Beef Up Your Insurance

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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