Spare Change

Money Tip

Income tax does not apply to a life-insurance payout, but the estate tax does. If you have a substantial policy that could push the value of your estate above the tax threshold (currently $2 million) you can create an irrevocable life-insurance trust, a legal entity that will own the policy while you’re alive and pay the proceeds to the beneficiaries you’ve designated after you die.

Fund Fact

The major no-load shops offer a wide range of financial planning tools. You can plug your data into online questionnaires for free or schedule an appointment with an in-house financial planner who will assess your progress for a fee. Though they’re far from comprehensive, the tools offered by Vanguard, Fidelity and T. Rowe Price can be a great first step toward figuring out what you need to save.

Market Tip

Right now, you can buy many of the world’s most wonderful businesses at valuations not seen in more than a decade; companies like Wrigley, Johnson & Johnson, Avon and Dell are trading at their lowest prices since the mid-1990s. Investors have moved to riskier investments because a lack of volatility in the market has made those alternatives seem safer than they are.

Money at Work

In corporate America, few status symbols rival the one-figure salary. Google’s Sergey Brin and Larry Page, Apple Computer’s Steve Jobs, and DreamWorks’ Jeffrey Katzenberg all drew just $1 in annual salary last year. All also are filthy rich, thanks to ownership stakes in the companies they helped build. But the gesture sends a message that the person succeeds only when his or her company does.