A versatile healthcare dynamo

Taking fools

Abbott Laboratories is a well-diversified healthcare company, with four distinct units: medical devices, diagnostics, nutrition, and engineered pharmaceuticals. This is great because it means if one of these businesses falls on hard times, another can compensate and maintain overall growth.

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

Abbott sells market-leading products across 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 sustain growth. It recently launched Lingo, a CGM platform for wellness purposes.

Ask the Fool

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

Consider mutual funds or exchange-traded funds (ETFs) that focus on socially responsible companies. This saves you the trouble of researching companies and picking the most promising ones – instead you let professional stock analysts do the work. Or, with passively managed funds, managers simply hold the same securities that are in a socially responsible index.

Some such funds have the acronym ESG in their title, meaning they focus on “environmental, social and governance” factors. 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 a fund) to invest responsibly. You can focus on companies that seem to be doing good for the environment or society. Or you can simply avoid companies you find unsavory—such as those that make and sell products you don’t approve of. (perhaps alcohol, guns or tobacco, for example).

Also remember that few companies will be perfect for every issue.

For example, they can treat the planet well but skimp on employee wages and benefits. You can learn much 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 company shares. Each stock moves frequently, influenced by what investors think about it, based on the latest news or developments. Good news often pushes up a stock’s price, and bad news does the opposite.

Abbott shares recently trade at a forward price-to-earnings (P/E) ratio of 22. This is a reasonable price to pay for a company that has a strong growth history, leading products and prospects long-term stable.

(The Motley Fool owns stock and recommends Abbott Laboratories.)

School for fools

Long-term care (LTC) insurance—which helps pay for the nursing home, assisted living, or home care you may need in the future—is one type of financial protection that most of us need. consider it. It’s expensive, though – for both policyholders and insurers – deciding whether to do so will be quite complicated.

Coping with LTC costs without it can be difficult: The folks at Genworth recently noted that a year of home health aides averages about $75,500 a year nationally, while a year in a assisted living facility assisted living costs $64,200 and a shared nursing home room averages $104,000. Without LTC insurance, if you end up needing help with daily activities like eating, dressing, and bathing, you may deplete your savings paying for care, or you may have to rely heavily on family members for take care of you.

A 2022 government report estimated that 56% of people turning 65 would need long-term services and support for some period. So what should you do? Definitely look into LTC insurance, paying attention to what a policy will and won’t cover. The average annual premium for a $165,000 benefit policy was recently $950 for a single male and $1,500 for a single female, both age 55. (Women tend to live longer and often need more care.) The older you are when you sign up, the higher the price is likely to be.

You may be able to pay less if you buy a policy in your 50s, or you and your life 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 opting out of inflation protection.

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

My smartest investment

From Anonymous: I’m 84 years old and I’ve earned an average middle class salary during my working years, but I’ve done a few things that have made me rich. I maxed out 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 the Roth IRA became available. My accountant asked me if I was confident that the US stock market would grow by about 6% or more over the next 10 years. I said yes. He then recommended that I convert as much of my retirement funds to Roth IRAs as I could. This caused a significant financial burden as there was a large tax on each conversion.

My wife and I agreed it was worth it. We lived frugally for a few years to make it work. Now retired, our only income is Social Security, a small pension, and minimum required 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 years of frugal living were worth it.

The fool replies: Well done! Roth IRAs can really be powerful wealth builders, and ending up with a large account to tap into tax-free in retirement is hard to beat.

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

Who am I?

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

I was a pioneer in valuing companies from their revenue prospects instead of their hard assets. With a recent market value of $180 billion, I am a leading global financial services company; I have more than $3 trillion in assets under supervision and more than $50 billion in annual revenue.

Who am I?

Forget last week’s question? Find it here.

Last week’s answer: Eli Lilly