Issue date:
June 5-7, 1998

Save cash at the car-rental counter

In this story:
How much stock is too much?
Invest direct and save? Not always

ummer vacation means hot novels on the beach, cool Chardonnay on the deck and confusion at the car-rental counter. Do you need to fork over more than $20 a day for insurance -- or are you already covered?

Ask your insurer before you rent. According to the Insurance Information Institute, your own insurance usually covers a rental car (driven for pleasure, not business). But because there are four components to rental car insurance -- collision (the collision damage waiver), liability, personal accident and personal effects -- it's possible you'd be covered in some areas and not others.

Most auto policies cover liability and collision. But if you dropped collision as your car got old (which can be a smart money move), you'll need to get it elsewhere. Homeowners insurance typically includes personal effects, insuring you for any items stolen from your car minus your deductible. And both your health insurance and the personal injury protection of your auto policy typically make accident insurance unnecessary. If you don't have car insurance or are traveling abroad, your credit card (particularly if you have a gold card) may cover a rental car.

How much stock is too much?
t's a nice problem to have: Today's rapidly rising Dow calls for a midyear assessment of the allocation of your money in stocks, bonds and cash. If you've invested in stocks and aren't sure what your allocations should be, subtract your age from 100. That's about the percentage you want in stocks. About two-thirds of the remaining chunk should be in bonds; the rest, in cash. If you're overweighted in stocks (you probably are), trim your losers. Then comb through your winners to find those that have cut a dividend, reported two disappointing quarters, or seem to be at the wrong end of their economic cycle.

Invest direct and save? Not always
ividend reinvestment plans, or "drips," have a great reputation as a low-cost way to buy stocks. They work like this: You buy one share of a specific stock, say Intel, through a discount broker or an enrollment firm specifically set up to sell you that share. Once you're a shareholder, you can sign up for Intel's drip, giving you the right to buy additional shares straight from the company. The upside: You avoid brokerage commissions and may be able to buy in manageable allotments (minimum additional investments are often as little as $10). But the little-known downside is that many drips have fees of their own -- some so steep the plans are not suitable for small investors.

Take McDonald's, for example. Its drip charges 75 cents each quarter to reinvest your dividends. And although the company allows additional investments of as little as $100, each purchase comes with a fee of $5 plus 10 cents a share. By comparison, Wendy's doesn't charge for either of these things and sports a $20 minimum.

To get started, check out the Web site of The Moneypaper (www.moneypaper.com), a drip newsletter. You'll find a list of more than 1,100 plans, with information on fees. When you're ready to buy a share, The Moneypaper's enrollment service, Temper of the Times, does the paperwork for the lowest fees I've found ($15 to $20 per plan you enroll in, plus 50 cents a share).