Oak Tree WealthManagementDiane L. Woodward, CFP®, RICP®3180 Crow Canyon PlaceSuite 220San Ramon, CA 94583925-275-9400888-965-9550 Faxdiane@oaktreewealth.comwww.oaktreewealth.com

July 2016 - Please Read 1st ArticleJuly 2016 -Important Updates Please Read

Four Reasons Why People Spend Too Much

Common Financial Wisdom: Theory vs.Practice

What do I need to know about home sharingsites like Airbnb?

July 2016 -Important Updates Please Read

See disclaimer on final page

For my clients, please read thefirst article. There is importantinformation for you about yourAssetMark accounts.

To keep up with most current eventsand information, Like us onFacebook . I post short educationalvideos, market updates and otherhand picked items I think you mightfind of interest.

Living in one of the hot spots of technology inthe world, we are used to a pretty fast pacearound here. Hold on to your hats because inthe financial services arena, change hasaccelerated in the past few months.

For those of you with accounts at AssetMark ,you will notice a change when you receive yourJuly statements. Up until now, you havereceived your performance on both yourAssetMark custody statement as well as yourQuarterly Performance Report, (QPR). Goingforward, you will only see your performance onthe Quarterly Performance Report. If you havenot been receiving the QPR statement, I haveupdated your settings at AssetMark so that youwill receive it in the same manner as yourcustody statement.

Why did AssetMark decide to excludeperformance on their custody statements? Theywill be able to get your statements to you 3-5days faster. You will receive your QuarterlyPerformance Report in a separate envelope oremail depending on your preferences. If youhave any questions about this, please let meknow.

Did you know the financial planning software Iuse can allow you to check in on your financialplan at any time? It is just a matter of gettingyou set up in the system. Within that software Ihave also subscribed to an additional servicethat will allow you to link in your 401k, and anyother accounts that are not under my umbrella.You can have a view into your overallfinancial situation, including your financialplan, in ONE place! Isn't that cool? [I know, myfinancial planning geekness is showing ;-) ]

I have been rolling out the financial planningaccess as I meet with you, but if you wouldlike that access before our next meeting justlet me know .

What do I do between our meetings? I amconstantly keeping up my continuingeducation in all areas to better serve you.

Here's what I have been doing so far this year.Ongoing Quarterly Meetings-One and a half day meetings with AssetMarkgoing over performance, economic updates,risk management, deep dives with moneymanagers, and best new ideas and practices.-One day with my network of about 200advisors where we learn from each other in allareas from implementation of the best newtechnologies, security of sensitive data, newproducts, latest tax updates, and so on.

Since January:-Attended CPA mini-conference to learn thelatest tax implications for those divorcing.-Attended 2.5 day conference in FL about howto use latest technology for portfolio managercomparisons, risk analysis, investment themesgoing forward, and helping clients see the bigpicture.-Multiple insurance training meetings on longterm care options, property home/car insuranceand estate planning.-Ongoing weekly meetings on topics includingthe markets, the economy, Social Security,Medicare, and many more from a wide range ofsources.- Dealing with new regulations, and an officeaudit.-Attended 2 day conference in San Franciscowith the Financial Planning Association on allaspects of my job.

I feel very lucky to do what I do for you, andpart of my value to you is keeping the graymatter between my ears in top condition!

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Four Reasons Why People Spend Too MuchYou understand the basic financial concepts ofbudgeting, saving, and monitoring your money.But this doesn't necessarily mean that you're incontrol of your spending. The following reasonsmight help explain why you sometimes breakyour budget.

1. Failing to think about the futureIt can be difficult to adequately predict futureexpenses, but thinking about the future is a keycomponent of financial responsibility. If youhave a tendency to focus on the "here and now"without taking the future into account, then youmight find that this leads you to overspend.

Maybe you feel that you're acting responsiblysimply because you've started an emergencysavings account. You might feel that it will helpyou cover future expenses, but in reality it maycreate a false sense of security that leads youto spend more than you can afford at a givenmoment in time.

Remember that the purpose of your emergencysavings account is to be a safety net in times offinancial crisis. If you're constantly tapping it forunnecessary purchases, you aren't using itcorrectly.

Change this behavior by keeping the big picturein perspective. Create room in your budget thatallows you to spend discretionary money anduse your emergency savings only for trueemergencies. By having a carefully thought-outplan in place, you'll be less likely to overspendwithout realizing it.

2. Rewarding yourselfAre you a savvy shopper who rarely splurges,or do you spend too frequently because youwant to reward yourself? If you fall in the lattercategory, your sense of willpower may be toblame. People who see willpower as a limitedresource often trick themselves into thinkingthat they deserve a reward when they are ableto demonstrate a degree of willpower. As aresult, they may develop the unhealthy habit ofoverspending on random, unnecessarypurchases in order to fulfill the desire for areward.

This doesn't mean that you're never allowed toreward yourself--you just might need to think ofother ways that won't lead to spending toomuch money. Develop healthier habits byrewarding yourself in ways that don't costmoney, such as spending time outdoors,reading, or meditating. Both your body and yourwallet will thank you.

If you do decide to splurge on a reward fromtime to time, do yourself a favor and plan yourpurchase. Figure out how much it will costahead of time so you can save accordinglyinstead of tapping your savings. Make sure thatyour reward, whether it's small or big, has apurpose and is meaningful to you. Try scalingback. For example, instead of dining out everyweekend, limit this expense to once or twice amonth. Chances are that you'll enjoy going outmore than you did before, and you'll feel goodabout the money you save from dining out lessfrequently.

3. Mixing mood with moneyYour emotional state can be an integral part ofyour ability to make sensible financialdecisions. When you're unhappy, you might notbe thinking clearly, and saving is probably notyour first priority. Boredom or stress also makesit easy to overspend because shopping servesas a fast and easy distraction from yourfeelings. This narrow focus on short-termhappiness might be a reason why you'respending more than normal.

Waiting to spend when you're happy andthinking more positively could help shift yourfocus back to your long-term financial goals.Avoid temptations and stay clear of stores ifyou feel that you'll spend needlessly afterhaving an emotionally challenging day. Stayingon track financially (and emotionally) will benefityou in the long run.

4. Getting caught up in home equityhabitsDo you tend to spend more money when thevalue of your assets--particularly yourproperty--increases? You might think thatappreciating assets add to your spendingpower, thus making you feel both wealthier andmore financially secure. You may be tempted totap into your home equity, but make sure you'reusing it wisely.

Instead of thinking of your home as a piggybank, remember it's where you live. Be smartwith your home equity loan or line ofcredit--don't borrow more than what isabsolutely necessary. For example, you mayneed to borrow to pay for emergency homerepairs or health expenses, but you want toavoid borrowing to pay for gratuitous luxuriesthat could put you and your family's financialsecurity at risk. After all, the lender couldforeclose if you fail to repay the debt, and theremay be closing costs and other chargesassociated with the loan.

You may be more likely tooverspend on a particularpurchase compared to otherpossible expenditures.According to researchconducted by the ConsumerReports National ResearchCenter, adults in the UnitedStates reported that theywould spend money on thefollowing throughout theyear:

• 54%--electronics

• 33%--appliances

• 27%--a car

• 23%--home remodeling

Source: Consumer Reports,November 2014

Page 2 of 4, see disclaimer on final page

Common Financial Wisdom: Theory vs. PracticeIn the financial world, there are a lot of rulesabout what you should be doing. In theory, theysound reasonable. But in practice, it may not beeasy, or even possible, to follow them. Let'slook at some common financial maxims andwhy it can be hard to implement them.

Build an emergency fund worth three tosix months of living expensesWisdom: Set aside at least three to six monthsworth of living expenses in an emergencysavings account so your overall financial healthdoesn't take a hit when an unexpected needarises.

Problem: While you're trying to save, otherneeds--both emergencies andnon-emergencies--come up that may preventyou from adding to your emergency fund andeven cause you to dip into it, resulting in aneven greater shortfall. Getting back on trackmight require many months or years ofdedicated contributions, leading you todecrease or possibly stop your contributions toother important goals such as college,retirement, or a down payment on a house.

One solution: Don't put your overall financiallife completely on hold trying to hit the high endof the three to six months target. By all meanscreate an emergency fund, but if after a year ortwo of diligent saving you've amassed only twoor three months of reserves, consider that agood base and contribute to your long-termfinancial health instead, adding small amountsto your emergency fund when possible. Ofcourse, it depends on your own situation. Forexample, if you're a business owner in a volatileindustry, you may need as much as a year'sworth of savings to carry you through uncertaintimes.

Start saving for retirement in your 20sWisdom: Start saving for retirement whenyou're young because time is one of the bestadvantages when it comes to amassing a nestegg. This is the result of compounding, which iswhen your retirement contributions earninvestment returns, and then those returnsproduce earnings themselves. Over time, theprocess can snowball.

Problem: How many 20-somethings have thefinancial wherewithal to save earnestly forretirement? Student debt is at record levels,and young adults typically need to budget forrent, food, transportation, monthly utilities, andcell phone bills, all while trying to contribute toan emergency fund and a down payment fund.

One solution: Track your monthly income andexpenses on a regular basis to see where yourmoney is going. Establish a budget and try to

live within your means, or better yet below yourmeans. Then focus on putting money aside inyour workplace retirement plan. Start bycontributing a small percentage of your pay,say 3%, to get into the retirement savings habit.Once you've adjusted to a lower take-homeamount in your paycheck (you may not evennotice the difference!), consider upping yourcontribution little by little, such as once a yearor whenever you get a raise.

Start saving for college as soon as yourchild is bornWisdom: Benjamin Franklin famously saidthere is nothing certain in life except death andtaxes. To this, parents might add college coststhat increase every year without fail, no matterwhat the overall economy is doing. As a result,new parents are often advised to start savingfor college right away.

Problem: New parents often face many otherfinancial burdens that come with having a baby;for example, increased medical expenses,baby-related costs, day-care costs, and areduction in household income as a result ofone parent possibly cutting back on work orleaving the workforce altogether.

One solution: Open a savings account and setup automatic monthly contributions in a small,manageable amount--for example, $25 or $50per month--and add to it when you can. Whengrandparents and extended family ask whatthey can give your child for birthdays andholidays, you'll have a suggestion.

Subtract your age from 100 todetermine your stock percentageWisdom: Subtract your age from 100 todetermine the percentage of your portfolio thatshould be in stocks. For example, a 45-year-oldwould have 55% of his or her portfolio in stocks,with the remainder in bonds and cash.

Problem: A one-size-fits-all rule may not beappropriate for everyone. On the one hand,today's longer life expectancies make a casefor holding even more stocks in your portfoliofor their growth potential, and subtracting yourage from, say, 120. On the other hand,considering the risks associated with stocks,some investors may not feel comfortablesubtracting their age even from 80 to determinethe percentage of stocks.

One solution: Focus on your own tolerance forrisk while also being mindful of inflation.Consider looking at the historical performanceof different asset classes. Can you sleep atnight with the investments you've chosen? Yourown peace of mind trumps any financial rule.

It might not always bepossible to follow somecommon financial wisdom.

Note: All investing involvesrisk, including the possibleloss of principal, and therecan be no assurance thatany investment strategy willbe successful.

Page 3 of 4, see disclaimer on final page

Oak Tree WealthManagementDiane L. Woodward, CFP®,RICP®3180 Crow Canyon PlaceSuite 220San Ramon, CA 94583925-275-9400888-965-9550 Faxdiane@oaktreewealth.comwww.oaktreewealth.com

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2016

California Insurance License#0785820. Diane Woodward is aregistered representative with andsecurities, advisory services andfinancial planning offered throughLPL Financial, a RegisteredInvestment Advisor, MemberFINRA/SIPC.

Can I name a charity as beneficiary of my IRA?Yes, you can name a charityas beneficiary of your IRA, butbe sure to understand theadvantages anddisadvantages.

Generally, a spouse, child, or other individualyou designate as beneficiary of a traditional IRAmust pay federal income tax on any distributionreceived from the IRA after your death. Bycontrast, if you name a charity as beneficiary,the charity will not have to pay any income taxon distributions from the IRA after your death(provided that the charity qualifies as atax-exempt charitable organization underfederal law), a significant tax advantage.

After your death, distributions of your assets toa charity generally qualify for an estate taxcharitable deduction. In other words, if a charityis your sole IRA beneficiary, the full value ofyour IRA will be deducted from your taxableestate for purposes of determining the federalestate tax (if any) that may be due. This canalso be a significant advantage if you expectthe value of your taxable estate to be at orabove the federal estate tax exclusion amount($5,450,000 for 2016).

Of course, there are also nontax implications. Ifyou name a charity as sole beneficiary of yourIRA, your family members and other loved oneswill obviously not receive any benefit from thoseIRA assets when you die . If you would like toleave some of your assets to your loved onesand some assets to charity, consider leavingyour taxable retirement funds to charity andother assets to your loved ones. This may offerthe most tax-efficient solution, because thecharity will not have to pay any tax on theretirement funds.

If retirement funds are a major portion of yourassets, another option to consider is acharitable remainder trust (CRT). A CRT can bestructured to receive the funds free of incometax at your death, and then pay a (taxable)lifetime income to individuals of your choice.When those individuals die, the remaining trustassets pass to the charity. Finally, anotheroption is to name the charity and one or moreindividuals as co-beneficiaries. (Note: There arefees and expenses associated with the creationof trusts.)

The legal and tax issues discussed here can bequite complex. Be sure to consult an estateplanning attorney for further guidance.

What do I need to know about home sharing sites likeAirbnb?Home sharing sites like Airbnbare online services throughwhich someone offers to renttheir home or a portion of their

home. Airbnb listings are popular lodgingoptions for travelers on a budget as well asproperty owners seeking extra income. Butbefore you decide to be a guest in someone'shome or open your door to strangers as thehost, there are some things to consider.

An Airbnb listing may be an affordable option ifyou want to cut lodging costs, but it could meanyou have to do more research before your tripthan you might for more conventionalaccommodations. Be specific when conductingyour initial search and narrow down locationsaccording to your budget, number of guests,length of stay, and space requirements. Thiswill help you find a match that best suits yourneeds. Check the ratings and reviews carefullyto determine whether the location and propertywork for you. Think about researchingneighborhoods outside of reviews--you can'talways trust their accuracy, and you want to besure you're staying in a place that meets yourexpectations.

Once you have a few viable options, contactyour prospective hosts with any questions youmight have.

During your search, be wary of scams. Makesure you're booking via a legitimate Airbnbservice with verifications that you're dealingwith real hosts. By using caution and commonsense in the booking process, you might saveyourself some trouble down the road.

If you want to rent out your property as anAirbnb host, the first thing you should do ischeck with your landlord or homeownersassociation (if applicable). It's important to knowany rules that might affect you. Next, considerthe costs of hosting. Can you afford to provideclean linens, towels, and other amenities toyour guests? Are you able to keep up withcleaning and maintenance of your property?Are you prepared to pay possible hosting feesto your booking service? Do you haveappropriate insurance coverage, or will youneed to purchase more?

Don't forget that renting out your property mayhave tax consequences. Talk to a taxprofessional to learn specific details.

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