The Motley Fool: The different dynamo of health care

Taking a Madman

Abbott Laboratories is a diversified healthcare company, with four distinct divisions: medical devices, diagnostics, nutrition and established medicine. This is great because it means that if one of these businesses is facing tough times, the other can pay and maintain overall growth.

In fact, this is happening now. As coronavirus testing continues to decline, the diagnostic business has seen revenue drop. But in the third quarter, the medical devices unit delivered double-digit revenue growth, helping Abbott report a 5% year-over-year increase in revenue to $10.6 billion.

Abbott sells leading products in its businesses, from the Ensure brand in its nutrition business to the FreeStyle Libre continuous glucose monitoring (CGM) system in its medical devices unit. The company also has a full pipeline of innovations to keep growth going. It recently launched Lingo, a CGM platform for health.

Ask the Madman

From DL, Flagstaff, Ariz.: What is the best way to invest in socially responsible companies?

Consider mutual funds or exchange-traded funds (ETFs) that focus on socially responsible companies. That saves you the trouble of studying companies and choosing the most promising ones – instead, you let professional product analysts do the work. Or, with only managed funds, managers hold securities that match the social responsibility index.

Some such funds have the acronym ESG in their title, meaning they focus on “environmental, social and governance” issues. Here are a few to read and consider: The iShares ESG Aware MSCI USA ETF (ticker: ESGU), the Vanguard ESG US Stock ETF (ESGV) and the Invesco ESG NASDAQ 100 ETF (QQMG).

Understand that there are many ways for you (or the fund) to invest responsibly. You can focus on companies that seem to be doing good for the environment or society. Or you can avoid companies that you consider incompatible – such as those that make and sell products that you do not approve of. (perhaps alcohol, firearms or tobacco, for example).

Also, remember that few companies will be perfect in every respect.

For example, they may treat the planet well but destroy workers’ wages and benefits. You can learn more at sites like GreenMoney.com, CorpWatch.org, CSRwire.com and CorporateRegister.com

From VN, Bella Vista, Ark.: Why does the stock market value go up or down every day?

Total market value reflects the movement of thousands of companies’ stocks. Every stock moves frequently, influenced by what investors think, based on the latest news or developments. Good news tends to increase stock prices, and bad news does the opposite.

Abbott shares recently traded at a forward price-to-earnings (P/E) ratio of 22. That’s a reasonable price to pay for a company with a strong track record of growth, leading products and solid long-term prospects.

(The Motley Fool owns shares of and recommends Abbott Laboratories.)

School for Fools

Long-term care insurance (LTC) — which helps pay for nursing home, assisted living, or home care you may need in the future — is the type of financial protection most of us need. think. It’s expensive, however – for policyholders and insurers alike – making a decision about how difficult it is to find.

Facing the cost of LTC without it can be difficult: Genworth recently noted that a year for home health aides is an average of $75,500 per year nationwide, while a year in a nursing home is assisted living costs $64,200 and a shared nursing home room costs $104,000. Without LTC insurance, if you end up needing help with daily activities such as eating, dressing and bathing, you may end up wasting your savings on care or you may have to rely especially with family members to take care of you.

A 2022 government report estimated that 56% of people turning 65 will need long-term services and supports at some point. So what should you do? Definitely look into LTC insurance, pay attention to what the policy will cover. The average annual premium for a $165,000 benefit policy recently was $950 for a single man and $1,500 for a single woman, both age 55. (Women tend to live longer.) and often they need more attention.) The older you are when you register, the higher the price will likely be.

You may be able to pay less if you buy a policy in your 50s, or you and your partner buy policies together. You can also save by choosing policy features such as a shorter coverage period (such as two years instead of five) or a waiting period before the policy starts paying out, or by opting out inflation protection.

Your decision about an LTC plan will likely be heavily influenced by how much money you have now and how much money you will have in the future, but it’s worth looking at. Other ways to pay for care include health savings accounts (HSAs) and annuities with long-term care benefits. Read about LTC insurance before you buy.

My Smartest Investment

From Anonymous: I am 84 years old and have earned a middle class salary while working, but I have done a few things that have made me rich. I increased contributions to retirement plans, such as 401(k)s and SEP IRAs. I invested those contributions in no-load mutual funds.

My smartest move was in 1998, when Roth IRAs became available. My accountant asked if I was optimistic that the US stock market would grow 6% or more over the next 10-plus years. I said yes. He then encouraged me to convert as much of my retirement savings into Roth IRAs as I could. This created a huge financial burden as there was a lot of tax to be paid with each conversion.

My wife and I agreed that it was good. We lived frugally for a few years to become successful. Now when we retire, our income is Social Security, a small pension and minimum distributions from our SEP IRAs. Our portfolio is under seven figures and mostly in Roth IRAs, which means we can withdraw as much as we need tax-free! Those frugal years were good.

The Fool replies: Bravo! Roth IRAs can certainly be powerful wealth builders, and having a large tax-deductible account for retirement is hard to beat.

(Do you have a smart or stupid investment practice to share with us? Email it to TMFShare@fool.com.)

Who am I?

I trace my roots to 1869, when a German immigrant in Manhattan began providing financial services to merchants. I joined the New York Stock Exchange in 1896 and soon had European clients. I went into the investment business in the early 1900s and helped Sears, Roebuck and Co. publishing in 1906.

I was a pioneer in valuing companies based on their earnings rather than their tangible assets. With a current market value of 180 billion dollars, it is the world’s top financial services company; I have over $3 trillion in assets under management and over $50 billion in annual revenue.

Who am I?

Forgot last week’s question? Find it here.

Last week’s answer: Eli Lilly