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Having a nameless and unknown thief break into your house or office and steal would be a frightening experience. I’ve heard people who have gone through it describe feeling violated. It takes time to regain a sense of safety after your space has been invaded.

It is almost worse to learn that someone has been abusing a position of trust by systematic theft. In addition to having your security and comfort violated, there is a sense of betrayal. That’s what my wife and I felt when we learned that the babysitter we liked and trusted had been cold-bloodedly stealing from us for months. Her recent sentencing has once again brought those feelings to the forefront.

As I’ve talked with friends and colleagues about this experience, several of them shared similar stories. All of our discussions had a common thread. We all had been left pondering two questions. The first was, "How can I keep this from happening again?" The second was, "How do you know when you can trust someone?"

The first question was in some ways the easier one. I had to ask myself what I might do differently in the future. How might I protect myself, yet not become paranoid and unreasonably mistrustful?

Some aspects of preventing this particular type of theft in the future were embarrassingly simple. First of all, I needed to stop keeping cash too easily accessible. In addition, it was my failure to review Jill’s timesheets regularly that had allowed her to get by with overstating her hours. As the person who signs the checks, verifying a statement or invoice is ultimately my responsibility, one I need to do more carefully.

Several friends also said that such an experience had led them to review their systems for handling payments, invoices, and cash in their businesses. All too often, there was no systematic method designed to guard against dishonesty. A way of handling money had been developed, sometimes quite haphazardly, based on the undoubted integrity of one or more employees.

What needs to be in place instead is a system that is independent of the character of individual employees. It isn’t a matter of trusting or not trusting specific people, but of having a reliable and neutral method of tracking what comes in and what goes out. This actually serves to protect employees as well as the employer.

The problem of how much and whom to trust is more difficult. My wife and I have been severely shaken by this betrayal, and so have other long-time and trusted employees. I also am questioning my ability to judge someone’s character. It was amazing to watch Jill’s behavior once we knew she had been stealing. She was as friendly and apparently open as she had ever been. It was as if she were able to completely dissociate her act of stealing from her relationship with us. That is perhaps the scariest issue about her theft.

I now am assessing all my relationships. Who else might be stealing from me? Who else is in my life that I should not trust? I am wondering whether I have been too naïve when it comes to trusting employees. My style of management requires a high level of responsibility and trust from my employees. I don’t want to give up that style and that attitude. I don’t want to believe that most people cannot be trusted.

My conclusion is that I should not give up trusting, but should offer my trust more consciously and responsibly. Perhaps I need to follow the old Muslim proverb: “Trust in Allah, but tie your camel.”

To listen to Rick’s column, click here:  Download NefariousNanny.mp3

About a year ago, I filed felony theft charges against one of the last people I ever thought would steal from us—our children’s primary babysitter. Jill (not her real name), a college student, worked for us for three years. She stayed with the children several times when my wife and I were out of town. She was a trusted employee who became a family friend.

Everything was fine until we began missing cash from my wife’s purse and from the spending money I kept hidden in the house. We weren’t leaving cash around in plain sight; someone had to be searching systematically for it. We started an investigation, including setting up a surveillance camera, and before long we caught our thief in the act. My wife and I were dumbfounded that the culprit was Jill.

We were even more shocked when we reviewed Jill’s time sheets. She submitted them to one of my staff members who made out checks, and we hadn’t been checking them because we trusted Jill. We learned she had been overstating her hours by four times.

At first we were tempted to just confront Jill, get as much money back as possible, and let her go. Because we had known and trusted her for several years, it was hard to consider turning her over to the police. Maybe just being caught, we rationalized, would teach her a lesson.

Finally, though, we decided we needed to press charges. This was no impulsive, petty theft, but systematic robbery of significant amounts from people who trusted her implicitly.

I also remembered the experience of a friend who had discovered a trusted employee was embezzling from his business. He found out later that she had done the same thing earlier in a previous job. That employer had chosen not to press charges, but had let her go after she reimbursed what she had stolen. Instead of learning from the first experience not to steal, she was merely released to go and steal from a new employer.

This story reinforced the position that it would be wrong to let Jill get by without serious consequences for her theft. It became clear that we would be doing no favors—either for her or for her possible future victims—by failing to hold her accountable for her actions.

When we confronted Jill, she admitted she had been stealing from us. She had no explanation for her behavior other than to say she realized she had a problem and had no clue why she stole. I gave her the name of the detective I had previously talked to, and she agreed to turn herself in. When she did, she confessed to stealing around $2,000 in cash. In actuality, it was many times more than that.

It took over a year for Jill to finally agree to a plea bargain and plead guilty to the felony charges. At a recent hearing, the judge sentenced her to 10 years in the penitentiary, suspended her incarceration and put her on probation for 10 years. She will serve 90 days in the county jail on work release, pay a $1000 fine plus court costs, go to counseling and do community service. She will also have to make restitution, in an amount to be set at an upcoming hearing.

My wife and I are relieved that the case has finally been heard. Yet it doesn’t feel "over." This whole incident has left us feeling sad, angry, and confused. We still struggle with the reality that someone we regarded as a friend could betray us so badly.

One of our goals at KFG is to provide the most comprehensive picture of your investments possible. For that reason, we don’t just track investment that are held at TD Ameritrade, but we also include in our asset allocation reports all of your other investments. This includes employer 401K plans, real estate, U.S. Treasury Bonds (EE, E, HH), certificated stocks and bonds, directly held real estate, B shares of mutual funds, certificates of deposit, precious metals, whole life insurance, annuities, business interests, and pension plans.

The reason is simple; the bigger the picture we have of your investments, the more effective is our advice.

Like anything, there is a downside to this, which is an annoyance for you and us. That annoyance is having to continually pester you for your latest statement. In addition, with our recent move to doing monthly rebalancing, our need for timely information on assets held away from TD Ameritrade is greater than ever. Not having timely, updated statements also significantly slows down our internal process.

So, starting January 1st, 2007, if we do not have automatic updates sent to us for your assets, except for real estate and precious metals, we no longer will include those assets in your asset allocation or financial reports.

Providing us with automatic and timely updates for most assets should not be a problem in the majority of situations. In most cases, we are probably already receiving duplicate copies of most investments held away from TD Ameritrade.

We will be sending you an email or contacting you by phone soon to request duplicate statements for those assets that aren’t currently providing them to us. We’ll ask you to contact them and request that we be added to your account.

Thank you for your help in making our services to you more timely and efficient.

Click here to listen to Rick’s column:Download money_secrets_or_money_privacy.mp3

One of the projects I’m currently involved in with co-authors Ted and Brad Klontz is a book for couples about financial infidelity. In that work, a question that came up is the difference between financial secrets and financial privacy.

Our society does not encourage us to talk about money in personal ways. For example, making a public announcement of your salary, your net worth, or the amount of your debt would be a social faux pas. On the other hand, we tend to expect couples to be completely open with each other when it comes to money. In most cases that expectation is reasonable and useful. Keeping financial secrets within a marriage can have lasting and destructive consequences.

Yet where do couples draw the line between keeping harmful secrets and respecting one another’s privacy and autonomy? This can be a complicated question for any couple. It gets even trickier for two-career couples, those in second marriages, and those in non-traditional families.

One thing we tell couples in our Healing Money Issues workshops is that each of them needs to have a certain amount of money that is theirs to spend in any way they wish. The amount will vary according to the family income, but having this separate personal allowance is important. It gives both partners a chance to spend some guilt-free money on themselves. This money is clearly private.

Other situations are less clear. Here are some possible circumstances where limits on a spouse’s knowledge might constitute privacy rather than secrecy:

· The couple has agreed to keep their income and assets separate and has established a method of sharing the expenses (such as housing) that are their joint responsibility.

· One spouse owns a separate business with which the other spouse is not involved. It’s reasonable for the non-owner spouse to expect to be kept informed of the business’s earnings, significant changes or problems, and the like. The details of its day-to-day affairs aren’t necessarily the non-owner’s concern.

· One spouse manages the financial affairs of an elderly parent or other relative.

· Spouses in a second marriage have children from previous marriages and have brought separate assets into the marriage.

In any of these examples, it’s not possible to define a one-size-fits-all boundary between privacy and secrecy. Each couple needs to draw that boundary for themselves, depending on their particular circumstances.

One factor in establishing such a line could be how much support or help spouses might need from each other. If you are paying your mother’s bills, for example, you might want your spouse to be able to step in at times you aren’t available. If you own a business, you might want your spouse to know enough about it so you can discuss problems or plans for the future.

Another significant factor might be other relationships and commitments within the family. Suppose you are in a second marriage and have adult children who have previously been told they will inherit your assets. Keeping those assets separate from your spouse’s assets might be the best way to avoid confusion, misunderstandings and hurt feelings.

The key to deciding whether keeping a money issue separate is secrecy or privacy is the reason behind the decision. If you don’t have a lot of energy around the matter one way or another, it’s probably a privacy issue. If you would feel embarrassed, ashamed, or otherwise uncomfortable with your spouse knowing something, it’s probably a potentially destructive secret. There’s a simple way to judge: if you really, really don’t want to talk about it, talking about it is probably exactly what you need to do.

For most bonds, rising interest rates spell trouble.  As interest rates rise, the value of a traditional bond sinks lower, unless you own Treasury Inflation Protected Securities, which are US Treasury Bonds.  For TIPS, rising interest rates are really good news!  Find out how one of the safest bonds in the world can further protect you bond portfolio from the raveges of inflation.  Join us for this informative teleclass where Rick will also give you all the details on our chosen TIPS fund manager.

Join us on Thursday, August 31st, at 4 PM MDT, for an interactive discussion on this asset class.  Click here to go to our website to register.  We will email you the phone number (and the webinar address if you want to join via your computer, too) the day before the class. Make sure you bring your questions!

Click here to listen to Rick’s column: Download baby_its_hot_outside.mp3

Having lived in Rapid City all my life, I thought I’d experienced about every type of weather there is in this region. Our weather can change on a dime. I’ve seen the temperature go from 20 below to 67 above within 36 hours. I’ve witnessed hailstorms, tornadoes, drought, and devastating floods.

But recently I’ve experienced something new—temperatures of 110 and higher. For the past two weeks, we’ve had almost daily temperatures over 100 degrees. One day the mercury climbed to 113.5 degrees at my house. Thank God, the humidity was only 10 percent. I can’t even imagine what 110 degrees must feel like in Miami or Chicago.

The Dakotas are taking the brunt of a drought that is affecting the entire midsection of the United States. I also notice that London hit a high of 98 degrees a few weeks ago. This is devastatingly hot in England, where anything above 80 is a serious heat wave.

All of this leads me to believe that the "theory" of global warming has become reality. A friend of mine observed that the only question left for debate about global warming is why it is happening.

About six months ago I ate dinner with a high-ranking official from Shell Oil. I asked his opinion of global warming, and his answer surprised me. He said the fact that the planet is warming is a foregone conclusion and that CO2 emissions play a significant role. I had expected quite the opposite reaction from one of the largest petroleum companies in the world. He indicated that Shell was aggressively developing alternative fuels.

Global warming is the main topic of debate on one of the online financial planning forums to which I belong. The general consensus among scientists seems to support the Shell Oil executive’s statement. I’ve been told that CO2 particles in the atmosphere have averaged below 300 ppm (parts per million) for most of history. These levels have recently risen to 379 ppm and are currently increasing at about two ppm per year. At this rate, in about 10 years CO2 emissions will reach 400 ppm, which one source has determined to be a tipping point where reversing the trend will be improbable.

One source indicates that the US is not the main culprit in global warming, as we account for only about 25% of the elevated levels and none of the increase. According to a DOE report, the US, Europe, and South America have virtually frozen annual CO2 emissions increases since 2000. (www.eia.doe.gov/pub/international/iealf/tableh1co2.xls)

Who, then, is the biggest culprit when it comes to increasing CO2 levels? It is China, with a 60% increase in emissions since 2000, and more specifically, it is Chinese coal. According to the DOE, in 2003 China accounted for over half of the total global increase in CO2. "The International Energy Agency in Paris predicts that the increase in greenhouse gas emissions from 2000 to 2030 in China alone will nearly equal the increase from the entire industrialized world." (www.healthandenergy.com/china_burning_more_coal.htm)

Realistically, there isn’t much the US or anybody else can do to control China’s consumption of energy. It appears to me that, contrary to the picture painted by environmental extremists, the US has done a good job in addressing and capping its CO2 emissions. Certainly, more can be done, like starting to build nuclear power stations as opposed to those that burn coal.

How will global warming affect our day-to-day lives and investments? It’s too soon to tell, but it definitely will be a factor, and investment analysts are paying attention to it. In the meantime, investing in swimming pool and air conditioning businesses seems like a really cool idea.