Investing in ETFs just got a little cheaper.

At a press conference in New York City Monday, Charles Schwab unveiled eight new exchange-traded funds, the first of the brokerage's Schwab-branded ETFs. The big news: For these select ETFs, Schwab has waived the commission typically charged when you buy or sell shares of an ETF or stock. In other words, an investor could jump in and out of these ETFs several times a day (not that that strategy is a particular good one) and not pay a dime in transaction costs. More

There's a lot of speculation about what will happen to the federal estate tax (or the "death tax," if you oppose it) next year. A handful of bills have been introduced in Congress recently, many of which would raise the current exemption from $3.5 million to $5 million and keep the tax rate at 45%. (Under current law, the estate tax disappears in 2010 but is reinstated in 2011 at 55% on estates larger than $1 million.)

Whether the exemption jumps from $3.5 million to $5 million — or disappears altogether — you may assume that you don't have an estate tax issue. Few of us leave behind that much wealth. But here's where many people go wrong: While you may not owe federal taxes you could be on the hook to your state. More

Why they're a buy: With luxury apparel sales in a slump, many high-end shirtmakers are cutting prices. The best shirts are made of two-ply Egyptian or Sea Island cotton with 100-plus thread count; they have a collar that's sewn, not glued, and buttons that are mother-of-pearl, not plastic. The ready- to-wear shirts normally retail for about $150 to $250, but right now you can find one for as little as $90. More

Why it's a buy: During the boom, California producers boosted prices on luxury wines more than some vintners elsewhere. But with high-end wine sales down and 2007 Cabernets hitting stores now, merchants are knocking 20% to 40% off the retail price of '05 bottles — even though that vintage was terrific and those Cabs will just get better over the next few years, says industry consultant Jon Fredrikson.

The strategy: Ask your local merchant about deals on wines from small family-owned producers. They're most likely to cut prices. For example, the well-regarded 2005 Ruston La Maestra Cabernet Sauvignon (right) sold for $50 a bottle in April; today you can find it for as little as $30.

Save even more: Find the best deals among thousands of retailers at snooth.com and wine-searcher.com. Most states allow wine shipments to consumers, but check the seller's website for details.

The 2010 fiscal year for most states began July 1. Facing severe budget shortfalls, some states have used the new year to introduce higher income tax rates. In Delaware, for example, the highest tax rate went from 5.95% to 6.95% on earnings over $60,000. In Hawaii, the maximum tax rate jumps from 8.25% to 11% for earnings above $200,000. And in New Jersey, the tax on earnings above $500,000 jumps to 10.25%, up from 8.97%; for a new bracket above $1 million, the rate is 10.75%.

As you can see, most of the tax increases are limited to high earners, the same tactic President Obama has proposed to help pay for expanded health-care coverage and other government spending measures.

But as Mark Robyn points out in his post for Tax Policy, a blog for the non-partisan Tax Foundation, raising taxes on the wealthy doesn't always have the desired effect. As some states have discovered, high earners have the means to move. The well-off also can afford to hire smart accountants to lower their tax bill.

That's not to say that wealthy folks shouldn't be taxed at a higher marginal rate. But the strategy seems like a shortsighted way for the federal government to raise the funding needed to fix health care. Howard Gleckman makes the point in his post for the non-partisan Tax Policy Center's blog, TaxVox.

What's the alternative? Len Burman, director of TPC, offers one option in this May editorial in The Washington Times. In the meantime, Obama can witness firsthand just how well targeted tax hikes work: While higher state tax rates were introduced this month, the rates are retroactive to January 1, 2009.

How many calls do you think accountants are getting right now?

As the King of Pop, Michael Jackson was bound to have a complicated estate. But in the days following his tragic death last week, the biggest estate-planning hurdles have had nothing to do with the size and complexity of Jackson's legacy. They've been the bare-bones elements of estate planning: having an updated will, an appointed executor for the estate and a named guardian for minors.

Estate planning is all about change: Your plan has to evolve as you marry and divorce, have children, form and cut business ties, and accumulate assets and debt — all things that happened in Jackson's life (though, admittedly, on a very grand scale). You also have to make sure to share the details of your plan with at least one person that you trust. According to news reports,  Jackson's latest will dates from seven years ago, but there is speculation about whether a more recent version exists.

If you think you need to update your estate plan, check out these recent Money stories here and here on what to do. You don't need to be a global pop icon with mega millions to warrant putting together a plan. As Jackson's death shows, an estate plan is critical if you have minors: It's the only way you, not the courts, can control who becomes the guardian of your children. Once drafted, you should revisit your estate plan every few years. Even if your circumstances haven't changed, new estate tax rules could upend your best-laid plans. Need to find an estate planning attorney? Look for one in your area through the American Academy of Estate Planning Attorneys.

Just about all parents tell the same war stories from childhood: "When I was your age, I had to walk two miles – in 3 feet of snow — to get to school." Or, "When I was your age, we had only one TV in the house." But pretty soon, parents may add this one, too: "When I was your age, I didn't have an IRA."

The Obama administration wants to stop that story in its tracks.

IRAs, along with 401(k)s, didn't exist until the mid-1970s. But after 30-plus years, the plans still are not ubiquitous. As Time magazine columnist Justin Fox points out in his blog post, only 57.7% of U.S. workers have some kind of retirement plan. The rest are counting on other savings and/or Social Security.

And that's a problem, because according to the latest data from the Employee Benefit Research Institute, half of workers ages 55 and older have less than $50,000 saved. The bear market isn't helping. From the start of 2008 through the first four months of this year, 401(k) account balances for workers ages 55 to 64 fell an average of 10% to 20%.

Obama's plan for IRAs does not make the accounts universal. Instead, it targets employers that don't offer a retirement plan to workers. But like Social Security, the benefit would be automatic. If workers aren't given a 401(k) or similar option, then their employer must automatically open an IRA on their behalf and make contributions through direct deposit, pulling the cash from the workers' paycheck. Employees who don't want to participate could opt out.

Critics claim such a plan would A) be too expensive, B) help turn the U.S. into a "nanny state," and C) be too burdensome for small businesses.

But it's also hard to argue against a program (any program) that would help people build some retirement security. You can't rely on employer contributions for it: Just consider the number of companies that cut their 401(k) match this year. Individuals aren't dependable, either.

And even as dramatic as Obama's proposal seems, it doesn't cover everyone. A growing number of company 401(k) plans have an automatic enrollment feature, but not all do.

We already have too many choices to make: How to invest our account, when to rebalance and how much to draw down, for example. Automatic IRAs and 401(k)s could take one decision off the table — and save future generations from hearing yet another story that starts, "When I was your age…"

If there's one regulatory trend that may define 2009, it could be the creation of exchanges. The U.S. Treasury wants to start a type of exchange, or clearinghouse, for the buying and selling of over-the-counter derivatives, those obscure asset-backed contracts that helped bring the financial system to its knees.

Now, Congress is dabbling with the idea of creating a health insurance exchange.

Legislation with more details isn't likely to become available until later this summer. But the House Committee on Ways and Means introduced an outline this week. The Senate Committee on Health, Education, Labor & Pensions, led by Sen. Ted Kennedy (D-Mass.), has also put forward a bill, (though at the moment the bill does not come up online, only the press release). At any rate, the Senate's proposal also calls for a "gateway" through which individuals can shop for insurance.

What's the point of an exchange? Well, it would set some ground rules for how insurance is bought and sold, just as there are rules for how stocks are traded in the market. For example, insurers wouldn't be allowed to sell policies that exclude pre-existing conditions. Individuals could choose between a newly formed public health insurance option and private plans, encouraging competition among insurers. Furthermore, the exchange would make it easier for consumers to comparison-shop policies.

In other words, the exchange would help create a more equitable, controlled health insurance market. At least that's the theory–but one perhaps worth gambling on. Because we've seen what happens when an opaque market, such as OTC derivatives, is allowed to run wild. I certainly don't want to take as much risk with my, your and future generations' health. (Click here to see the White House report, "The Economic Case for Health Care Reform.")

Vanguard this week announced changes to three of its money market funds: According to a press release on the company's website, Admiral Treasury Money Market and Treasury Money Market will merge (the two funds have been closed to new investors since late January).

In addition, Vanguard said it would close Federal Money Market to new investors, as of the end of day, June 2.

The changes are an attempt to shore up yield. With short-term Treasury rates at deep lows–the 1-year T-Bill pays out less than 0.5% today-money funds can barely cover expenses. 

By merging two funds, Vanguard can cut costs; by closing funds to new investors, managers can avoid buying more Treasurys at ever lower yields.

The sad state of cash returns won't last forever. Still, I feel for anyone who relies on savings yields to help meet living costs. Though inflation was negative for the 12 months ending in April, some costs–like food–increased over the same time period. On top of the soaking we've all taken in the markets, today's ultra low yields are just one of the bear's many bitter aftershocks.

The only real recourse is to shop around. Vanguard is pointing investors to alternatives, such as Prime Money Market, now yielding 0.42%.

You can find a list of the highest yielding funds across the industry at iMoneyNet.com. For bank savings rates go to BankingMyWay.com and Bankrate.com.

Take heart: High savings yields come with their own problems, like inflation. As Reagan makes the point in his first inaugural address–at a time when savings accounts paid double-digit rates–the rapid rise of prices can do just as much to "penalize thrift."

When the markets began to tank last fall, investors fled to cash and cash-like investments. No one cared if yields were paltry. The return of principal rather than the return on principal was the biggest priority.

The result today is that you may hold more cash in your portfolio than during the years leading up to the bear market. According to a recent survey of 401(k) plans by Hewitt Associates, investors added 11% to stable-value funds in 2008. (Stable value funds invest in short-term bonds that carry an insurance "wrapper.") 

But with the immediate crisis out of the way (let's hope), how much cash do you need going forward?

Steven Romick, manager of FPA Crescent Fund, recently stopped by Money's offices. He says FPA Crescent, which invests in both bonds and stocks, currently has little more than 20% allocated to cash, down from roughly 40% back in September. Romick's shift makes sense from a long-term perspective. Consider: Today, the average rate on bank money market accounts is only 1.33%, according to Bankrate.com. Factor in inflation, and cash doesn't give your portfolio the growth it needs.

But Romick also says this: "The idea that you're invested at all times [in say, equities] presupposes there is no better deal coming down the road." In other words, cash gives you flexibility, which you need if you want to be able to pounce on investment opportunities as they arise.

So how much cash should you have ? As always, you'll have to consider your goals, time horizon and risk tolerance. You'll also want to look at how much cash is held in the mutual funds you own. Many fund managers, such as Romick, loaded up on greenbacks last year.

If you need to scale back and build up say, your equity or bond allocation, make the shift gradually. And promise yourself you won't abandon cash altogether during the next market boom.

Finally, remember that separate from your portfolio, you also want emergency savings to cover at least six months of living costs. That money should be kept in a safe, liquid spot, such as a bank savings account.

-Carolyn Bigda

Chrysler's plan to shut down 789 dealerships, about a quarter of the car company's franchises (see related news story here), may have you wondering: What does this mean for me? Let's break it down like this:

If you own a Chrysler, Dodge or Jeep: Your biggest issue is likely convenience, says Philip Reed, consumer advice editor for Edmunds.com. A factory-backed warranty will be honored at any of Chrysler's remaining authorized dealerships. You may just have to travel farther for service.

The one exception: if you bought a service plan, extended warranty or a pre-owned certified vehicle backed by the dealership or a third party, not Chrysler. In that case, there's no guarantee your agreement will be honored at other dealerships. And in the past, says Reed, "there have been reports of dealerships going out of business and leaving people out of luck."

Take heart:  Even if a dealership is axed, it may not go out of business, says Reed. The dealership could turn into a service center or a used-car shop, and, as a result, continue to honor its contracts. Joe Wiesenfelder, senior editor at Cars.com, also notes that these are "extraordinary circumstances." There's hope, he says, "that other dealerships will honor those [third-party warranties]."

If you want to buy a Chrysler, Dodge or Jeep:  According to Chrysler's proposal, dealerships would close by June 9. That means there's less than two months to unload inventory (only authorized dealerships can sell new cars). So look for discounts on top of existing incentives–today, as much as $4,000 in cash rebates–offered by Chrysler. "If you're shopping," says Wiesenfelder, "chances are you can get a good deal."

A word of caution: Make sure the warranty you sign up for is factory-backed. That way, it will be good at any dealership. Also, don't get caught up in the lure of a good deal. First, find a car that fits your needs. Then start negotiating.

-Carolyn Bigda

No doubt, health care costs are on a lot of people's minds. The average family with employer-provided insurance now pays $3,350 in annual premiums, up from $1,540 in 1999, according to the Kaiser Family Foundation's latest survey of employer health benefits.

And costs are likely to get worse unless we change the way we pay for and use health care. 

Well, today, the Employee Benefit Research Institute released a survey that asked regular folks just how to make those changes. Among the results:

•  58% support lower cost sharing for patients who actively participate in a program to maintain or improve their health.
• 40% support lower cost sharing for patients who use treatments that are scientifically proven to be effective for their medical condition.
• And 34% support lower cost sharing for patients who choose to see high-performing health care providers.

The findings are interesting for a couple of reasons.

For one, the Obama administration has suggested that one way to rein in Medicare and Medicaid costs is to identify procedures that have proven to be effective–and provide funding accordingly. (See these stories in the NYTimes and the New Yorker for more.)

Second, the survey results don't favor only people in good health. Rather, they suggest that we want to reward smarter decisions about medical care, whatever our needs are.

What do you think? Can we control costs by taking a harder look at the effectiveness of care?

-Carolyn Bigda

Most investors are licking their wounds from the bear market, but in Oregon's 529 college savings plan, investment pain has turned into legal action.

On Monday, Oregon's state attorney general filed a suit against OppenheimerFunds, alleging that savers in the state's 529 plan lost at least $36.2 million as a result of the fund company's negligence. You can read the legal complaint here. Specifically, the suit centers around Oppenheimer Core Bond (ticker: OPIGX), which until recently played  a major role in the state's conservative and ultra-conservative portfolios. According to the suit, the objective of both portfolios–intended for students in college or just a few years from college–was to preserve capital with minimal growth. You'd think a core bond fund would fit neatly into such a mandate.

But in 2007 and 2008, as markets went haywire, the managers of Oppenheimer Core Bond decided to go after "potential value." Specifically, in the spring of 2008, managers were building positions in things like high-quality commercial mortgage-backed securities–and using a type of leverage known as swaps to do it, according to an annual report. The bets backfired, and the fund lost a stunning 35.83% in 2008, compared with a positive 5.24% return for the Barclays Capital U.S. Aggregate Bond Index, the fund's benchmark.

Oregon is ticked. The state claims that the "character of the fund … changed in 2007 and 2008 … yet neither the state no investors were alerted that the fund had become significantly more aggressive and risky."

In a statement, Oppenheimer fired back that it did not change the investment policies of Core Bond. The fund company also said it consistently provided the state with information about the fund and "offered to make its portfolio managers available to meet with the Board," which overseas the 529 plan. "An offer that was not accepted," Oppenheimer says.

I checked in with Miriam Sjoblom, a Morningstar analyst that covers Core Bond. She said that Oppenheimer disclosed its asset exposure–it just wasn't written in plain English.  "A lot of that exposure came from derivative contracts, which were detailed in the footnotes of the shareholder report," she said. "But that required you to flip to the back of the report and do the math on your own."

From my point of view, Oppenheimer clearly got ahead of itself. As Sjoblom points out, it's not uncommon for core bond funds to turn to derivatives, such as swaps, to boost yield. Just some fund shops are better at it than others, apparently.

What's more interesting to me, though, is to look at the fund's recent history. A Morningstar analyst report dated April 29, 2007 (not from Sjoblom), points out that for the trailing five years, the fund's annualized return was 5.7%–better than 90% of its peers. Then, on September 26, 2007, Sjoblom wrote that, "the fund's top-quartile record during this period has been helped by a tendency to hold more mid- and lower-grade fare than its typical rival."

So I wonder just how closely the board of Oregon's 529 savings plan was looking at the underlying assets of Core Bond, or whether past returns were a bigger factor. I'm also skeptical of Oppenheimer's decision to use Core Bond for 529 portfolios where the aim was principal preservation, not growth. 

For the record, Core Bond is no longer an investment option in four of the five state 529 plans that Oppenheimer administers: Oregon, Texas, Illinois and New Mexico. However, in some states, any money invested prior to the change this year will remain in Core Bond. Only new contributions will be directed to the replacement fund, Dreyfus Bond Market Index (DBIRX). And in Nebraska, Core Bond is still used in four of the state's 529 portfolio options.

Want to make a change yourself? Get details on 529 plans nationwide here. Plus, in light of the market's recent volatility, the IRS is allowing savers in 2009 to switch 529 plans twice. Normally, you can only make a move once per year.

–Carolyn Bigda 

Get ready for higher mutual fund fees.

Morningstar reports that expense ratios will likely climb in 2009. As investors yanked money out of the market in the last year, fund asset levels declined. At the end of February, for example, mutual funds held $5.9 trillion, down from $8 trillion at the start of 2008, according to Morningstar. Since a fund's expense ratio reflects total fees divided by assets, it's not surprising that fees are on the rise.

It's just painful — and a dubious approach for winning back investors hit by losses of 50% or more.

Granted, expense ratios may climb by only a few basis points. But in a market where positive returns are scarce, slight increments are felt. If you own a fund where the expense ratio already was high, you may want to reconsider your position. In 2008, the average fee for a U.S. stock fund was 1.6%. For an international stock fund the average was 1.8%, and for a taxable bond fund, 1.3%, according to Morningstar.

Getting below the average can minimize the pain. Vanguard–yes, even this fee-conscious shop–is raising the expense ratio on some of its funds, including Intermediate-Term Tax-Exempt (ticker: VWITX), a MONEY 70 pick. The new fee is 0.20%, up from 0.15%. At that level, however, you're not giving up too much money. Let's say the fund manages a 5% return this year (hey, it's a hypothetical). On $10,000, the higher fees cost you only an additional $5.

–Carolyn Bigda

Tomorrow is payday for staffers like myself at Money Magazine. And according to a story written by CNNMoney.com colleague, Jeanne Sahadi, I should get a fatter check: the payroll tax cut written into this year's economic stimulus package should take effect today, April 1.

The tax cut, officially known as the Making Work Pay credit, is as much as $400 for single filers in 2009 and 2010, and $800 if you're married and filing jointly. There are income limits to qualify: For singletons, the tax break begins to phase out if your modified AGI is between $75,000 and $95,000 (after which, the credit disappears entirely). For couples, the phase-out range is $150,000 to $190,000.

If you qualify, don't expect to see a triple-digit boost next payday. Unlike the rebate checks mailed out last summer, this stimulus will be doled out gradually through a reduction in your federal withholding taxes.

Why this approach instead of a lump-sum? Well, some economists argue that consumers are more likely to spend the extra money if the rebate is viewed as income. With a sudden windfall, we're prone to save the money (Consider refunds at tax time. Many people use that money to pay down debt or boost savings). James Surowiecki gives a great overview in his story in the January 26 issue of The New Yorker.

So will it work? I took an early peek at my paycheck to see just how much more money I'll be taking home every week. (I'm single and qualify for the full $400 credit.)

The grand total: $20.

Am I likely to put the extra $20 toward savings? Nope. Is it more likely I will spend it? You bet.

Will it go far in stimulating the economy? Of that, I'm not so sure.

To make up for a budget shortfall, the MTA in New York City just passed a significant fare hike. Pretty soon, I'll pay $103 for a monthly subway pass, up from $81. Sales tax in some parts of the country is jumping to nearly 11%. And while inflation is relatively flat these days, the cost of big-ticket items such as health care and education aren't getting any cheaper.

So for my part, I think the economic stimulus will go toward paying for a more expensive subway pass. For others, the money will help cover higher sales tax.

Sure, every little bit helps. But I wonder if a year from now, for the sake of an economic recovery, we'll have wished we got a lot more.

–Carolyn Bigda