Umbrella insurance offers extra protection
Q. What’s umbrella insurance? — F.W., Mansfield
A. It exists to keep you from getting soaked financially. It offers coverage exceeding the limits of the policies covering your house or apartment, car and more. Umbrella policies can pay for any property damage and personal injury you’re found responsible for causing. Policies also cover losses not typically paid for by standard insurance, such as coverage for rental units or coverage if you’re sued for slandering or libeling someone. Imagine a scenario in which you’re sued and end up ordered to pay $1 million. Your regular insurance policy won’t offer anything close to that, but an umbrella policy can. Umbrella insurance won’t cost you a lot, either: A $1 million umbrella insurance policy often costs around $100 to $350 annually.
Q. I’m thinking of selling two stocks I own. One doesn’t pay a dividend, and the other hasn’t grown much in the past few years. Should I just move that money into CDs?
A. If you no longer have faith in the long-term growth potential of either stock, do sell. But don’t sell because they pay little or no dividend. There are two main ways to make money in stocks: dividends and stock-price appreciation. A company may pay no dividend, but if it’s executing its strategies successfully, its stock price might increase substantially over time, rewarding shareholders. Some of the best stocks will offer both growing dividends and stock-price growth.
Certificates of deposit are fine for short-term savings, but with interest rates so low these days, they aren’t that great as long-term investments.
Fool’s school: smart year-end tax moves
As the end of the year approaches, look into what smart tax moves you can make. For example, donate cash, stocks or other assets to charities, especially if you plan to itemize your deductions. Also:
• Review your investment portfolio’s winners and losers. If you’ve sold some holdings and have substantial capital gains on which you’ll be taxed, you might want to sell some underwater stocks for a loss to offset some or all of those gains. (Don’t buy that stock back until after 30 days pass, though, for the loss to count.)
• Spend any funds in a Flexible Spending Account (FSA) on qualifying expenses, as that’s use-it-or-lose-it money. Some employers may give you an extra 2½ months to spend it, and some may let you roll over up to $500 to the following year.
• Contribute to an IRA (and/or your employer-sponsored retirement plan such as a 401(k)) if you haven’t done so yet. The maximum 2018 IRA contribution is $5,500 (plus $1,000 if you’re 50 or older), and it’s $18,500 (plus $6,000 if you’re 50 or older) for 401(k)s.
• Plan to grab any available tax credits.
Name that company
I trace my roots to 1930, when the Oak Ridge Telephone Company was bought for $500. Over the years, I bought other telecom companies (such as Qwest, Savvis and Level 3 Communications) and some security businesses. I was added to the S&P 500 in 1999. In the early 2000s, I operated in 22 states and was focused on rural markets. Today, headquartered in Monroe, Louisiana, and with a market value recently near $23 billion, I’m the secondlargest U.S. communications provider to global enterprise customers, serving customers in more than 60 countries. Who am I?
Last week’s trivia answer
I trace my roots to the 1812 founding of the City Bank of New York, which later grew into the National City Bank of New York. I had a network of ATMs in the late 1970s. I became a major credit card issuer after buying Carte Blanche in 1978 and am now the top issuer globally. I’m an international banking giant, with more than 200,000 employees, more than 100 million customers and a market value recently near $165 billion. I rake in more than $70 billion annually. I’m the result of a 1998 merger with Travelers Group. Who am I? (Answer: Citigroup)