What the experts say

Reach for that umbrella

Many auto- and home-insurance policies don’t offer enough liability protection, said Joseph B. Treaster in The New York Times. If you’re sued—whether it’s because you’re at fault in a car accident or a kid dives into the shallow end of your pool—you could be “wiped out financially.” Ideally, you should have liability insurance worth the entire value of your assets. That’s where an umbrella policy comes in. These go above and beyond the protection of standard auto and home insurance, covering anywhere from $1 million to $100 million in damages and legal fees. “But many people with major assets either do not buy the extra coverage or do not buy enough,” even though the premiums aren’t prohibitive. Insurance companies that cater to wealthier clients charge anywhere from $150 to $300 a year for the first $1 million in coverage and about $100 for each additional million.

Give your 401(k) some backup

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Company retirement plans have gotten better in recent years, but plenty of 401(k) plans still “stick employees with low-performing mutual funds and high fees,” said Christine Dugas in USA Today. You don’t “have to sit and suffer,” though. First, consider how much money, if any, you make from your employer’s matching plan. “If your employer chips in, say, a 50 percent matching contribution for up to 6 percent of your pay, you might still do fine with a subpar fund that performs nearly as well as its benchmark index.” You could then handpick the good funds in your company’s plan—index funds may be the way to go—and diversify your portfolio by shopping for other funds on your own. Take a close look, in that case, at a Roth IRA: You won’t get pretax savings, but you also won’t incur taxes for future gains or withdrawals.

Wine: A bold investment

Increasing worldwide demand has turned wine into an asset class all its own, said Lisa Scherzer in SmartMoney. Fine-wine prices increased 39 percent in 2007, according to the Liv-ex 100 wine-trading index, “making the S&P 500’s 3.5 percent gain look downright measly.” Wine collecting involves more than finding wines that please your palate. “Most important when deciding what wine to buy is that it has proven ability to appreciate in value and age well in the bottle.” Start with red Bordeauxs, which have a long track record as “investment grade” wine. The value of wine is influenced by wine reviews, so pay attention to what the critics are saying. Once you buy the bottles, store your investment in a temperature-controlled environment, and keep track of dates. “If a wine is close to its peak drinking window, it’s time to sell—or drink.”