXE-HOUGHTON MGR
co
CD

~I
Min Inv Loads and Fees Withdrawal Options Annual Return
Asset Dow Scwb
Fund Name Type Mil 5mb Int Add In% Out% Mgt 12b-1 Marg Phone Wire Chek Income 85 86 87 88 89
Stock Fund SG 58 AXBTX 1000 0 0 0 .7 .45 Yes No No No Yes 311 10.4 -6.0 -0.2 29.8
Fund B Inc. SB 159 AXEBX 1000 0 0 0 .6 .45 Yes No No No Yes 32.9 23.1 -3.5 8.9 20.6

Income Fund BL 60 AXBAX 1000 0 0 0 .6 .45 Yes No No No Yes 26.6 15.8 1.8 8.7 10.2

Money Market MM 106 1000 0 0 0 .5 .25 Yes No Yes 5000 Yes 6.8 5.5 6.0 7.0 8.6
PHONE SWITCH - All Funds #SWITCHES/YEAR - Unlimited IRA MINIMUM INVESTMENT -$25.00 IRA FEE-$10.00
KEOG MIN. INVEST. -$250.00 MINIMUM WIRE WITHDRAWAL-$1,000.00 MIN. INVEST FOR MONTHLY INCOME-$10,000.00

BABSON FUNDS
Min Inv Loads and Fees Withdrawal Options Annual Return
@
Asset Dow Scwb
() Fund Name Type Mil 5mb Int Add In% Out% Mgt 12b-1 Marg Phone Wire Chek Income 85 86 87 88 89
;:,-
Q)
Enterprise SA 53 BABEX 1000 100 0 0 1.5 15 No No No No Yes 38.6 9.0 -9.2 32.8 22.5
=::!..
(1)
CI) Growth SG 240 BABSX 500 50 0 0 .75 15 No No No No Yes 29.6 18.8 2.7 15.9 22.1
~ Value SG 10 BVALX 1000 100 0 0 .95 15 No No No No Yes 26.5 20.7 3.3 19.0 18.2

-.
(j)
<:
(1) Tax Free Inc. ax 22 BALTX 1000 100 0 0 .95 0 No No No No Yes 20.4 21.3 -1.9 11.6 8.8
:::3 Bond Trust BL 66 BABIX 500 50 0 0 .75 15 No No No No Yes 20.7 13.8 1.9 7.2 13.1
CI)

0 TF Inc. Short BY 17 1000 100 0 0 .95 0 No No No No Yes 11.1 10.4 3.5 5.1 7.0
cOQ)
:::3 Mon Mkt Prime MM 71 BMMXX 1000 100 0 0 .85 15 No Yes Yes 500 Yes 7.6 6.1 5.9 6.9 8.4
~. 5.0
TF Inc. MM MX 14 1000 100 0 0 .95 0 No Yes Yes 500 Yes 5.0 4.5 4.1 5.9
:::t
0 Men Mkt Fed MG 9 1000 100 0 0 .85 15 No Yes Yes 500 Yes 5.6 6.8 8.2
:::3
-..4

~I
PHONE SWITCH-All Funds #SWITCHES/yEAR - Unlimited IRA MIN. INVEST.-$1,000.00 [Exc. Bond Trust & Growth] IRA FEE-$10.00
KEOGH MIN. INVEST. - $100.00-$1 ,000.00 MIN. WIRE WITHDRAWAL-None MIN. INVEST. FOR MONTHLY INCOME-$10,000.00
l:J
-..4

J
J
'A

,~


~, ~,
) ~\
/

@I BOSTON CO. FUNDS


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:::t Min Inv Loads and Fees Withdrawal Options Annual Return
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Fund Name Type Mil 5mb Int Add In% Out% Mgt 12b-1 Marg Phone Wire Chek Income 85 86 87 88 89
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Spec Growth SA 34
Capital Apprec. SG 520
BOSSX
BCCAX
1000
1000
0 0
0 0
0 1.00
0 .75
.45
.45
No
No
Yes
Yes
Yes
Yes
No
No
Yes
Yes 34.7 7.6 -3.5 21.1 19.2
:;:, 35.0 22.5 0.5 19.6 24.8
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0 Mass. Tax Free BY 15 1000 0 0 0 .50 0.00 No Yes Yes No Yes


17.6 -0.9 10.7 8.8
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Tax Free Bond BX 11 1000 0 0 0 .50 0.00 No Yes Yes No Yes
:;:, GNMA BG 14 BGMFK 1000 0 0 0 .65 .45 No Yes Yes No Yes 18.3 2.4 10.8 9.8
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Managed Inc. BS 64 BOSGY 1000 0 0 0 .60 .45 No Yes Yes No Yes
21.8 15.1
0.8
5.7
6.5 11.6
10.0 6.1
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:::3 Cash Mgmt MM 334 BCAXX 1000 0 0 0 .50 .45 Yes
No Yes 500 Yes
..... 7.9 6.3 6.1 7.0
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Mass. Tax Free MX 142 BCMXX 1000 0 0 0 .50 0.00 No Yes Yes 500 Yes 8.4
C Tax Free Mon. MX 32 1000 0 0 0 .50 .45 No Yes Yes 500 Yes 4.9 4.4 4.2 4.8 5.8
:0 4.9 4.1 4.0 4.6 5.7
..... Gov. Money MG 35 BOGXY 1000 0 0 0 .50 .45 No Yes Yes 500 Yes
7.2 5.6 5.3 6.4 8.1
PHONE SWITCH -All Funds #SWITCHES/YEAR - Unlimited IRA MIN. INVEST. -$500.00 IRA FEE - $1 0.00
KEOGH MIN. INVEST.-$500.00 MIN. WIRE WITHDRAWAL-$1,000.00 MIN. INVEST. FOR MONTHLY INCOME-$10,000.00

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Min Inv Loads and Fees Withdrawal Options Annual Return
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5mb Int Add In% Out% Mgt 12b-1 Marg Phone Wire Chek Income 85 86 87 88 89
Fund Name Type Mil
Spec. Equity SA 3 BULHX 1000 100 0 0 1.0 1.0 Yes Yes Yes No Yes -6.4 22.7 42.3
Capital Growth SA 57 BULSX 1000 100 0 0 1.0 1.0 Yes No Yes No Yes 27.7 3.7 -4.6 13.9 30.3
Equity Income SE 12 BULAX 1000 100 0 0 0.6 1.0 Yes No Yes No Yes 25.7 19.3 -4.7 15.4 15.2
Gold Inv. SP 42 BULGX 1000 100 0 0 1.0 1.0 Yes Yes Yes No Yes 2.6 35.0 30.4 -13.5 19.3

High Yield BL 110 BULHX 1000 100 0 0 0.7 0.5 Yes Yes Yes No Yes 20.6 6.0 -6.4 5.0 -3.0
Tax Free Inc. BX 19 BLTFX 1000 100 0 0 0.7 0.5 Yes Yes Yes No Yes 22.4 19.7 -.9 11.7 8.9
US Gov Guar BG 49 BLTFX 1000 100 0 0 0.7 0.5 Yes Yes Yes No Yes 5.4 4.5 10.4

Dollar Res. MM 101 BULXX 1000 100 0 0 0.5 0.2 Yes Yes Yes 250 Yes 7.9 6.3 6.0 7.1 8.4

PHONE SWITCH - All Funds #SWITCHES/YEAR-Unllmlted IRA MIN. INVEST.-$500.00 IRA FEE-$10.00
KEOGH MIN. INVEST. -$500.00 MIN. WIRE WITHDRAWAL-$1,OOO.00 MIN. INVEST. FOR MONTHLY INCOME-$10,OOO.00
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Fund Name Type Mil 5mb Int Add In% Out% Mgt 12b-1 Marg Phone Wire Chek Income 85 86 87 88 89
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Equity SG 7 CFEQX 2000 250 0 0 0.7 0.7 Yes Yes Yes No Yes
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Tx Free Res Ltd BY
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CTILX
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2000 250
2000 250
0
0
0
0
0.6
0.6
0.3
0.3
No
No
Yes
Yes
Yes
Yes
No
No
Yes
Yes
18.8 16.6 7.1
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Social Inv. MM MM 92 CSIXX 1000 250 0 0 0.7 0.2 Yes Yes Yes 250 Yes
7.8 6.2 5.8 7.1
Tax Free MM MX 827 CTMXX 2000 250 0 0 0.5 0.0 No Yes Yes 250 Yes
4.8 4.6 5.3 6.3
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#SWITCHES/yEAR - Unlimited IRA MIN. INVEST -$l,OOOEqultyl $250 for Equity $1000.00 min.
KEOGH MIN. INVEST. -$250.00 in Equity only MIN. WIRE WITHDRAWAL-No minimum
MIN. INVEST. FOR MONTHLY INCOME-$5,OOO.00
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Min Inv Loads and Fees Withdrawal Options Annual Return
Asset Dow Scwb
Fund Name Type Mil 5mb Int Add In% Out% Mgt 12b-1 Marg Phone Wire Chek Income 85 86 87 88 89
Special SA 30 CLSPX 3,000 100 0 2 1.0 .15 Yes Yes Yes No Yes
Growth SA 209 CLMBX 1000 100 0 0 0.7 .15 Yes Yes Yes No Yes 15.6 3.0 42.5 31.8
32.0 6.9 14.7 10.8 28.9
Municipal Bd BX 140 CMBFX 1000 100 - 2 0.5 .15 Yes Yes Yes No Yes
Fixed Inc. Sec. BL 102 CFISX 1000 100 - 0.5 .15 Yes Yes Yes No Yes 19.8 16.8 1.4 10.2 9.0
US Govt. Sec. BG 9 CFISX 1000 100 - 0.5 .15 Yes Yes Yes No Yes 20.2 12.3 .9 7.6 14.4
4.1 5.3 9.6
Dally Income MM 546 CDIXX 1000 100 0 0 0.5 .15 Yes Yes Yes 500 No
7.6 6.2 6.0 7.1 8.5
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CD KEOGH MIN. INVEST. - NONE KEOGH FEE-$50 MIN. WIRE WITHDRAWAL-$1000.00
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Fund Name Type Mil 5mb Int Add In% Out% Mgt 12b-1 Marg Phone Wire Chek Income 85 86 87 88 89
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Strategic Agg. SA 158 DRCVX 2500 100 0 o .75 0.2 Yes No No No Yes 15.7 5.1 14.2
New Leaders SA 112 DNLDX 2500 100 0 o .75 Yes No No No Yes 12.3 -5.0 23.3 31.3
Growth Opp. SG 571 DREQX 2500 100 0 o .75 0.0 Yes No No No Yes 30.7 15.3 6.8 17.9 14.7
Third Century SG 176 DRTHX 2500 100 0 o .75 0.0 Yes No No No Yes 29.7 4.6 2.5 23.2 17.3
Fund SI 2301 DREVX 2500 100 0 o .65 0.0 Yes No No No Yes 25.2 16.2 8.2 8.7 22.5
Convert. Sec. SI 243 DRSPX 2500 100 0 o .75 0.0 Yes No No No Yes 23.9 25.2 -2.6 23.0 14.9

Mass TE Bond BX 92 2500 100 0 o .60 0.0 Yes Yes No No Yes 17.9 -3.4 10.5 7.7
NY Tax Exempt BX 1560 DRNYX 2250 100 0 o .60 0.0 Yes Yes No No Yes 20.6 17.1 -2.6 10.1 8.9
Cal TE Bond BX 1281 DLAXX 2500 100 0 o .50 0.0 Yes No Yes No Yes 18.8 17.7 -1.7 9.7 8.6
Insured TE Bd BX 182 2500 100 0 ci .60 0.2 Yes Yes Yes No Yes 17.0 -1.9 10.2 8.7
Tax Exempt Bd BX 3346 DRTAX 2500 100 0 o .601 0.0 Yes Yes Yes No Yes 19.4 17.3 -1.7 11.5 8.7
A Bond Plus BL 261 DRBDX 2500 100 0 o .65 0.0 Yes No Yes No Yes 23.1 14.0 -1.7 9.0 14.1
GNMA BL 1764 DRGMX 2500 100 0 o .60 0.2 Yes No No No Yes 9.6 1.8 6.4 11.5
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Int. Tax Exempt BY 1048 DFTEX 2500 100 0 o .60 0.0 Yes Yes No No Yes 16.1 15.4 1.1 8.0 6.5
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Cal TF Money MX 348 DLAXX 2500 100 0 o .50 0.0 Yes No Yes 500 Yes 4.7 5.6
~ Tx Exempt MM MX 2338 DTEXX 5000 100 0 o .50 0.0 Yes Yes Yes 500 Yes 5.0 4.4 4.1 4.8 5.8
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CI) MM Govt. Sec MG 658 DMMXX 2500 100 0 o .50 0.0 Yes Yes Yes 500 Yes 8.3 6.5 5.9 6.8 8.4
~ liquid Assets MM 7302 DLAXX 2500 100 0 o .50 0.0 Yes Yes Yes 500 Yes 6.5 6.2 7.1 8.7
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g KEOGH MIN. INVEST.-$750.00 MIN. WIRE WITHDRAWAL-$1000.00 MIN. INVEST. FOR MONTHLY INCOME-$5,000.00
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Fund Name Type Mil 5mb Int Add In% Out% Mgt 12b-1 Marg Phone Wire Chek Income 85 86 87 88 89
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(j) OTC SA 720 FDCPX 2500 250 3 o .35 0 Yes No Yes No Yes 69.0 11.4 1.622.8 30.4
~. Capital App. SA 1573 FDCAX 2500 250 2 1 .30 0 No No Yes No Yes 19.3 37.6 26.9
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Growth Co. SA 138 FDGRX 1000 250 3 o .30 0 Yes No Yes No Yes 39.8 13.0 -1.7 16.1 41.6
o Magellan SA 8971 FMAGX 1000 250 3 o .30 0 Yes No Yes No Yes 43.1 23.7 0.9 22.7 34.6
cQ Freedom*** SA 1219 FOFFX ,500 250 0 o .30 0 Yes No Yes No No 28.7 14.0 9.3 15.5 30.3
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:) Value SA 124 FDVLX 1000 250 0 o .40 0 Yes No No No Yes 22.1 14.7 -8.6 29.0 22.9
~. Contra Fund SA 107 FCNTX 1000 250 0 o .10 0 Yes No Yes No Yes 27.0 13.1 -2.021.0 43.3

g=:t Trend SG 702 FTRNX 1000 250 0 o .10 o Yes No No No Yes 28.2 13.3 -4.2 24.3 31.6

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Growth & Inc. SI 1145 FCRIX 2500 250 2 o .20 o Yes No No No Yes 35.2 -.6 23.0 29.6
Fidelity Fund SI 895 FFIOX 1000 250 0 o .10 o Yes No No No Yes 27.7 15.6 3.3 17.9 28.7
~ Equity Income SE 4065 FEQIX 1000 250 2 o .10 o Yes No No No Yes 25.0 16.9 -1.6 22.5 18.7
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-a. Real Estate SI 64 FQDEX 2500 250 2 o var. o Yes No Yes No Yes -7.7 10.3 13.8
Puritan SB 4295 FPURX 1000 250 0 o .10 o Yes Yes Yes No Yes 28.5 20.7 -1.9 18.8 19.6
Balanced SB 123 FAFTX 2500 250 2 o .50 o Yes No No No Yes 1.9 16.0 19.5
Qualified Dlv.* SE 66 FQDFX 50M - 0 o var. o No No Yes No No 25.7 21.0 -4.9 10.1 19.5
Convert. Sec. SI 40 FCVSX 2500 250 0 o .20 o Yes No No No Yes -4.9 15.8 26.2
Sel Prec.Metals SP 199 FDMPX 1000 250 2 .35 o Yes No Yes No Yes -10.5 32.8 37.5 -23.9 32.2
Sel Amer Gold SP 191 FSAGX 1000 250 2 .35 o Yes No Yes No Yes 18.1 40.5 -12.5 22.0
Sel Energy Ser SS 29 FSESX 1000 250 2 .35 o Yes No Yes No Yes -15.7 -11.8 -0.4 59.4
Sel Chemicals SS 79 FSCHX ~OOO 250 2 .35 o Yes- No Yes No Yes 26.9 14.8 21.0 17.3
Sel Tech SS 148 FSPTX 1000 250 2 .35 '0 Yes No Yes N~ Yes 7.4 -7.5 -11.8 -2.7 17.0
Sel Software SS 26 FSCSX 1000 250 2 .35 o Yes No Yes No Yes 13.9 9.4 9.0 12.1
Sel Computers SS 18 FDCPX 1000 250 2 .35 o Yes No Yes No Yes 7.9 -6.4 -5.0 6.8
Sel Electronics SS 11 FSELX 1000 250 2 .35 o Yes No Yes No Yes -23.9 -13.5 -8.5 15.7
Sel Telecomm SS 44 FSTCX 1000 250 2 ,35 o Yes No Yes No Yes 19.8 15.2 27.7 50.9
Sel BioTech SS 39 FRIOX 1000 250 2 .35 o Yes No Yes No Yes 3.5 -3.3 4.1 43.9
~ Sel Defense SS 2 FSDAX 1000 250 2 .35 o Yes No Yes No Yes 26.4 5.0 -23.2 4.3 8.8
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(I) Sel Automation SS 3 FSAVX 1000 250 2 .35 o Yes No Yes No Yes -9.3 9.3 14.4
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Health Care Del SS 229 FHSNX 1000 250 2 .35 o
Yes No No No Yes 58
-a. Sel Health SS 181. FSPHX 1000 250 2 .35 o Yes No Yes No Yes 59.4 22.0 -0.6 8.8 42.5
~ Sel Air Trans SS 5 FSLAX 1000 250 2 .35 o Yes No Yes No Yes
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CD Sal Trans SS 4 FTRAN 1000 250 2 .35 o Yes No Yes No Yes 12.8 -20.1 29.1 26.3
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Sal Automotive SS 2 FSAYX 1000 250 2 .35 o Yes No Yes No Yes -17.5 38.5 28.5
en Sel Cap Goods S5 3 FCAPX 1000 250 2 .35 o Yes No Yes No Yes 6.5 20.1 4.1
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5al Ind. Mat. 55 26 FINDX 1000 250 2 .35 o Yes No Yes No Yes -9.3 4.9 4.4
Sel Paper For. SS 14 FSPFX 1000 250 2 .35 o Yes No Yes No Yes 15.6 10.8 4.0
5el Housing S5 2 F5HOX 1000 250 2 .35 o Yes No Yes No Yes 3.9 6.8 16.6
Sel Food & Agr.SS 21 FDFAX 1000 250 2 .35 o Yes No Yes No Yes 22.5 -12.4 29.2 38.9
Sel Bdcst Med S5 12 FRMPX 1000 250 2 .35 o Yes No Yes No Yes 7.5 26.8 32.6
Sel Energy 55 75 FSENX 1000 250 2 .35 o Yes No Yes No Yes 17.9 19.9 26.9 42.8
Sel Life Ins. S5 1 FSLTX 1000 250 2 .35 o Yes No Yes No Yes 5.5 -1.8 15.9 38.9
5el Prop Cas S5 5 FSPCX 1000 250 2 .35 o Yes No Yes No Yes -21.7 16.3 37.9
5el Broker 55 4 FSLBX 1000 250 2 .35 o Yes No Yes No Yes 7.7 -12.2 17.4 14.1
Sel Financial 55 26 FIDSX 1000 250 2 .35 o Yes No Yes No Yes 41. 7 9.5 36.9 18.5 19.4
5el Reg Banks 55 9 FSRGX 1000 250 2 .35 o Yes No Yes No Yes 15 -16.6 12.1 26.7
Sel S&L S5 5 FSC5X 1000 250 2 .35 o Yes No Yes No Yes -3.1 25.7 9.3
Sel Leisure S5 66 FDLSX 1000 250 2 1 .35 o Yes No Yes No Yes 56.5 27.5 -7.9 18.5 31.2
5el Rest. 5S 2 FRE5T . 1000 250 2 1 .35 o Yes No Yes No Yes 15.7 5.7 26.0 40.9
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NY Tx Fr Ins BX 123 FNTIX 2500 250 0 o .40 o Yes No Yes No Yes -3.1 29.6 29.6
g Sel Retail SS 15 FSRPX 1000 250 2 1 .35 o Yes No Yes No Yes 14.2 -7.4 38.7 28.2
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:::t Sel Elect UtI! S5 14 FSEUX 1000 250 2 1 .35 o Yes No Yes No Yes -17.3 20.0
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C/) Sel Utilities 55 82 FSUTX 1000 250 2 1 .35 o Yes No Yes No Yes 31.7 24.0 -9.2 20 39.0
~ Global Bond BL 83 FGBDX 2500 250 0 o .50 o Yes No Yes No Yes 19.1 3.7 7.9
(j) NYTF Yld Munl BX 343 FTFMX 2500 250 0 o .40 o Yes No Yes No Yes 20.9 16.8 -2.4 11.9 9.2
~. Cal Free HY BX 460 FCFXX 2500 250 0 o .45 o Yes No Yes 500 Yes 16.6' 17.5 -3.7 11.8 9.6
~ Ltd. Term Munl BY 438 FLTMX 2500 250 0 o .15 o Yes No Yes 500 Yes 17.3 15.2 1.1 8.2 7.8
o Penn Free HY BX 61 FPURX 2500 250 0 o .10 o Yes No No No Yes -5.8 14.3 9.8
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High Income BL 1689 FAGIX 2500 250 0 o .55 o Yes No Yes No Yes 25.6 17.9 0.5 12.6 -3.1
:::l High Yld Muni BX 1Q15 FHIGX 2500 250 0 o .45 o Yes No Yes No Yes 21.4 18.9 -3.7 12.0 11.4
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Agg. Tax Free BX 452 FATEX 2500 250 0 o .50 o Yes No Yes No Yes 17.4 1.7 13.4 9.5
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Texas Tax Free BX 31 FTEXX 2500 250 0 o .30 o Yes Yes Yes 500 Yes -0.8 12.4 11.3
~ Mass Free MuniBX 602 FDMMX 2500 250 0 o .45 o Yes Yes Yes No Yes 19.6 16.9 -1.5 10.7 9.3
~ Mlnn Tax Free BX 99 FDMDX 2500 250 0 o .45 o Yes Yes Yes No Yes 17.0 -4.1 12.6 9.5
o Mlch Tax Free BX 169 FMHTX 2500 250 0 o .45 o Yes Yes Yes No Yes 18.9 -3.1 13.0 10.2
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~ Ohio Tax Free BX 152 FOHFX 2500 250 0 o .45 o Yes Yes Yes No Yes 16.4 -2.4 13.0 10.0
Munic. Bond BX 980 FMBPX 2500 250 0 o .40 o Yes No Yes No Yes 20.1 19.5 -1.6 12.3 9.6

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g Cal Ins TF BX 58 FCTFX 2500 250 0 o .45 o Yes No Yes 500 Yes -4.5 11.6 8.8
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Ins. Tax Free BX 152 FMUIX 2500 250 0 o .45 o Yes No Yes No Yes 18.3 -2.2 11.2 9.5
CD
en Short Term BS 287 FSHRX 2500 250 0 o .50 o No No No No Yes 4.0 5.7 6.3
~ GNMA BG 678 FGMNX 1000 250 0 o .50 o Yes No Yes No Yes 12.7 1.2 7.2 13.8
G) Gov Securities BG 567 FGOVX 1000 250 0 o .50 o No Yes Yes No Yes 17.6 14.7 1 .1 6.4 12.6
~. Short Term TF BY 76 FPURX 2500 250 0 o .50 o Yes No Yes 500 Yes 4.9 7.8
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en Corp Trust ARP BY 102 FCPTX 50000 0 o .60 .2 No No Yes No No 6.5 16.4 6.7 -1.5 3.7

o Flexible Bond BL 308 FBNDX 2500 250 0 o .40 o Yes No Yes No Yes 21.1 13.6 0.1 7.9 13.0
ca Mort. Sec. BG 442 FMSFX 1000 250 0 o .50 o Yes No Yes No Yes 18.6 10.9 2.7 6.7 13.6
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;::, Select MM M M 77 4 1000 250 0 o .35 o No No Yes No Yes 6.4 5.8 7.1 8.6
~. Dally Inc. Tr MM 3002 FDTXX 5000 500 0 o var. o No Yes Yes Yes Yes 8.0 6.6 6.2 7.3 8.7
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o· Cash Reserves ,. 10550 FDRXX 1000 250 0 o .50 o No No Yes 500 Yes 7.9 6.5 6.3 7.3 8.6
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..... US Gov. Res MG 1540 FGRXX 1000 250 0 o .48 o No No Yes 500 Yes 7.8 6.4 6.0 7.0 8.4
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Mass TF Mon MX 628 FDMXX 2500 500 0 o .45 o Yes Yes Yes 500 Yes 4.7 4.2 4.6 5.6
c NY TF Money MX 701 2500 250 0 o .40 o Yes Yes Yes 500 Yes 4.2 3.8 4.5 5.3
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..... Cal. TF Money MX 663 FCFSX 2500 250 0 o .45 o Yes Yes Yes 500 Yes 4.5 4.1 4.8 5.6
Penn TF Mon MX 114 FPURX 2500 250 0 o .10 o No Yes Yes 500 Yes 5.1 6.1
Tax Exempt MX 31 82 FTEXX 5000 250 0 o .30 o No Yes Yes 500 Yes 5.2 4.5 4.3 4.9 5.8

PHONE SWITCH - All Funds except Tr Fixed lAC Port LT #SWITCHES/YEAR - Min 4 - in most cases Unlimited
IRA MIN. INVEST. -$500.00 IRA FEE-$10.00 KEOGH MIN. INVEST. -$250.00 {Dally Inc. at $500.00}
MIN. WIRE WITHDRAWAL-$5000.00 MIN. INVEST. FOR MONTHLY INCOME-$5.000.00

*Corporatlons Only
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~ ***Limlted to tax qualified retirement plans and tax-exempt organizations
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~ Min Inv Loads and Fees Withdrawal Options Annual Return
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Asset
Mil
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Add In% Out% Mgt 12b-1 Marg Phone Wire Chek Income 85 86 87 88 89

Dynamics SA 92 FIDYX 250 50 0 o .75 o Yes No No No No -13.8 29.1 6.2 3.9 9.1
Industrial Fund SG 317 FLRFX 250 50 0 o .75 o Yes No No No Yes 1.2 28.4 8.2 -0.1 6.0
Industrial Inc. SB 372 FIIiX 250 EO 0 o .75 o Yes No No No Yes 9.7 30.7 14.4 4.9 15.3
Strategic Gold SP 32 FGLDX 250 50 0 o .75 o Yes No No No No -4.5 38.7 16.0 -20.0
Strategic Tech SS 14 FTCHX 250 50 0 o .75 o Yes No No No No 27.3 21.9 -5.3 14.2
Strat. Health SS 10 FHLSX 250 50 0 o .75 o Yes No No No No 31.5 29.5 7.0 16.1
Strat. Energy SS 6 FSTEX 250 50 0 o .75 o Yes No No No No 13.6 7.2 5.0 14.9
Strat. Financial SS 1 FSBSX 250 50 0 o .75 o Yes No No No No -11.2 17.1
Strat. Leisure SS 4 FLlSX 250 50 0 o .75 o Yes No No. No No 32.2 18.8 0.7 28.6
World of Tech SS 8 FPWTX 250 50 0 o 1.00 o Yes No No No No 16.5 2.3
Strat. Utilities SS 18 250 50 0 o .75 o Yes No No No No -4.9 14.2
Strat. Europe SS 7 FEUBX 250 50 0 o .75 o Yes No No No No -4.5 10.6

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Strat. Pacific SS 29 FPBSX 250 50 0 o .75 o Yes No No . No No 27.3 71.9 9.8 23.2

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Bond Select BL 30 FBDSX 250 50 0 o .50 o Yes No No No No 5.2 22.7 18.7 -1.6 10.4
en Tax Free Inc. BX 121 FTIFX 250 50 0 o .50 o Yes No No No Yes 9.2 22.9 22.1 -4.0 15.1
~ Bond Sh HY BS 60 FHYPX 250 50 0 o .50 o Yes No No No No 26.5 14.5 3.5 13.5
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Dally Inc. Sh. MM 339 FBSXX 250 50 0 o .50 o Yes Yes Yes 500 No 10.5 7.8
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~. Tax Free Mon. MX 32 250 50 0 o .50 o Yes Yes Yes 500 Yes 5.5 5.5
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~. IRA FEE-$5.00 KEOGH MIN. INVEST.-$50.00 MIN. WIRE WITHDRAWAL-$1,000.00

g MIN. INVEST. FOR MONTHLY INCOME-$10.000.00

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CI:I Add In% Out% Mgt 12b-1 Marg Phone Wire Chek Income 85 86 87 88
Fund Name Type Mil 5mb Int 89
'- Frontier 8 1000 100 0 0 1.0 .25 Yes No No No Yes
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SA 29.2 44.1
~. Special SA 63 FRSPX 1000 100 0 0 1.0 0.00 Yes No No No Yes
CD
15.2 18.9 5.2 13.2 38.9
::3 Growth SG 53 FRGRX 1000 100 0 0 1.0 0.00 Yes No No No Yes
CI:I 28.8 19.6 10.2 4.8 41.5
Blue Chip SI 174 FRMUX 1000 100 a 0 0.5 .25 Yes No No No Yes
0 31.9 17.3 1.9 10.0 35.5
Equity Income SE 13 FRINX 1000 100 0 0 1.0 .25 Yes No No No Yes
cOQj 12.7 14.6 1.9 11.1 25.2
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Gov. Sec. Fund BG 4 1000 100 0 0 0.8 .25 Yes No No No Yes
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Money Market M M 54 FMMXX 1000 100 0 0 0.5 0.00 No No Yes 500 Yes
7.3 6.0 5.9 6.9 8.2
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PHONE SWITCH-All Funds #SWITCHES/YEAR - Unlimited IRA MINIMUM INVESTMENT -$500.00 IRA FEE - $10.00
KEOGH MIN. INVEST. - $500.00 MIN. WIRE WITHDRAWAL $1000.00 MIN. INVEST. FOR MONTHLY INCOME-$5,000.00
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Asset
Mil
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Min Inv

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Loads and Fees

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Out% Mgt 12b-1 Marg
No
Withdrawal Options

Phone Wire
Yes Yes
Chek
No
Income
Yes
85
47.2
Annual Return

86
15.1
87
-2.0
88
24.6
89
25.1
1000 0 0 .75 1.0 No Yes Yes No Yes 32.5 21.2 0.5 15.7 22.6
Select Growth SG 3
2 1000 0 0 .75 1.0 No Yes Yes No Yes 25.7 18.5 -4.8 13.2 26.2
Equity Income SE

BX GTFHX 2000 0 0 .62 0.0 No Yes Yes Yes Yes 17.3 19.4 0.2 8.6 7.2
Tax Free HY 40
10 GITMX 1000 0 0 .62 1.0 No Yes Yes Yes Yes 22.0 9.1 -2.8 10.1 11.1
Inc. Max Inc.* BL
1000 0 0 .62 1.0 No Yes Yes Yes Yes 25.2 13.0 -1.1 7.1 2.9
Inc. A Rated BL 6

Tax Free Tr. MX 21 2000 0 0 .50 0.7 No Yes Yes Yes Yes 5.6 4.3 -0.5 4.4 7.2
Gov Inv. Trust MG 167 GITXX 2000 0 0 .50 0.7 No Yes Yes Yes Yes 7.5 6.0 5.9 6.9 8.3

PHONE SWITCH-All Funds #SWITCHES/YEAR-Unlimlted IRA MINIMUM INVESTMENT -$500.00 IRA FEE-$12.00
@ KEOGH MIN. INVEST. -$1000.00 MIN. WIRE WITHDRAWAL-No Minimum MIN. INVEST. FOR MONTHLY INCOME-No Minimum

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III Min Inv Loads and Fees Withdrawal Options Annual Return
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Fund Name Type Mil 5mb Int Add In% Out% Mgt 12b-1 Marg Phone Wire Chek Income 85 86 87 88 89
~ No Yes No Yes
Growth SA 26 LEGGX 1000 50 0 0 0.75 .25 Yes 26.7 20.6 -0.5 10.5 28.1
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Research SI 111 LEXRX 1000 50 0 0 0.75 .25 Yes No Yes No Yes 26.3 20.2 0.1 9.4 27.5
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::) Goldfund SP 93 LEXMX 1000 50 0 0 1.00 .25 Yes No Yes No Yes 13.0 32.7 46.3 -15.0 24.9
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GNMA Inc. BG 97 LENNX 1000 50 0 0 0.60 .25 Yes No Yes No Yes 18.3 11.9 1.6 6.8 15.5
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~. Money Mkt MM 191 LMMXX 1000 50 0 o 0.50 .25 No Yes Yes 100 Yes 8.0 6.3 6.2 7.0 8.3
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Tax Free MF MX 83 LTFXX 1000 50 0 o 0.50 .25 No Yes Yes 100 Yes 5.1 4.5 4.2 4.8 5.6
:::3 Gov Sec MM MG 17 LSGXX 1000 50 0 o 0.50 .25 No Yes Yes 100 Yes 7.6 6.0 5.8 6.6 8.8
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PHONE SWITCH - All Funds #SWITCHES/yEAR -7 day hold except for Money Mkt which is unlimited
IRA MINIMUM INVESTMENT -$250.00 IRA FEE-$10.00 KEOGH MIN. INVEST. - $250.00 MIN. WIRE WITHDRAWAL-$1000.00
MIN. INVEST. FOR MONTHLY INCOME-Not Available
*Designed for Institutional Investors Only

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Asset Dow Scwb
Fund Name Type Mil 5mb Int Add In% Out% Mgt 12b-1 Marg Phone Wire Chek Income 85 86 87 88 89

Rush. Stk Mkt SG 20 RSSIX 2500 0 0 0 .5 0 No Yes Yes No No 8.9 8.9 23.2
Rushmore OTC SG 6 RSOIX 2500 0 0 0 .5 0 No Yes Yes No No 8.8 6.2 9.2 15.0

Fund TF Inv Lg BX 10 2500 0 0 0 .5 0 No Yes Yes 250 No 11.8 0.3


Fund TF Int. BY 9 2500 0 0 0 .5 0 No No No No No 12.1 -1.0
Rush. GNMA BG 10 RSGMX 2500 0 0 0 .5 0 No Yes Yes No No 9.1
Rush. US Gov BG 2500 0 0 0 .5 0 No No No No No 10.5

Rushmore MM MM 59 2500 0 0 0 .5 0 No Yes Yes Yes No 6.0 5.8 7.0


TF Inv. MM MX 79 FFTXX 2500 0 0 O· .5 0 No No No No No 4.2 3.8 4.8
Gov. Investors MG 167 FUSXX 2500 0 0 0 .5 0 No Yes Yes 250 No 6.0 5.6 6.9

@ PHONE SWITCH -All Except the "Rushmore' Funds #SWITCHES/yEAR - Unlimited IRA MINIMUM INVESTMENT -$500.00
IRA FEE-$10.00 KEOGH MIN. INVEST. -$500.00 MIN. WIRE WITHDRAWAL-$5000
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9
Q) Min Inv Loads and Fees Withdrawal Options Annual Return
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Fund Name Type Mil 5mb Int Add In"lo Out"lo Mgt 12b-l Marg Phone Wire Chek Income 85 86 87 88 89
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Manhattan 5G 341 CNAMX 1000 100 0 0 0.5 0 Yes No No No Yes 37.1 17.0 0.4 183 29.1
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Partners 5A 695 PARTX 1000 100 0 0 0.6 0 Yes No No No Yes 29.9 17.3 4.3 15.4 22.7
:;:, Guardian Mut. 51 529 GUARX 1000 100 0 0 0.7 0 Yes No No No Yes 25.3 11.9 -1.0 28.0 21.5
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Energy 5S 375 ENEGX 1000 100 0 0 0.6 0 Yes No No No Yes 22.5 10.5 0.6 16.5 29.8
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~ Money Mkt MM 96 NBMXX 5000 250 0 0 1.5 0 No Yes Yes No Yes 5.5 6.9 9.3
0
:;:, TF Money Fd MX 211 NBTXX 2000 200 0 0 0.5 .2 No Yes Yes 250 Yes 5.0 4.3 4.2 5.0 5.9
..... Gov. Money MG 165 NBGXX 2000 200 0 0 0.5 0 No Yes Yes 250 Yes 7.4 5.8 5.2 6.2 7.6
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~I PHONE SWITCH-All Funds #SWITCHES/YEAR - Unlimited
MIN.
IRA MINIMUM INVESTMENT -$250.00
WIRE WITHDRAWAL-$1000.00
IRA FEE - $9.00
KEOGH MIN. INVEST. -$300.00 except Ltd Matur. at $30,000.00
MIN. INVEST. FOR MONTHLY INCOME-$5,000.00 except Ltd Matur. at $50,000

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Loads and Fees Withdrawal Options Annual Return
~, Min Inv
co Asset Dow Scwb
c Type Mil 5mb Int Add In% Out% Mgt 12b-1 Marg Phone Wire Chek Income 85 86 87 88 89
Fund Name
.75 .25 Yes Yes No No Yes 28.7 9.7 -3.6 12.8 18.8
Growth SG 32 NEWTX 1000 50 0 0

Yes Yes No No Yes 12.8 9.0 2.5 6.3 11.6


Income BL 16 NWTNX 1000 50 0 0 .75 .25

No Yes Yes 500 Yes 7.6 6.7 6.4 7.4 8.8


Money Mkt MM 75 NMFXX 1000 250 0 0 .75 0

#SWITCHESIYEAR - Unlimited IRA MINIMUM INVESTMENT -$500.00 IRA FEE -$10.00


PHONE SWITCH-All Funds
KEOGH MIN. INVEST. -$500.00 MIN. WIRE WITHDRAWAL-$1000.00 MIN. INVEST. FOR MONTHLY INCOME-$10,000.00

SAFECO ASSET MANAGEMENT CO.


Min Inv Loads and Fees Withdrawal Options Annual Return
Asset Dow Scwb 88 89
@
Int Add In% Out% Mgt 12b-1 Marg Phone Wire Chek Income 85 86 87
Fund Name Type Mil 5mb
9
III
Growth SG 71 SAFGX 1000 100 0 0 .50 0 Yes Yes Yes No Yes
20.5 1.8 7.0 22.1 19.2
~ .50 0 Yes Yes Yes No Yes 31.9 13.3 -4.8 25.3 35.8
Cb Equity SI 44 SAFQX 1000 100 0 0
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.50 0 Yes Yes Yes No Yes 31.6 20.6 -6.0 19.0 19.2
Income SB 217 SAFIX 1000 100 0 0
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Cal TF Inc. BX
BX
35
222
SFCAX 2500 250
SFCOX 2500 250
0
0
0
0
.55
.55
0
0
Yes
Yes
No
No
No
No
No
No
Yes
Yes
21.,1
21.6
19.8
19.8
-2.1
0.2
12.8
13.9
9.9
10.1
::3 Munl Bond
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Yes No No No Yes 0.9 7.8 12.9
US Gov Sec. BG 27 1000 100 0 0 .65 0
0
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.50 0 No No Yes 500 Yes 7.8 6.2 6.2 7.0 8.7
Money Mkt MM 146 SAFXX 1000 100 0 0
.50 0 No Yes Yes 500 Yes 4.6 4.2 4.2 4.8
TF Money MX 38 1000 100 0 0
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co IRA MINIMUM INVESTMENT -$250.00 IRA FEE-$5.00 KEOGH MIN. INVEST. -$250.00
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en Fund Name Type Mil 5mb Int Add In% Out% Mgt 12b-1 Marg Phone Wire Chek Income 85 86 87 88 89
~ Development SA 292 SCDVX 1000 o 0 0 1.0 0 Yes Yes Yes No Yes 19.7 7.8 -1.4 11.1 23.2
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Cap. Growth SB 499 SCDUX 1000 o 0 0 .65 0 Yes Yes Yes No Yes 36.6 16.6 -0.7 29.7 33.8
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International BL 537 SCINX 1000 o 0 0 .75 0 Yes Yes Yes No Yes 49.8 50.8 0.9 18.8 27.0
en Global SG 74 SCOBX 1000 o 0 0 1.0 0 Yes Yes Yes No Yes 2.9 19.3 37.4
o Growth & Inc. SI 400 SCDGX 1000 o 0 0 .60 0 Yes Yes Yes No Yes 34.5 17.9 3.5 11.9 26.4
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Cal TF BX 166 SCYTX 1000 o 0 o .60 o Yes Yes Yes No Yes 18.3 16.9 -1.7 11.9 10.3
::::l Managed Muni BX 632 SCMBX 1000 o 0 o .60 o Yes Yes Yes No Yes 17.4 16.8 0.3 12.3 11.1
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Gov. Mort. Sec BG 248 SGMSX 1000 o 0 o .60 o No Yes Yes No Yes 11.2 1.5 6.8 12.8
to
o Income BL 245 SCSBX 1000 o 0 o .60 o No Yes Yes No Yes 21.7 14.6 0.8 8.9 12.7
:0 Gov Zero 2000 BS 5 1000 o 0 o .55 o No Yes Yes No No -8.8 11.7 20.5
~
Gov Zero 1995 BS 4 1000 o 0 o .55 o No Yes Yes No No -3.8 7.9 15.7
Target TF 1996 BY 32 1000 o 0 o .60 o No Yes Yes No No 15.0 1.1 7.5 8.0
Target TF 1993 BY 105 STIFX 1000 o 0 o .60 o Yes Yes Yes No No 14.4 12.7 2.6 5.6 7.3
Target TF 1990 BY 99 STFTX 1000 o 0 o .60 o No Yes Yes No No 11.0 10.0 3.2 4.9 6.0
Cash Inv TR MM 1404 SCTXX 1000 o 0 o .50 o No Yes Yes 100 Yes 7.8 6.4 5.3 8.5
Tax Free Mon. MX 356 STFXX 1000 o 0 o o o No Yes Yes 100 Yes 4.6 11.9 2.0 5.0 5.7
Gov. Money MG 154 SCGXX 1000 o 0 o .50 o No Yes Yes 100 Yes 7.3 6.6 4.4 8.0

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PHONE SWITCH-All Funds #SWITCHES/YEAR-4 IRA MINIMUM INVESTMENT-$240.00 IRA FEE-None
KEOGH MIN. INVEST.-$240.00 to $500.00 MIN. WIRE WITHDRAWAL-$5000.00, $3.50 FEE
MIN. INVEST. FOR MONTHLY INCOME-$10,000.00
~I SELECTED FUNDS
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Special Shares SG
Asset

35
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SLSSX
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Loads and Fees

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Yes No Yes
Withdrawal Options

Chek
No
Income
Yes
85
23.7
Annual Return

86
7.3
87
0.4
88
19.5
89
28.7
.5 1.0 Yes No Yes No Yes 33.3 17.1 0.2 22.0 19.8
Amer. Shares SI 285 SLSAX 1000 100 0 0

.5 0 No No Yes 500 Yes 7.0 5.7 6.0 8.6


Money Mkt MM 16 SMMXX 1000 100 0 0
.5 0 No No Yes 500 Yes 7.0 5.3 6.0 8.4
Mon. Mkt Gov MG 1000 100 0 0

PHONE SWITCH-All Funds #SWITCHES/YEAR-Unlimited IRA MINIMUM INVESTMENT-No Minimum


IRA FEE-$10.00 KEOGH MIN. INVEST.-No Minimum MIN. WIRE WITHDRAWAL-$1000.00
MIN. INVEST. FOR MONTHLY INCOME-$10,OOO.OO

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Special SA 230 SRSPX 1000 100 0 0 .75 0 Yes No Yes No Yes 29.4 14.6
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0
No
No
No
No
Yes
Yes
No
No
Yes
Yes
28.3 13.7
3.5
-1.6
20.2
2.1
37.7

::3 45.3 -5.3 -3.8 11.8


en Farn. Cap Opp SA 151 SRFCX 1000 100 0 0 .75 0 Yes No Yes No Yes 24.9 16.7 8.7 -3.9 36.8
0 Farn. Stock SA 174 SRFSX 1000 100 0 0 .50 0 Yes No Yes No Yes 26.5 16.8
<0 5.2 0.7 35.5
III Prime Growth SG 24 1000 100 0 0 0 No Yes Yes No Yes 9.1
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Total Return 81 130 SRFBX 1000 100 0 0 .50 0 Yes No Yes No
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0
::3 High Yd Muni BX 243 SRMFX 1000 100 0 0 .50 0 No No Yes No Yes 21.0 18.9 -0.9 13.9 11.4
~
(() Inter. Muni BY 91 SRIMX 1000 100 0 0 .50 0 No No Yes No Yes 12.2 1.9 6.2 8.1
(()
C High Yld Bds BL 102 SRHBX 1000 100 0 0 .65 0 No No Yes No Yes 4.2 11.8
:0 Managed Bds BL 164 SRBFX 1000 100 0 0 .50 0 No No Yes No Yes 22.6 16.1 0.8 7.5 12.6
~
Gov. t'lus BG 28 1000 100 0 0 .60 0 No No Yes No Yes 0.2 7.1 13.3

Cash Reserves MM 951 STCXX 2500 100 0 0 .50 0 No Yes Yes 150 Yes 7.8 6.3 6.1 7.1 8.5
Tax Ex. Money MX 278 STEXX 2500 100 0 0 .50 0 No Yes Yes 150 Yes 4.8 4.2 4.1 4.8 5.8
Gov. Reserves MG 55 SGRXX 2500 100 0 0 .50 0 No Yes Yes 150 Yes 7.1 5.6 5.3 6.8 8.4

PHONE SWITCH - All Funds #SWITCHEStYEAR -4 IRA MI~IMUM INVESTMENT -$500.00 IRA FEE-$10.00
KEOGH MIN. INVEST. -$500.00 MIN. WIRE WITHDRAWAL-$1000.00 MIN. INVEST. FOR MONTHLY INCOME-$10,000.00

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Min Inv Loads and Fees Withdrawal Options Annual Return
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Add In% Out% Mgt 12b-1 Marg Phone WiFe Chek Income 85 86 87 88
4 Fund Name Type Mil 5mb Int
Yes Yes Yes No Yes 59.9 11.B 16.3 1B.5
Opportunity SA 157 SOPFX 1000 200 2 0 1 0
Yes Yes Yes No Yes 25.4 20.0 6.0 15.5 2.6
Total Return S6 1005 STRFX 250 200 1 0 .B 0
Yes No Yes 19.4 17.6 -0.3 9.1 11.2
Investment SB 256 STIFX 250 200 1 0 .B 0 Yes Yes
.6 0 Yes Yes Yes No Yes 30.0 4.4 12.5
Income SB 202 STACX 1000 200 0 0

Tax Free Inc. BX 2 2500 200 0 0 .6 0 No No Yes No. Yes


No Yes No Yes 3.4 10.5 9.4
Gov. Sec. BG 25 1000 200 0 0 .6 0 N.o

No Yes Yes 500 Yes 6.5 6.3 7.5 B.9


Money MM 464 1000 200 0 0 .5 0
No Yes Yes 500 Yes 4.6 5.2 6.0
Tax Free MoneyMX 77 1000 200 0 0 .5 0

PHONE SWITCH - All Funds #SWITCHES/YEAR - 5 IRA MINIMUM INVESTMENT'-$250.00 IRA FEE-$10.00
KEOGH MIN. INVEST.-$250.00 MIN. WIRE WITHDRAWAL-$1000.00 MIN. INVEST. FOR MONTHLY INCOME-$10,000.00
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9
III Min Inv Loads and Fees Withdrawal Options Annual Return
~ Asset Dow 5cwb
CD
(I) Fund Name Type Mil 5mb Int Add In% Out% Mgt 12b-1 Marg Phone Wire Chek Income 85 86 87 88 89
~
(j) Cap. Appr. SA 99 PRWCX 1000 100 0 o .70 o Yes Yes Y~ No Yes 5.6 21.2 21.4
<' New Horizons SA 914 PRNHX 1000 100 0 o .65 o Yes Yes Y~ No Yes 24.2 -0.1 -7.4 14.0 26.2
CD
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Internat'l Stock SS 630 PRITX 1000 100 0 o .75 o Yes Yes Y~ No No 44.7 61.8 7.9 17.9 18.1

o New Amer SG 67 PRWAX 1000 100 0 o .60 o Yes Yes Y~ No Yes 14.3 -9.4 18.5 38.4
ca
III
New Era
Growth Stock
SG 727
SG 1294
PRNEX
PRGFX
1000
1000
100
100
0
0
o
o
.50
.50
o
o
Yes
Yes
Yes
Yes
Y~
Yes
No
No
Yes
Yes
23.3
35.2
16.0
21.8
17.7
3.4
10.3
6.0
24.3
25.4
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~. Growth Income SI 445 PRGIX 1000 100 0 o .50 o Yes Yes Y~ No Yes 19.7 8.0 -4.7 25.1 19.3
Q:
o Equity Income SE 497 PRFHX 1000 100 0 o .50 o Yes Yes Y~ No Yes 26.7 3.7 27.1 13.6
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CO Tax F"ree HY BX 312 PRFHX 2000 100 0 o .55 o No Yes Yes 500 Yes 20.4 .02 11.2 10.3
CO
c GNMA BG 358 PRGMX 2000 100 0 o .55 o No Yes Yes No Yes 11.0 0.9 5.9 14.0
:0
-... CALTF BX 40 PRKCX 2000 100 0 o .55 o No Yes Yes No Yes 6.7 9.5 8.5
Tax Free Inc. BX 1021 PRT AZ 2000 100 0 o .50 o Yes Yes Yes 500 Yes 16.9 19.8 -4.3 7.9 6.9
High Yield BL 1129 PRHYX 2000 100 0 o .62 o Yes Yes Yes No Yes 14.2 3.0 17.9 -1.5
Int'I Bond BL 405 PRIBX 2000 100 0 o .75 o Yes Yes Yes No Yes 27.6 -1.3 -3.2
New Income BL 854 PRCIX 2000 100 0 o .50 o Yes Yes Yes 5000 Yes 17.6 13.9 2.1 7.6 12.2
Tax Fr Short BY 267 PRFSX 2000 100 0 o .50 o Yes Yes Yes 500 Yes 11.8 9.7 2.2 5.0 6.9
Short Term BS 262 PRWBX 2000 100 0 o .50 o No Yes Yes 500 Yes 12.5 8.9 5.2 5.5 9.9
Prime Reserve MM 3784 PRRXX 2000 100 0 o .40 o No Yes Yes 500 Yes 8.0 6.4 6.2 7.2 8.6
US Treasury MG 284 2000 100 0 o .50 o No Yes Yes 500 Yes 7.3 5.7 5.3 6.5 8.0
NYTF Money MX 43 PTEXX 2000 100 0 o .45 o No Yes Yes 500 Yes 3.7 4.3 5.1
Cal TF MX 68 PTEXX 2000 100 0 o .45 o No Yes Yes 500 Yes 4.1 4.6 5.4
Tax Exempt MX 1147 PTEXX 2000 100 0 o .50 o No Yes Yes 500 Yes 5.0 4.6 4.3 4.9 5.8

~ PHONE SWITCH -All Funds #SWITCHES/YEAR - 2 in 120 days IRA MINIMUM INVESTMENT -$500.00 IRA FEE-$10.00
CO KEOGH MIN. INVEST. -$500.00 MIN. WIRE WITHDRAWAL-$500.00 MIN. INVEST. FOR MONTHLY INCOME-$10,OOO.00
CD
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Growth
Asset
Type Mil
SG 1193
Dow
5mb
TWCGX
Min Inv

Int
0 0 0
Loads and Fees

0 1 0
Scwb
Add In% Out% Mgt 12b-1 Marg
No
Withdrawal Options

Phone Wire
Yes Yes
Chek
No
Income
Yes
85
33.9
Annual Return

86
18.8
87
13.0
88
2.7
89
43.1
Gift Trust SA 14 TWGTX 100 0 0 0 2 No Yes Yes No No 55.3 28.0 8.7 11.1 50.2
Select SG 2266 TWCIX 0 0 0 0 0 No Yes Yes No Yes 33.8 20.4 5.6 5.6 39.5
Ultra SA 255 TWCUX 0 0 0 0 0 No Yes Yes No Yes 26.2 10.3 6.7 13.3 36.9
Vista. SA 201 TWCVX 0 0 0 0 0 No Yes Yes No Yes 22.5 26.3 6.0 2.4 -1.6

Long Term BL 28 0 0 0 0 0 No Yes No No Yes 7.4 8.3 13.7


Tax Exempt Int BY 16 0 0 0 0 0 No Yes No No Yes 4.8 6.0 6,7
Tax Exempt LT BX 14 0 0 0 0 0 No Yes No No Yes 5,7 10.3 9.8
US Gov BG 424 0 0 0 0 0 No Yes Yes No Yes 12.9 9.1 3.8 5.6 9.8

Cash Reserves MM 511 TWCXX 0 0 0 0 0 No Yes Yes No Yes 6.1 5.9 6.9 8.4

@ PHONE SWITCH - All except Gift Trust #SWITCHES/YEAR -12 30-Day Hold Switches IRA MINIMUM INVESTMENT-O
g IRA FEE-$10,00 KEOGH MIN. INVEST. -0 MIN. WIRE WITHDRAWAL-$10.00 Fee
III MIN. INVEST. FOR MONTHLY INCOME-$5,OOO.00
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CD Min Inv Loads and Fees Withdrawal Options Annual Return


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Asset Dow Scwb
0 Fund Name Type Mil 5mb Int Add In% Out% Mgt 12b-1 Marg Phone Wire Chek Income 85 86 87 88 89
<dQ) Lo Cap SA 2 LOCFX 100 50 0 2 .75 0 Yes No No No Yes -6.6 -13.2 3.4 -1.6
::) Growth .75
SG 5 GRTHX 100 50 0 0 0 Yes No No No Yes 21.0 11.5 -11.2 10.5 27.3
~.
Good/Bad Tms SG 13 GBTFX 100 50 0 0 .75 0 Yes No No No Yes 24.0 11.3 0.6 -3.1 16.8
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0 Income SB 4 USINX 100 50 0 0 .75 0 Yes No No No Yes 15.3 5.6 -4.3 16.9 37.9
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~ Gold Shares SP 223 USERX 100 50 0 0 .75 0 Yes No No No Yes -26.8 37.5 31.6 -35.7 64.7
co Prospector* SP 38 PSPFX 0 2 Yes
co 0 30.9 25.4 -12.2 22.1
0
New Prospect. SP 96 UNWPX 100 50 0 2 1.00 0 Yes No No No Yes 38.5 31.1 -18.8 16.5
:0
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Tax Free BX 9 100 50 0 0 .75 0 Yes No No No Ye's 11.3 16.9 -0.2 11.9 8.2
GNMA BG 7 100 50 0 0 .66 0 Yes No No No Yes -1.3 10.1 12.4

Treasury Sec. MG 170 USTXX 100 50 0 0 .50 0 No Yes Yes 250 Yes 7.2 5.4 5.4 6.8 8.0

PHONE SWITCH - All Funds #SWITCHES/YEAR -12; 5.00 FEE Per Switch IRA M'INIMUM INVESTMENT - None
IRA FEE-$10.00 KEOGH MIN. INVEST. - None MIN. WIRE WITHDRAWAL- No Minimum
MIN. INVEST. FOR MONTHLY INCOME-$5,OOO.OO
*Not seiling shares

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Min Inv Loads and Fees Withdrawal Options Annual Return
Asset Dow Scwb 89
Int Add In% Out% Mgt 12b-1 Marg Phone Wire Chek Income 85 86 87 88
Fund Name Type Mil 5mb
.5 0 No Yes Yes No Yes 23.0 5.6 -0.8 14.3
Mutual Sunbelt SA 137 USAUX 1000 50 0 0
.5 0 No Yes Yes No Yes 19.0 12.6 2.6 9.9
Mutual Income SB 288 USAIX 1000 50 0 0
No Yes Yes No Yes 14.7 40.8 9.0 8.4 21.9
Cornerstone SG 519 USCRX 1000 50 0 0 .75 0
0 .5 0 No Yes Yes No Yes 20.0 10.0 5.6 6.6
Mutual Growth SG 211 USAAX 1000 50 0
No Yes Yes No Yes -20.7 55.6 15.7 -17.1 18.1
Gold SP 176 USAGX 1000 50 0 0 .75 0

No Yes Yes 250 Yes 9.5 8.2 2.4 6.1 7.4


Tax Ex Short BY 250 USSTX 3000 100 0 0 .5 0
No Yes Yes No Yes 16.3 13.6 0.9 8.7 9.2
Tax Ex Int BY 393 USATX 3000 100 0 0 .5 0
No Yes Yes No Yes 19.8 17.3 -3.6 12.5 10.6
Tax Ex HY BX 950 USTEX 3000 100 0 0 .5 0

No Yes Yes 250 Yes 7.8 6.3 6.3 7.3 B.6


Mutual Money MM 704 USAXX 1000 50 0 0 .5 0
No Yes Yes 250 Yes 5.3 4.9 4.5 5.2 6.1
TE Money Mkt MX 742 USEXY 10,000 50 0 0 .5 0

@
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PHONE SWITCH - All Funds #SWITCHES/YEAR - 8 IRA MINIMUM INVESTMENT-Q IRA FEE-$10.00
KEOGH MIN. INVEST.-O MIN. WIRE WITHDRAWAL-$1000.00 MIN .. INVEST. FOR MONTHLY INCOME - Mo. Inc. Not Avail.

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Explorer II SA 73 VEIIX 3000 100 0 0 .45 0 Yes Yes Yes No Yes -7.2 -4.3 22.0 17.4
WL Morgan SA 621 VMAGX 1500 100 0 0 .33 0 Yes Yes Yes No Yes 7.0 5.0 22.3 22.6
World US SG 132 VWUSX 3000 100 0 0 .33 0 Yes Yes Yes No Yes 36.6 7.8 -5.4 &.8
Index Trust SX 931 VFINX 1500 100 0 0 6.0 0 Yes Yas Yes No Yas 31.2 17.8 4.7
Wlndsor* SG 5826 VWNOX 1500 100 0 0 .35 0 Yes Yes Yes No Yes 27.9 20.3 1.2 28.7 15.0
Windsor II SG 1502 VWNFX 1500 100 0 0 .35 0 Yas Yes Yes No Yes . 21.5 -2.1 24.7 27.2
US Trustees SI VTASX 25M 100 0 0 .85 0 Yas Yes Yes No Yes
Star* SB 681 VGSTX 3000 100 0 0 0 0 Yas Yas Yes No Yes 13.8 1.6 19.0 18.6
World Int. SG 462 VWIGX 3000 100 0 0 .33 0 Yes Yas Yas No Yes 55.5 56.7 12.7 11.6 24.8
Qualified DiY. I'" SE 157 VQOIX 0 0 .33 0 Yas Yas Yes No Yes 30.1 21.5 -4.8
Qual. Olv. II SE 124 VQIIX 3000 200 0 0 .33 0 Yes Yes Yes No Yes 29.7 24.7 -7.7
@ Qual. Olv. III SE 95 VOPTX 25M 1000 0 0 .20 0 Yes Yas Yes No Yes 11.4 4.2 3.0
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2.9 9.2 17.9
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~. 27.4 18.2 -1.9 13.5 20.8
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a Wellington SB 1527 VWELX 1500 100 0 o .20 o Yes Yes Yes No Yes 28.4 18.3
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49.7 38.7 -14.2 30.4
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Spec. Gold SP 124 VGPMX 3000 100 0
i:::t. Spec. Tech. SS 16 VGTCX 3000 100 0 .30 o Yes Yes Yes No Yes 13.9 5.7 -11.9 9.5 14.6
45.6 21.4 ~.5 28.4 32.9
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43.7 12.7 -13.5· 19.1. 31.4
Spec. Service SS 20 VGSEX 3000 100 0 .30 o Yas Yas Yes No Yes
12.5 6.1 21.4 43.3
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Part 5 - Retirement Planning

~
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i
Page:4~102 © Charles J. Givens Organization 1990 R1
A retirement plan can be described in three parts: contributions, investment options, and
("" withdrawal options. The questions you must answer to profit from your retirement plans
are listed under each category. Check those you cannot answer. They are costing you
money.

Understanding Your Retirement Plan Options


Fill in answers to all questions based on what you know about your retirement plan or
learn in this chapter.

Contributions

Do I qualify to contribute to an IRA? How much?


What kind of plan does my employer offer-401 (k), 403(b),
457, or SEP?
How much can I deposit each year into all plans?
How much of my contribution is deductible from my taxable in-
come?
Does my employer give me any matching funds? What %?
Is there a commission or load on my contributions?

Investment Options

What are the choices for investments?


How often can I change investments?
Do I have a choice of sponsors offering different investments?
Should I move my money now to a better investment?
How can I earn 20% instead of less than 10%?
Can I get my employer to put in a better plan?

Withdrawals

At what age can I withdraw my money with no penalty?


What is the penalty if I withdraw before then?
What is the withdrawal method that minimizes the taxes?
Under what conditions, such as disability or financial hardship,
can' withdraw my money with no penalty?
Can I borrow from my plan? How much?
Should I withdraw my money in a lump sum, annuity pay-
ments, or use the IRA rollover rules?

© Charles J. Givens Organization 1990 R 1 Page 4-103


Retirement Contribution Strategies

Strategy #4-37: Contribute the deductible maximum to an


IRA.

The IRA is the only retirement plan you, as an employee, may create yourself. You deposit
your IRA money in investments you select, and you may contribute to an IRA any time
before April 15th of the year following the year you earned the qualifying income.

Maximum Contribution:
$2,000 Self
$2,000 Employed Spouse

$ 250 Nonemployed Spouse

Anyone with employment income may contribute the deductible maximum to an IRA
regardless of total income, provided neither spouse contributes to an employer-related
retirement plan. If you or your spouse contribute to a 401 (k), 403(b) or other similar
employer-related retirement plans, the following additional rules apply:
~.

A. You may deduct the maximum contribution to your IRA if your adjusted gross )
income (AGI) is less than $40,000 (couple) or $25,000 (individual), even if you
or your spouse contribute to an employer's retirement plan.

B. If you file jointly, you lose the deduction for $200 of your $2,000 contribution for
each $1 ,000 of adjusted gross income over $40,000, and so does your spouse.

C. If you file as an individual, you lose the deduction for $200 of your $2,000
contribution for each $1,000 of adjusted gross income over $25,000.

D. A deductible minimum of $200 may be contributed by any couple or individual


whose AGI falls within $1,000 of the deduction phase out limit.

Page 4-104 © Charles J. Givens Organization 1990 R 1


Strategy #4-37.1: Use the double deduction benefits of your
retirement plan to build your wealth.

A Deduction for Your Contribution

Within your contribution limits, the money you invest in your plan is deducted from your
taxable income for the year. If you are in the 28% federal tax bracket, your tax saving is
28% of your contribution. If your tax bracket is 33%, the tax saving is 33% of your
contribution.

IRA 401(k)
$2,000 IRA contribution $7,000 401 (k) contribution
X 28% Your tax bracket X 33% Your tax bracket
(includes 5% surcharge)
$ 560. Tax Savings $2,310 Tax Savings

Deduction for the Earnings

Your retirement account earnings compound tax free as long as your money remains
invested. The concept of "earn now, deal with the taxes later" is..known as a tax deferral.
f~ Let's look at $2,000 of your income invested with or without IRA protection.

One-Year Investment Growth


With IRA Without IRA
Amount Invested $2,000 $2,000
Taxes @ 33% o - 660
Net Investment $2,000 $1,340
Earnings, 1 Year, 20% + 400 + 268
Tax on Earnings, 33% o 88
Account Balance After 1 year $2,400 $1,520

You have $880 more in your account after just one year with IRA tax shelter protection
or 44% more based on your original investment. The same is true of all retirement plans.
If you expand the results for 5 to 30 years, you will see how small investments in retirement
accounts make millionaires.

© Charles J. Givens Organization 1990 R1 Page 4-105


The Power Of Tax-free Compounding
20% Compounded Annually

Look over "The Power of Tax-Free Compounding" chart below to see how your retirement

plan will build your fortune over the next 5 to 30 years.

$2,000 Invested Yearly in an IRA

Years With IRA Without IRA

5 $ 18,000 $ 10,000

10 62,000 29,000

15 173,000 63,000

20 448,000 129,000

25 1,133,000 252,000

30 2,837,000 482,000

$4,000 Invested Yearly in an IRA for You and Your Spouse

Years With IRA Without IRA


,.fililf"\
"
5 $36,000 $ 20,000

10 124,000 58,000

15 346,000 126,000

20 896,000 258,000

.25 2,266,000 504,000

30 5,674,000 946,000

$7,000 Invested Yearly/401(k), 403(b) or 457 Employer-Related Retirement Plan

Years With Tax Protection Without Tax Protection

5 $ 63,000 $ 35,000

10 217,000 101,500

15 602,000 220,500

20 1,568,000 451,500

25 3,965,500 882,000

9,929,500
/~
30 1,687,000

Page.4-106 © Charles J. Givens Organization 1990 R1


Strategy #4-38: Contribute to your retirement plan now-
don't wait until later.

You can't be too young to start a retirement plan. Read the next statement carefully. It
will amaze you.

"IF YOU INVEST $2,000 IN A TAX-DEFERRED RETIRE-


MENT ACCOUNT EACH YEAR BETWEEN THE AGES OF
20 AND 26, AND NEVER INVEST ANOTHER CENT, YOU
WILL HAVE MORE MONEY WHEN YOU REACH AGE 65
THAN IF YOU WAIT UNTIL YOU ARE 26 AND .INVEST
$2,000 EVERY YEAR FOR THE NEXT 40 YEARS WITHOUT
RETIREMENT ACCOUNT TAX PROTECTION."

Strategy #4-39: Choose an IRA with a low trustee's fee, $35 ~


or less. ®
c."~

Every IRA must have a trustee, someone certified by the IRS to be responsible for the
account. The fee can range from five dollars to hundreds of dollars.

Avoid all IRA accounts that charge a percentage. The percentage may seem small when
your account is small, but it will amount to hundreds per year as your account grows.
Many major brokerage firms and some financial planners charge a percentage.

Strategy #4-40: .Borrow the money for your IRA-even if


you have it.

If you borrow the money for your account, you'll end up borrowing it free. You borrow
$2,000 from the credit union or bank for your IRA. The interest, at 12% for one year would
be $240. If you are in the 28% tax bracket, you have already saved 28% of your $2,000
contribution, or $560. The $560 not only pays the $240 interest, but gives you an
additional $320 profit. The IRS has now ruled that the interest you pay on money borrowed
for an IRA is tax-deductible even though you are investing in a tax shelter.

© Charles J. Givens Organization 1990 R1 Page 4-107


Strategy #4-41: Use your retirement plan as an instant
source of borrowed capital.

If you have a 401 (k) or 403(b), your money is not tied up until retirement if your compali':1
offers the IRS-approved loan provision. The rule states that you may borrow up to 50%
of the vested amount of your account not to exceed a total of $50,000. The loan must be
paid off within 5 years with no less than quarterly equal payments, which means 5% of
the principal paid quarterly. The payback rule is waived if you use the money as a down
payment on a principal residence. Sixty-five percent of 401 (k) plans and almost aIl403(b)
plans now offer the loan option. It is up to your employer.

One of the best benefits of pension plans like 401 (k)s and 403(b)s is that you can borrow
the money tax and penalty free. New rules took effect October 18, 1989, which clear up
some of the old confusion. The old rules required that you borrowed $1,000 or more.
The new rules make loans available to all participants in the plan, except ex-employees.
You may borrow up to $50,000, or half of what is vested in your retirement'plan without
taxes or penalties, no matter what your age. But here's a new wrinkle; for loans up to
$10,000, you can borrow up to the full amount that's vested in your plan. Here's how to
deduct the interest paid on what you borrow: use your home as collateral with your
retirement plan taking back a mortgage. Use the proceeds from the loan for your
business, or for your investments. However, interest is not deductible if made to any
owner who owns a 5% or greater share or to 1% owners paid more than $150,000 or
officers paid more than $45,000.

Strategy #4-42: Use the loan provision of your 401 (k) or


403(b) to borrow money for an IRA.

If you qualify for an IRA, borrow the $2,000 or $4,000 to fund your IRA from your 401 (k)
or 403(b) retirement account. If your tax bracket is 33%, you will save $1,320 in taxes on
a $4,000 IRA contribution simply by shifting money from one retirement plan to another.
The interest you pay on the borrowed IRA money is tax deductible.

~
I

Page 4-108 © Charles J. Givens Organization 1990 R1


Strategy #4-42.1: Contribute the deductible maximum to your
. employer's retirement plan.

There are four major types of retirement plans offered by employers and funded through
payroll deductions. Locate your plan from the information provided. Use the "Under-
standing Your Retirement Plans Options" Form earlier in this chapter.

1. 401 (k) - Deferred Compensation Plan for Corporate Employees

Employees may contribute up to 25% of their compensation or a maximum of


$7,318 per year, tax-deferred. The employer may contribute the difference
between the employee contribution and $30,000, also tax-deferred. The more
your employer contributes, the better the plan. The $7,318 limit will be increased
for inflation in future years. The best 401 (k) plans are those that offer mutual
funds as investment options,

2. 403(b) - Deferred Compensation Plan (Tax-sheltered Annuity) for Public School


and Nonprofit Organization Employees

. Employees may contribute approximately 20% of compensation up to $9,500


per year, tax deferred. The employer has the option of contributing the difference
between the employee contribution and $30,000, also tax-deferred, although
few, if any, employers use this option. Most public school employees are also
covered by a separate pension plan over which the employee has no control.
The best 403(b) plans offer mutual funds as investment options.

3. 457 - Deferred Compensation Plan for State, County, and City Employees

Employees may contribute up to $7,500 per year tax-deferred. Employers may


not contribute. Most municipal employees are also covered by a separate
pension plan over which the employee has no control. The best 457 plans offer
mutual funds as investment options.

4. 408(k) SEP -Simplified Employee Pension Plan for Employees of Small Com-
panies - Less than 25 Employees

Employees may contribute up to 15% of compensation or a maximum of $7,000


per year, tax deferred. The employer may contribute the difference between the
employee contribution and $30,000, also tax deferred. The more your employer
contributes, the better the plan. The best SEP plans are those that offer mutual
funds as investment options. SEPs, like IRAs, can be contributed to until April
15th of the year following the tax year.

r
© Charles J. Givens Organization 1990 R1 F:age 4-109
Retirement Account Investment Strategies
The new tax rules give you almost unlimited options for where your IRA can be invested.
You may, in fact, invest your IRA money in anything except:

1. Collectibles - i.e. art, Persian rugs, and precious metals.

2. Any investment such as mortgaged rental property, where your accou~t would
be used as collateral or security for a loan. The IRS treats anlRA used as security
for a loan as if you withdrew the money.

3. A business in which you own more than a 5% interest.

Strategy #4-43: Open a self-directed IRA to earn 20% per


year.

Anyone who qualifies for an IRA may open a self-directed account. A self-directed IRA
puts you in control, letting you choose any investment you wish, such as stocks, bonds,
mutual funds, discounted mortgages, real estate options, county tax lien certificates,
mortgage pools, or even the lot next door to your home. Every IliA must have a trustee.
Financial institutions, such as brokerage firms or mutual fund families, have one trustee
for alilRAs but you can choose only the investments they sell. If you want to invest your
money in real estate, discounted mortgages or tax liens, you must find an independent
trustee. Any bank trust department can legally act as your independent trustee, but many
still won't. There are now a few financial planners who are IRS registered independent
trustee.

Strategy #4-44: Never invest your IRA in a tax shelter.

An IRA is already tax-sheltered. Since you can't take the deduction twice, avoid tax
sheltered investments, which are usually more restrictive. For many years some brokers
and financial planners have incorrectly advised clients to put IRA accounts in tax shelters
like real estate limited partnerships.

Page 4-110 © Charles J. Givens Organization 1990 R1


Retirement Plan Borrowing Strategies

r Strategy #4-45: Use the switching rules to earn 20% in your


employer's retirement plan.
c:......
®".--

The tax rules allow you to change investments within a company retirement plan or IRA
any time you wish. The investment options and number of changes permitted per year
are set by your retirement plan sponsor or the financial institution in which your IRA is
invested.

IRA Switching Rules

If your IRA is a self-directed account like a mutual fund family or brokerage firm, you may
move your money from one investment to another within the same institution as often as
you wish. There are no tax penalties and the processing charge, if any, should be no
more than $5.00.

IRA Transfer and Rollover Rules

If you are dissatisfied with the performance of your IRA and want to transfer the money
.. "-.,
~. to a new IRA in a different institution, such as a mutual fund family, you have two options:

A. Trustee to Trustee Transfer

By signing a transfer agreement with the new trustee or institution, the transfer
of your IRA can be handled by the institutions. There is no limit to the number
of transfers which can be made each year using this method.

B. The IRA Rollover

You may physically withdraw your IRA money and open a new IRA with a different
institution with no tax penalty as long as the money is redeposited within 60 days
after the date of withdrawal. During the 60 days, you may do anything you wish
with your IRA money. You may do a rollover no more than once per 365 days.

© Charles J. Givens Organization 1990 R1 Page 4-111


Ninety percent of all employment-related retirement plans now give you options for
investing. Your investment alternatives are actually mutual funds offered through mutual
fund families or insurance companies chosen by your employer as sponsors of your
retirement plan. Your choices for investments are usually two or more of those shown in
the following chart. Notice that the name shown in the retirement plan documents and
the salesman's descriptions are often different than the names normally associated with
the investment. Most company plans allow you to switch investments from one to four
times per year. Since your money is tax-sheltered, there are no capital gains taxes to pay
when you switch.

Employer Retirement Plan Investment Options


Investment Retirement Plan Name Salesman's Description
Stock fund Equity or variable High risk
Bond fund Bond fund Medium risk
Stock/bond fund Balanced fund Medium risk
Money market fund Variable interest Low risk
Fixed rate investment Guaranteed return Low, risk
Company stock Company stock N/A
"". ,

Page 4-112 © Charles J. Givens Organization 1990 R 1


Retirement Plan Withdrawal Options
(""" Withdrawals before age 59 112

Strategy#4-45.1: Use the withdrawal exception rules to withdraw


money from your retirement account before
age 59112.

A. All plans, except an IRA, allow you to withdraw money penalty-free to offset a
financial hardship or because of death or disability. If you are strapped finan-
cially, a committee set up by your employer, using IRS guidelines, can allow
you to take money out of your employer's 401 (k), 403(b), 457, or SEP.

B. Most employer plans now have a loan provision, allowing you to borrow up to
$50,000 at any time with no penalties. Even though all 401 (k) and 403(b) plans
qualify under the tax rules, your employer and plan sponsor must offer the
borrowing option.

C. You may withdraw money from your IRA any time you wish. If you are under
59112 and withdraw any part of your money, you must pay the 10% penalty on
the amount withdrawn. If your account is earning 20% per year, however, the

r penalty is just six months of interest. All withdrawals of tax-deferred money are
added to your taxable income for the year.

D. You may begin withdrawing from your IRA in periodic payments, using the life
expectancy payout rules any time you wish with no penalty.

E. If you retire before age 59 1/2 but after you are 55, you're allowed to withdraw
your money with no penalty.

F. If a court orders you to pay money to a spouse or child from your retirement
account, the withdrawal is not subject to the penalty.

G. If you have extraordinary medical expenses, withdrawals from an employer's


plan used to pay the medical expenses are not subject to penalties.

H. If you withdraw money from an employee stock ownership plan (ESOP) before
1990 that, on the average, has been invested for 5 years or more when you
withdraw, there is no penalty.

I. There is no penalty for the withdrawal of dividends earned in an Employee Stock


Option Plan (ESOP).

© Charles J. Givens Organization 1990 R1 Page 4-113


Retirement Plan Withdrawal Options (cont.)
Withdrawals after age 59 112

There is no 10% penalty applied on a withdrawal after age 591/2 no matter what the reason
or method of withdrawal. The amount you withdraw, if part of your or your employer's
tax-free contribution, is added to your taxable income for the year. The withdrawal method
you choose, however, will determine the amount of taxes you pay.

Strategy #4-46: Use the lump sum averaging method only if


you need the cash from your retirement
plan.

If money is withdrawn in a lump sum from an employer's retirement plan, the averaging
method option reduces your taxes to a minimum. The averaging method allows you to
treat your lump sum distribution as if you received an equal portion of the money each
year for five or ten years. Those who were over 50 years old on January 1, 1986, may
elect ten-year averaging at any age. Those under 50 on that date may use only five-year
averaging after age 591/2. Lump sum averaging may now be used only once per lifetime.
The old tax law allowed averaging every time a person changed jobs or retired, no matter
what age.

The purpose of lump sum averaging is to prevent your withdrawals from putting you in
a higher tax bracket. Because of the two bracket system under the new tax laws, the
averaging method does not cut your taxes nearly as much as before tax reform and makes
the rollover option far more attractive.

If your employer's retirement plan withdrawal qualifies for lump sum averaging, it also
qualifies for the tax-free rollover to an IRA.

~)

Page 4-114 © Charles J. Givens Organization 1990 R1


r Strategy #4-47: Use the IRA rollover rules to minimize the
taxes on your employer's retirement plan
lump sum distribution.

When you change jobs or retire, your objective is to get control of your 401 (k), 403(b),
457, or SEP money without paying taxes. The rollover rules allow you to move your entire
company retirement plan to any IRA without the $2,000 IRA contribution restriction and
without paying taxes. You request a check from your former employer for the amount in
your account and you have 60 days from the date you receive the money to deposit it in
the IRA. The only exception is the 457 plan which cannot be rolled over. Since the rollover
allows you to move your money without tax consequences, it is your best alternative for:

1. Getting control of your retirement money,

2. Keeping the money totally tax sheltered,

3. Greater earnings through self-directed investments.

Strategy #4-48: Open your rollover IRA in a no-load mutual


fund family.

By using the Money Movement Strategy with your rollover account, you will average 20%
per year, tax sheltered. If your rollover account is $200,000, you will average $40,000 per
year and double your money in under four years. If you are withdrawing 10% each year,
but earning 20%, not only does your principal remain intact, it is actually growing!

Strategy #4-49: Avoid the employer-to-employer transfer of


your retirement account.

When you change jobs you have the option of moving your retirement plan from one
employer to another with no tax consequences and preserve your right for lump sum
averaging. The down side to this option is that your options for investing are limited to
those in your new employer's plan. Better to do the IRA rollover!

© Charles J. Givens Organization 1990 R1 Page 4-115


Strategy #4-50: Never annuitize your company retirement
plan.

Instead of receiving a lump sum, many plans allow you to use your retirement money to
buy a lifetime annuity contract from an insu~ance company. Based on life expectancy
tables published by the insurance company, you receive monthly checks for the rest of
your life. Another option allows you to take less initiatly in your monthly annuity check
and guarantees your spouse will receive partial annuity payments if you go first.

The annuity option makes only the insurance companies ~ealthy and is mathematically
your worst withdrawal option even though it sounds appealing. There are three draw-
backs to the annuity option:

1. The insurance company annuity tables give you monthly checks that are far
smaller than you should receive for an account that size.

2. Your remaining principal in most contracts becomes the property of the


insurance company when you die.

3. The monthly check amounts are based on an extremely low investment return
on your principal (now owned by the insurance company).

Strategy #4-51: Create additional tax deductions to shelter


a retirement account withdrawal.

By using the tax strategies in the tax section of the manual you can create enough
additional tax deductions to make a retirement account withdrawal tax free. Your
withdrawal is not directly taxed. The amount of the withdrawal is added to your income
for the year and taxed at your highest bracket (i.e. 33%). Every $1 ,000 of new deductions
you create through a small business, family tax strategies, travel deduction strategies,
etc., has the effect of tax sheltering $1,000 of your taxable withdrawal.

Page 4-116 © Charles J. Givens Organization 1[190 R 1


Strategy #4-52: To minimize a mandatory withdrawai, ~
.c:5,1).
recalculate your life expectancy every year. \J.:5'
The longer you live, the better your chances of living longer according to the IRS life
expectancy tables. If you are 70 1/2 your life expectancy might be ten years, but if you
make it to age 75 it might still be eight years. By recalculating your life expectancy about
every year, you keep the mandatory withdrawal percentage at a bare minimum. In the
future this will be done automatically by the IRS in their life expectancy tables.

Strategy #4-52.1: Enjoy your retirement money.

It is all right to spend the money from your retirement account for pleasure. Withdraw all
you want. That's what it is for. Too many successful retired people spend too much time
trying to preserve capital instead of spending and enjoying it. You can't take it with you.
So far no one has discovered a way to attach a bank vault to a hearse.

© Charles J. Givens Organization 1990 R1 Page 4-117


Part 6 - Tax-Sheltered Mutual Funds . ~

Page 4-118 © Charles .J. Givens Organization 1990 R1


Strategy #4-53: Use a self-directed annuity to earn 20%
per year with no commissions or taxes.

A self-directed annuity is a tax-sheltered mutual fund family in which you have a choice
of investments. There are 1,100 annuities that have only one investment choice, a fixed
interest account, but there are only a few self-directed annuities. All of the self-directed
annuities offer you the same three investment choices -stock, bond, and money market
mutual funds. Because of the tax-shelter feature, you can move your money from one
fund to another, with no tax liability. You may also, in most annuities, withdraw up to 10%
of your money each year for whatever purpose you wish without penalties or commis-
sions, although you would be liable for any income taxes.

The first rule of annuity investments is to use them last, only after you have contributed
the legal maximum into your IRA, Keogh, or other tax-deferred, employment-related
retirement programs. The money you invest in an IRA or Keogh, remember, is tax
deferred. In an annuity, only the investment earnings are tax deferred; you have already
paid taxes on the money you invest. (Teachers' and state employees' job-related
,...... tax-sheltered annuities are an exception.)

All of the self-directed annuities listed at the end of this section give you three or more
choices for investing your money. When you open your account, tell the company which
of their investments you have chosen; never let them tell you. Once you open your
account, you manage your money using the Money Movement Strategy with an expec-
tation of averaging 20% currently tax free.

You may contribute to some annuities until you are 90, unlike most retirement plans which
require you to stop contributing when you are 70 1/2. Under tax reform, you must begin
withdrawing about 10% of your money beginning the year after you reach age 70 1/2.
When you withdraw, you will be given two options: take the money out in lump sums or
allow the account to "annuitize" (annuitize means the company will guarantee to pay you
a monthly income for a specified number of years or even for the rest of your life). Under
tax reform, there is a penalty of 10% on all amounts withdrawn from an annuity before
age 59 1/2. The penalty is overcome in three to five years from the tax-free compound
ing,so the penalty should not be a deterrent to using an annuity even as a short-term
!J""~

~. investment.

© Charles J. Givens Organization 1990 R1 Page 4-119


Strategy #4-54: Never annuitize your annuity account.

Annuitizing means you agree to accept periodic payments over the balance of your
lifetime. Sounds appealing until you realize the payment schedule is weighted in favor of
the company; the monthly income is far too little for the amount in the account. In addition,
after your demise, your principal will usually become the property of the insurance
company instead of being transferred to your heirs. Always withdraw your money as
required so no part of it becomes the property of the insurance company. You may
withdraw in a lump sum any time or use the minimum per year withdrawal requirements
when you reach age 70 1/2 as defined by law.

Strategy #4-55: Use the tax-free rollover rules to move your


annuity to another company.

What if you become dissatisfied with one company's annuity program and wish to move
to another? You may move your money to another company using the tax-free rollover
rules without any tax penalty. You would, however, be subject to any withdrawal penalty
imposed by the insurance company for early withdrawal. You may move your money
from investment to investment within a self-directed annuity without becoming liable for
any taxes and, in most instances, without commissions.

Strategy #4-56: Make your annuity account withdrawals tax c......


free by creating "equivalent" tax deductions. ®
One annuity benefit was lost in the Economic Recovery Act: treating the first money you
withdrew from your annuity as nontaxable principal instead of taxable profits. The rules
now require that when you make a withdrawal, the first money withdrawn is treated as
taxable profits instead of nontaxable principal. Your strategy is clear. Any year you
withdraw money from your annuity, create an equal amount of tax deductions using any
tax strategies you choose. One will offset the other and, in essence, your withdrawal will
be tax free.

Page 4-120 © Charles J. Givens Organization 1990 R1


Strategy #4-57: Invest in an annuity only with funds you plan c:......
;-,~("r,

to leave invested for five years or longer. ®


Annuities are commission free if you leave your money invested long enough. To
discourage you from moving your money in and out, most annuities have a decreasing
load or commission. If you withdraw your money the first year, the maximum commission
of 50/0-9% would be deducted. The commissions usually decrease by one percent each
year until the withdrawal charge reaches zero. Make certain there is no commission or
front-end load when you invest.

Strategy #4-58: Use your self-directed annuity as an estate


planning tool.

The major goal in planning your estate is to pass to your heirs as much of your wealth
as possible by not letting the government and the attorneys get their hands on it. Annuities
are great estate-planning tools because they avoid probate. Annuities, like insurance
contracts, allow you to nominate a beneficiary who would receive your annuity money
without probate or attorney's fees. Annuities are, however, counted as part of your estate
for estate tax purposes.

© Charles J. Givens Organization 1990 R1 Page 4-121


Strategy #4-58.1: Use a self-directed annuity to beat the kiddie tax
,..,.,)
for children under 14.

If you are a parent or grandparent, one of your biggest concerns about tax reform should
be the low-taxed investment earnings limit for children under 14. When income from
investments totals over $1,000, the child automatically pays taxes on the excess at the
parents' tax rate, even though the child files a separate return. That means investment
income for children can be taxed at over 30% instead of the child's rate of 0% to 15%. A
child could pay in taxes more than double what an adult with the same income would
pay.

The new rules make it difficult to create a college investment fund or to move some of
your wealth to the lower tax bracket of children and grandchildren.

A self-directed annuity is one solution to this problem. By law, there are no current taxes
due on the earnings from an annuity so the earnings from even a child's college fund
investment compound tax free until the money is withdrawn.

Tax protect all of a child's income over $1,000 by using a self- directed annuity. When
the child reaches college age and starts withdrawing the money, there is a 10% penalty.
The tax-free compounding makes up for the penalty in about three years. If the child's
annuity is self-directed using the Money Movement Strategy, 10% is only six months of
the average 20% one-year return.

Strategy #4-58.2: Rollover your cash value life insurance, tax free,
into a self-directed annuity.

The 10% early withdrawal penalty will be overcome by the tax-free compounding and the
no commission status of the investment.

Page 4-122 © Charles J. Givens Organization 1990 R1


Strategy #4-58.3: Ask the right questions before investing in a
r self-directed annuity.

Investing in an annuity is as simple as opening a bank account. Call several companies


that offer self-directed annuities, using the telephone numbers listed in the Self-Directed
Annuity Planning Chart at the end of this chapter. Ask for a prospectus. Check the
Planning Chart or the prospectus to determine your different options for investments. Be
certain you have all the options necessary for using the Money Movement Strategy: stock
funds, bond funds, and a money market fund (or fixed rate investment). Determine what
procedure -letter or phone call - is required to move your money from one fund to
another, and how often you are allowed to change investments. Complete the application
\

for the annuity you choose, and mail it along with your check.

Questions to Ask When Choosing A Self-Directed Annuity:

Q: What is the minimum investment?

A: The minimum investment required must be within your investment capital range. Some
(~'" annuities require a larger lump sum, others will accept monthly installments. Check the
Self-Directed Annuity Planning Charts at the end of this chapter.

Q: Can I add money any time I wish? What minimum?

A: It is advantageous to be able to add money to an existing account, like you do in a


bank savings account. Again, check the charts.

Q: Is the annuity insured or registered in the state of New York?

A: Insurance protects you against bankruptcy or fraud of the issuing company. If the
annuity is registered in the state of New York, the New York Insurance Commission has
done the work of being certain the annuity is insured and you are protected no matter
where you live. Otherwise, check the A.M. Best rating.

© Charles J. Givens Organization 1990 R 1 Page 4-123


0: How often can I move my money within the annuity and what is the procedure?

A: Some annuities have telephone switching; in others you must put your request in .~
writing. Some annuities may limit the number of times you can move your money each
year, others will not. Although you will not be moving your money often, flexibility is always
on your side. Check the charts.

0: What is the load or commission charged?

A: Your objective is to find an annuity with no commission when you invest, no


commission when you move money within the annuity, and a yearly decreasing commis-
sion if you withdraw. Look for a maximum 6% withdrawal commission decreasing 1%
each year to zero. In addition, annuities level charges against the account including a
fixed charge and a percentage amount similar to the mutual fund management fee. The
total charges should be no more than 1.5% per year. Check the charts.

0: What different investments are available within the annuity?

A: To use the Money Movement Strategy, you need a minimum of a stock fund, a bond
fund, and a money market or fixed rate fund. Check the charts.

0: Can I withdraw 10% a year during the early years with no commissions?

A: Most annuities allow the penalty-free withdrawal of 10% a year. The money you
withdraw is added to your income for the year. In that way, part of your earnings can be
withdrawn for income or other purposes while the rest remains tax sheltered.

If you have been investing your money in low-interest, highly taxed bank certificates of
deposit or you are considering single-premium life insurance, a self-directed annuity is
a far better alternative.

Self-directed annuities are a must investment when your desire is to create safe, tax-
sheltered investments for yourself, your children, or your grandchildren.

Page 4-124 © Charles J. Givens Organization 1990 R 1


Self-Directed Annuities Planning Chart Definitions

GENERAL INFORMATION

Company - The name of the company which issues the annuity.

Annuity Name - The name of the annuity plan offered by the company.

Issue Ages to - The last year in which you can deposit money into the annuity.

Minimum Initial Deposit - The minimum investment required to open the account.

SP = Single Premium, one-time investment required to open account.

Install = The amount required to open the account if you intend to add monthly
installments to your investment.

Additional DepOSits - The minimum amount you can add to your account. "None" means
no additional investment can be made.

Retirement Plans Available - The retirement plans that can be used with the annuity
including IRA, Keogh, 403(b). 401 (k), 457.

Statements - How often you receive a statement of your account.

States not approved - The states in which the company is not licensed to sell.

FEES

Mortality Fees/Expenses - Represents the percentage per year charged against your
account balance for expenses.

Load - The percentage charged against your account as a load or commission. The
average is .5%.

Administrative Fees-A flat charge assessed against your account for administrative
expenses. The average is $30 per year.

Transfer Charge - The amount you are charged, if any, to move your money from one

r investment to another.

© Charles J. Givens Organization 1990 R1 Page 4-125


SAFETY

Year Founded - The year the company began doing business.

Assets - The amount of assets in billions managed by the company.

A.M. Best Rating - The safety rating assigned by the A.M. Best Company. Companies in
the charts are acceptable.

FLEXIBILITY

Investment Options - The different mutual funds or accounts in which you can invest your
money.

Transfer - When, how often, and how much of your money you can move from investment
to investment.

Written or Phone -The method(s) you can use to move your money from one investment
to another. "Written" requires a letter or special form; "phone" requires only a phone call
and gives maximum convenience.
~
I
PERFORMANCE

The percent growth for the year shown of each type of investment offered. Where more
than one investment is included in a category, the average is shown.

UQUIDITY

Back end load - The year-by-year decreasing commission charged if you withdraw your
money.

Example: 5-4-3-2-1 means that 5% is charged if you withdraw your money the first year
which decreases by a percentage point each year until it reaches zero the sixth year and
after.

Charged against - The amount of your account against which the back end load is
charged. "Deposits" means that the load is charged against your deposits but not the
appreciation. "Total" means the load is charged against your total withdrawal or account
balance.

Page 4-126 © Charles J. Givens Organization 1990 R1


SElFaDIRECTED ANNUITIES PLANNING CHART
[ COMPANY ANCHOR NAT'l NATIONWIDE GUARDIAN KEYSTONE
ANNUITY NAME AM. PATHWAY Ii BEST OF AMERICA IV VALUE GUARD II KEY-FLEX
GENERAL INFO
Issue - Ages To 0-80 0-78 0-75 1-80
Min. Initial Deposit 0= $300/NQ = $1500 Q = $300/NQ = $1500 Q = $500/NQ = $500 Q = S2000/NQ = $5000
Additional Deposits Q =$25/NQ =$25 SlO or S25 if pac $100 or pac Q = S500/NQ = $2000
Retirement Plans Avail. ALL (exc. 457) ALL ALL ALL
Statements Quarterly Quarterly Annually Quarterly
States Not Approved NY ID, ME, VT, WV NY

FEES
Mortality/Expense Fees 1.3% .80%/.45%-.05% 1.0%/0.1 %-0.28% 1.2%
Investment Fees 0.6%-0.7% see prospectus 0.5% 0.7%
Admin. Fees $30 $30 $35 $30
When Deducted Contract year end Contract anniversary Contract anniversary Contract year end
Transfer Charges o o o o
SAFETY
Year Company Established 1965 1927 1860 1957
Assets $2 billion $9 billion $5 billion $3 billion
A.M. Best Rating A Excellent A+ Superior A+ Superior A+ Superior

FLEXIBILITY
Investment (Series) Fund Groups (15) (Funds) (Trusts)
Options Growth Oppenheimer Stock Managed Growth
Growth/Income Fidelity Bond Aggressive Growth
H/Y Bond Neuberger-Berman Cash/MM Managed Assets
Govt. AAA Van Eck Centurion H/Y Bond
MM Twentieth Century Value Line Managed Security Inc.
Asset Alloc. *Nationwide * M/M Cash Inc.

General/Fixed Yes Yes Yes Yes

Transfer v = 12 times/yr V = 100% anytime V = every 30 days V = 5 times/yr.


F = 25% ea. contract yr F=not < 10% F = 1st mo. ea. contract yr.

Written or Phone Either Either Either Either

PERFORMANCE
87 88 89 87 88 89 87 88 89 87 88 89
STOCK 7% 14% 36% -2% 18% 12% 1% 19% 24% -7% 6% 30%
BOND 4% 12% 7% 3% 7% 12% -1% 8% 14% 21% 1% 15%
STOCK/BOND 2%
MONEYMKT 5% 6% 7% 5% 6% 8% 5% 6% 8% 6% 7% 7%
FIXED g(}f 7.5% 7.5%

LIQUIDITY
Surrender Fees 5%-5-5-5-5 Rolling 7%-6-5-4-3-2-1 Rolling 5%-5-5-5-5 Rolling 7%-6-5-4-3-2-1 Rolling
Charged Against Purchase Deposits Purchase Deposits Purchase Deposits Purchase Deposits
Partial Free Withdrawal 10% of Purch. Dep. 10% of Purch. Dep 10% of Purch. Dep. 10% Acct. Val.

r Cumulative
Waiver of Fees
No No
Death/5 yr. Annuity payout
No No
Death/Life Annuity Deathl5 yr. Annuity pay

*For information on the above annuities call the Life Insurance Clearinghouse at 1-800-522-2827
SELF-DIRECTED ANNUITIES PLANNING CHART
COMPANY SECURITY BENEFIT KEMPER INVESTORS GOLDEN AMERICAN
ANNUITY NAME VARI-FLEX ADVANTAGE III SPECIALTY MANAGER
GENERAL INFO
Issue - Ages To 0-75 0-100 0-75
Min. Initial Deposit Q = $25/NQ = $500 Q = $25/Q =$2500 Q =$1500/NQ = $10000
Additional Deposits Q = $25/NQ = $25 Q =$25/NQ = $500 Q = $250/NQ = $500
Retirement Plans Avail. ALL ALL IRA
Statements Active-Monthly Quarterly Quarterly
States Not Approved NY NY NY

FEES
Mortality/Expense Fees 0.7%/0.5% 1.3% .80%/1.25%
Investment Fees 0.5% 0.5% 0.95% up to 2.0%
Admin. Fees $30 $25 $40
When Deducted Calendar year end Calendar year end 1/4th Quarterly Anniversary
Transfer Charges 1st free; $10 after o 5 free/yr.; $25 after

SAFETY
Year Company Established 1892 1947 1973
Assets $3 billion $3.5 billion $36 million
A.M. Best Rating A + Superior A Excellent Not Yet Rated

FLEXIBILITY
Investment (Series) (Sep. Acct.) (Series - 7 total fund)
Options Growth . Equity Growth
Growth/Inc. Income Ltd. Matur. Bond
High Grade Inc. Total Return 2 Asset Managed
High Yield M/M Natural Resources
M/M Real Estate
Liquid Assets

GenerallFixed Yes Yes Yes

Transfer v = every 30 days v = every 30 days v = 100% anytime


F=min. $5000/lx yr. F = min. $500/lx yr. F = 25% per year

Written or Phone Either Either Either

PERFORMANCE
87 88 89 87 88 89 87 88 89
STOCK 5% 9% 34% .4% -.1% 27% 6%
BOND 23% 7% 4% 22% 4% 14% 7.5%
STOCK/BOND 2% -.7% 3%
MONEYMKT 5% 6% 7% 5% 6% 8% 8%
FIXED 8.5% 7.5%

LIQUIDITY
Surrender Fees 8%-7-6-5-4-3-2-1 6%-5-4-3-2-1 Rolling 5% red. 5% ea. yr/lO yrs.
Charged Against Purchase Deposits Total Funds Purchase Payments
Partial Free Withdrawal 10% of Deposits 10% of Acct. Bal. 15% of Cash Surrender Value
Cumulative no no no
Waiver of Fees DeathlAnnuitize 5 yrs Death, after 64 1/2 Death ~
- - - - - - - - - - - - - )
"For information on the above annuities call the Life Insurance Clearinghouse at 1-800-522-2827
SECTION V

TAX PREPARATION & TAX PLANNING

>-This symbol designates


';:;;..,.~~
strategies which are on
~ both video and audio tapes
Part 1 - Your Tax Attitude and Approach )

)
----.'
. Page 5-2 © Charles J. Givens Organization 1990 R1
Strategy #5-1 : Use only tax strategies, never loopholes or
tax cheating.

TAX CHEATING is understating your income or claiming tax deductions for assets you
don't own or expenditures you never made. Tax cheating may bring you fame and fortune,
as in the case of Billie Sol Estes who claimed tax deductions for nonexistent Texas grain
bins, but jail and other legal penalties always outweigh the fame and may cost you your
fortune.

LOOPHOLES are gray, untested areas of the tax law that allow you to claim "default
deductions" that Congress and the IRS might have ruled against had they had the
foresightto see the possibilities. Since a specific "no" does not exist, you create a loophole
by saying "yes" to a shaky deduction. Loopholes are often sought after by desperate,
high income taxpayers who never took the time to plan. Some loopholes are used purely
out of greed, others are taken because of the gambling instinct. There is only one "do"
about loopholes, and that is "don't."

TAX STRATEGIES are positive, legal uses of the tax laws to reduce your income taxes.
Tax strategies are actions you take that automatically and legally qualify you for additional
deductions. These action strategies can include opening an IRA account, starting a small
business, buying real estate and 75 other possibilities. Some tax strategies, like those
just mentioned, are straightforward and obvious. Other strategies, like traveling on tax
deductible dollars and a tax deductible college education for your children, are just as
legal, just as easy to use, but less understood.

© Charles J. Givens Organization 1990 R1 ·Page 5-3


Your Tax Reducing Strategy

The question of the legality and morality of tax deductions was settled once and for all
more than 40 years ago by the United States Circuit Court of Appeals in an opinion written
by Judge Learned Hand.

Anyone may so arrange his affairs that his taxes shall be as


low as possible. He is not bound to choo.se a pattern that will
best pay the Treasury. No one owes any public duty to pay
more than the law demands.

This decision should govern both your tax plan and your tax attitude. Rearranging your
affairs to create deductions where you had none before is the secret to paying less in
taxes. All of the tax strategies you will learn will legally and easily reduce your taxes by
thousands of dollars each year. Your job is to pick those strategies that best suit you and
your family. Tax strategies should form one-third of your written financial plan.

How much time is required? Reducing your taxes is basically a do-it-at-home, do-it-your-
self, do-it-in-your-spare-time project, requiring no more than a few minutes a week. What
you'll soon discover is that one hour spent learning and applying a legal tax strategy will
save you $100 to $300 in taxes. That's like having a $100 to $300 per hour tax-free job.

Page 5-4 © Charles J. Givens Organization 1990 R1


Stll'ategy #5-2: Determine your tax bracket to track your tax ~
savings. ®
Your EFFECTIVE TAX BRACKET is the percentage of your total income you pay in taxes.
If your total income is $40,000 per year and you pay a total of $5,000 in federal, state,
and local taxes, your effective tax bracket is 12.5%. ($5,000 divided by $40,000 = 12.5%).
In tax planning, knowing your effective tax bracket will motivate you to create a good tax
plan.

Your MARGINAL TAX BRACKET is the percentage in taxes you pay on your top dollar
of taxable income. It is also the percentage of tax you will pay on one additional dollar of
income, or conversely, the percentage you will save in taxes for each additional dollar of
tax deductions you create.

The chart below will show you your marginal bracket and the amount of tax you will pay
based on your taxable income in 1988 and beyond. Your marginal tax bracket is the
percentage shown in the right hand column of each schedule.

TAX RATE SCHEDULES UNDER TAX REFORM


1989 and Beyond
Married Filing Jointly Single
Taxable Marginal Taxable Marginal
Income Bracket Income Bracket

29,750
o 1~
28% 17,850
° 1~
28%
71,900 33% 43,150 33%
149,250 * 28% 89,560 * 28%

Married Filing Separately Head of Household


Taxable Marginal Taxable Marginal
Income Bracket Income Bracket
o 15% 15%
14,875
35,950
28%
33%
23,900
61,650
° 28%
33%
74,625 * 28% 123,790 * 28%

*Plus 5% personal exemption surtax.

© Charles J. Givens Organization 1990 R 1 Page 5-5


Strategy #5-3: Cut your adjusted gross income (AGI) to
increase allowable itemized deductions.

Under the new tax laws, the amount of medical and miscellaneous deductions you can
claim are partially dependent on your adjusted gross income (AGI). Since medical
expenses are deductible only in excess of 7.5% of AGI and miscellaneous expenses, such
as job-related expenses, are deductible only in excess of 2% ofAGI, your goal is to reduce
your adjusted gross income.

Refer to the form on pages 5-6 and 5-7, "Computing Your Adjusted Gross and Taxable
Income," to help you increase certain itemized deductions. Notice that deductions like a
small business loss, IRA contributions and real estate deductions all reduce your adjusted
gross income (Part 2).

As you use the tax strategies in this book, keep track of your deductions as you create
them. You will notice that as your taxable income gets smaller, your taxes become less
and your spendable income increases. The purpose of a good tax plan is having more
money to spend.

Page 5-6 © Charles J. Givens Organization 1990 R1


Computing Your Adjusted Gross and Taxable Income

Using your receipts, complete this form to determine your adjusted gross income, taxable
income and marginal tax brackets.

Part 1 INCOME

A. Included $_ _ _ Tax-Free bond interest


$ _ _ _Wages _ _ _ Tax-Free insurance proceeds
_ _ _ Gifts
- - - Profit from a small business
_ _ _ Inheritances
_ _ _Annuity Income
_ _ _ Social security (tax-free portion)
- - -Pension Income _ _ _ Other
- - -Profit from sale of investments
- - -Interest or dividend income $_ _ _ Total
- - -Rental income
_ _ _ Royalty Payments
_ _ _ Other

$ _ _Total Taxable Income Before


Deductions

B. Not Included

Part 2 Deductions That Reduce Your AGI (Adjusted Gross Income)

$ Loss from small business


_ _ _ Unreimbursed employee travel expenses.
_ _ _ Deductible contributions to an IRA or KEOGH
_ _ _ Contribution to pension plan of an S corp.
_ _ _ Alimony payments
_ _ _ Premature withdrawal penalty from CD's

- - - Deductions from real estate investments


_ _ _ Other

$ Total AGI deductions

© Charles J. Givens Organization 1990 R1 Page 5-7


(The lower your AGI, the lower your taxes and the greater your Schedule A allowable deductions)

Part 3 COMPUTING YOUR AGI & TAXABLE INCOME

Total Taxable Income from Part IA +$


Subtract: AGI Deductions Part 2

Adjusted Gross Income $

Subtract:
Schedule A Deductions (total)* -$
Deductions for Dependents ($1,950 each)
Taxable Income $

COMPUTING YOUR MARGINAL TAX BRACKET

Your Federal Tax Bracket (from Tax Rate Schedule) +


Your State Tax Bracket (estimated) +

Your Marginal Tax Bracket =

You can easily determine your adjusted gross income (AGI) by subtracting Part 2
deductions from Part 1A Income. Other Schedule A deductions and deductions for
dependents are subtracted from your Adjusted Gross Income to determine your tax-
able income.
*Schedule A deductions include interest, medical, charitable contributions, taxes and
miscellaneous deductions often referred to as itemizing.

Page 5-8 © Charles J. Givens Organization 1990 R1


r Part 2 - Tax Return Filing Strategies

© Charles J. Givens Organization 1990 R1 Page 5-9


Strategy #5-4: Complete the 1040 long form - you cannot
pay more in taxes, only less.

Those who fill out the short form are paying the absolute maximum tax possible on that
level of income. Always complete the 1040 long form to identify potential tax deductions.
If you don't have more than the standard deduction, the long form will point out where
your tax plan is lacking. Completing the long form will also familiarize you with the process
of turning deductions into dollars. Use tax publication 17 as your guide. Filing the long
form can never cost you more, only the same or less.

Strategy #5-5: Choose an aggressive tax preparer or none c:.......


,c-~()o..

at all. ®
Whether or not you use a tax preparer is strictly a matter of choice. Almost 60% of
taxpayers use a tax preparer and, with the complexity of the new tax laws, more will
continue to look for help.

A good tax preparer is an aggressive tax preparer. Many tax laws and rules are written
to intimidate tax preparers into becoming unnecessarily meek, mild and conservative. If
your tax preparer is full of warnings, such as, "I wouldn't take that deduction, it might
send up a red flag," and short on explanations, the money you are paying for so-called
tax advice pales beside the money you are unnecessarily paying in taxes.

The most effective way to choose a tax pre parer is to interview several with one key
question: "How much in taxes did you pay last year?" If the answer is much more than
zero, or a hedge like "None of your business!", you are dealing with a tax loser, not an
effective tax preparer.

Page 5-10 © Charles J. Givens Organization 1990 R1


Strategy #5-6: Increase or decrease your end of year withholding
to avoid penalties or get your refund for
\
Christmas.

Under the new tax laws, the amount of withholding from your paycheck required to avoid
penalties was increased from 80% to 90% of the total taxes due.

If you had too little withheld during the year, you can have any amount of extra money
withheld from your end of year checks to make up the difference. Every November, pencil
in a 1040 form with your approximate income and deductions. If you will be short of the
required withholding amount, have your employer withhold extra taxes for your last few
pay periods.

If you have had more than 90% withheld, you can reduce your end of year withholding
to as little as 0 and use the extra money for Christmas.

Strategy #5-7: Prepare your own return -at least once.

Without understanding how adjustments, credits and deductions affect your return, you
will never feel confident about handling the tax system. Pencil in your income and
deductions even if you take your papers to a tax preparer. This process will discipline
you into becoming a better record keeper as well as operate as a checklist to be certain
you have everything organized.

There are also hidden traps in the way that your tax pre parer may take deductions. Tax
preparers may, for instance, choose alternatives for automobile, interest or investment
ded.uctions that save their preparation time but give you far less in deductions. You must
be in a position to tell your preparer what forms and formulas to use if you want to pay
less in taxes.

© Charles J. Givens Organization 1990 R 1 Page 5-11


Strategy #5-8: Time your refund to earn extra interest.

The IRS must send you any refund due within 45 days from the date you file or April 15th,
whichever date is later. If your refund is late even one day, you are entitled to interest
from the filing date. To get your interest you may have to notify the IRS by sending in a
claim. Always calculate the number of days between filing and refund to determine if you
are due extra interest.

Strategy #5-9: Don't apply this year's refund to next year's c-.
.c:~!)o.
taxes. ~

Your 1040 form will give you an option: get your refund in cash or apply your refund to
next ye"ar's taxes. Never give the IRS the use of your money free! If you end up owing
more money because of understated income or interest income you forgot to claim, you
will have to pay from your bank account. The IRS will not let you take the additional money
owed out of your prepayment. Put your refund in your investment~account and let it work
for you instead of the IRS.

Page 5-12 © Charles J. Givens Organization 1990 R1


Strategy #5-10: Avoid tax penalties, don't be concerned
about interest.

Refer to the following "Penalties and Interest on Tax Returns" chart and you will see what
it costs to file late, make mistakes or even cheat.

The two biggest penalties, negligence and fraud, are also the easiest to avoid. These
penalties are never assessed arbitrarily or used as a threat, but only to punish taxpayers
who intentionally try to cheat or who don't report all income.

The largest honest taxpayer's penalty is imposed for not having the extra money to pay
taxes due when filing a return. The penalty is 1% per month plus interest of three
percentage points over prime. The total interest and penalties paid are therefore only
slightly more than the 18% interest of credit cards you may carry in your wallet. Not
pleasant, but not enough to break you either. Interest and penalties are assessed only
on the extra taxes due, not on your taxable income.

All penalties are easily avoided by proper planning and by filing an honest return.

© Charles J. Givens Organization 1990 R1 Page 5-13


Penalties And Interest On Tax Returns

Interest (Paid and Received)

Underpayment of Tax 3 mo. T-Bill Rate + 3%


Overpayment of Tax 3 mo. T-Bill Rate + 2%

Penalties for Tax Law Violations

Civil Violations PENALTV


Unpaid Taxes .5% per month up to 25% + Interest
Negligence 5% of Underpayment + Interest

Failure to File Return When Due $100 or taxes due


(60 day grace period)
Bad Check C h a r g e ' 1 % o f check
Frivolous or Incomplete Return $500

Frivolous Lawsuit against the IRS $5,000


Overvaluation of Property 10% to 30% of Underpayment
Intent to Evade Taxes 75% of Underpayment + 50% of Interest
False Withholding Information $500
Failure to File Partnership Return $50 Ea. Partner per Month; Max. 5 Months 0
Criminal Violations
Willful Failure to Payor File Up to $25,000 + 1 year prison
Willfully Falsifying Return Up to $100,000 + 3 years prison
Intent to Evade Taxes Up to $100,000 + 5 years prison
False Withholding Information Up to $100,000 + 1 year prison

Page 5-14 © Charles J. Givens Organization 1990 R 1


Strategy #5-11: When in doubt, deduct it.

If you want to reach your financial goals, you must adopt the winning tax strategy: "WHEN
IN DOUBT, DEDUCT IT." Take everything the law allows. Follow the rules, but deduct all
gray areas in your favor. Gray areas are not loopholes or an attempt to get around the
tax laws, but areas of ambiguity and uncertainty about what Congress or the IRS really
meant. You have just as much chance of winning your point as the IRS does. You'll be
surprised, as you learn about taxes, at how much of the code is ambiguous. Simple
recordkeeping and tax strategies will always have you prepared to win your point.

Strategy #5-12: Sign your own tax return if your income is


less than $50,000.

The IRS audits a greater percentage of returns signed by "experts" than by individual
taxpayers. The reason? The IRS found that tax professionals make more mistakes than
taxpayers. The statistics are as follows:

30% of returns prepared by taxpayers contain errors,

40% of returns prepared by CPAs and accountants contain errors,

60% of returns prepared by franchised tax preparers contain errors.

If a tax preparer has prepared your return, he must, by law, sign it, but if you simply get
tax advice or assistance in preparing your return, you may sign it yourself. Signing· your
own return cuts your chances of being audited by about 20%, but does not prevent you
from taking a professional with you if you are audited.

There is an exception. If you earn over $50,000 per year in total income, your chances
of being audited are less if a CPA or tax preparer signs your return.

© Charles J. Givens Organization 1990 R1 Page 5~15


Strategy #5-13: File your return later, not earlier.

The later you file, the less your chances for audit. If you file your tax return each year after
April 1st, you have automatically reduced your chances for audit by about 40% over those
who file in January, February and March. The reduced chance for audit is due to a quirk
in the IRS's computer program and how it selects returns for possible audit. The IRS will
tell you it's not true, but it is. Here's how it works.

The IRS brass meets each year to decide how many returns will be audited for each
deduction category. The IRS has only 24,500 auditors, and has suffered budget cuts like
all government branches. The number of returns to be selected for each deduction
category is programmed into the computer. Returns for possible audit are then selected
on a "first come" basis, and when the total number of returns for a category have been
chosen, the computer stops selecting. The later you file, the more categories that will be
full.

Strategy #5-14: File an automatic extension Form 4868.


.~
j
You can reduce your chance for audit even further by filing IRS Form 4868 - Automatic
Extension of Time to File. The automatic extension gives you an extra four months - until
August 15th - to file your tax return for the previous year. Interest is charged on unpaid
taxes at less than 1% per month, but there is no late filing penalty. Another two-month
extension can be requested in writing by filing Form 2688. which is almost always granted.
moving your required filing date to October 15.

Page 5-16 © Charles J. Givens Organization 1990 R1


Part 3 - Audit Winning Strategies

. :,"",

© Charles J. Givens Organization 1990 R1 Page 5-17


Strategy #5-15: Don't react to an audit as more than it
really is.

According to the IRS, an audit is "an impartial review of a tax return to determine its
accuracy and