Beef Up Your In­sur­ance

The Saratogian (Saratoga, NY) - - BUSINESS -

Q What’s um­brella in­sur­ance? — F.W., Mans­field, Ohio

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? — G.V., on­line A If you no longer have faith in the long-term growth po­ten­tial of ei­ther stock, do sell. But don’t sell any hold­ing just be­cause it pays 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 (per­haps be­cause it’s still try­ing to grow rapidly and is in­vest­ing any avail­able cash back into the busi­ness), 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 stock­price 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.

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