You have reached your limit of free articles this month.

Enjoy unlimited access to myStatesman.com

Starting at just 99¢ for 8 weeks.

GREAT REASONS TO SUBSCRIBE TODAY!

  • IN-DEPTH REPORTING
  • INTERACTIVE STORYTELLING
  • NEW TOPICS & COVERAGE
  • ePAPER
X

You have read of premium articles.

Get unlimited access to all of our breaking news, in-depth coverage and bonus content- exclusively for subscribers. Starting at just 99¢ for 8 weeks

X

Welcome to myStatesman.com

This subscriber-only site gives you exclusive access to breaking news, in-depth coverage, exclusive interactives and bonus content.

You can read free articles of your choice a month that are only available on myStatesman.com.

Best defense against rising medical costs: Educate yourself


What about medical expenses when you are retired? I have substantial assets, but I am worried about medical expenses eating up everything before I die. They can be quite costly, even with Medicare. — G.G., Austin

Sadly, your concern is entirely reasonable. Even when mediated by insurance, including Medicare, health care costs in America have simply priced themselves beyond what the vast majority of people, working or retired, can pay. This is the case whether you look through the window of Medicare, employer-subsidized health insurance, or subsidized insurance through the Affordable Care Act.

While there is no way you can be guaranteed that medical or long-term-care expenses won’t overwhelm your assets, you have much more control of spending if you do something the vast majority of Americans have failed to do: educate yourself about the excesses of our health care system.

For starters, read “Less Medicine: More Health” by Gilbert Welch. Once you’ve done that, you’ll have a foundation for declining a good deal of testing and a significant amount of treatment. You might even live a longer and healthier life than you would live with active testing and aggressive treatment.

Another line of defense is to move, when appropriate, to a well-funded continuing-care retirement community. These are the communities where you can live independently, then have assisted living, then nursing care — with the expenses all covered by your entry fee. All of this would be done under one organizational roof. It’s not cheap, but medical expenses won’t be part of your daily worries.

Would you recommend a book or two about shorting stocks? I feel that if the market tanks, as some are predicting, that would be a good way to offset the decline. — R.J., by email

The trouble with shorting stocks is that your liability, if things go the wrong way, is infinite. Many people have gone broke borrowing shares to sell and promising to buy them back at what they hope will be a lower price. At least on a long transaction, one where you buy shares and hold them, the worst that can happen is that you’ll lose 100 percent of your money.

I’ve advocated nothing but index investing for more than two decades. It limits what I write about quite a bit, but that’s a small price to pay for knowing that readers will be far better off if they avoid the purchase, or sale, of individual stocks and focus on a low-cost, diversified portfolio of index funds.

I am 70 years old and thinking of investing in a superfund of closed-end funds. The stock market symbol is PCEF. Do you think this is a safe investment? — K.S., by email

The fund you mention, PowerShares CEF Income Composite ETF, is not a “superfund.” It is an exchange-traded fund that holds a portfolio of closed-end funds, all of which are devoted to providing high returns. Funds like this are often called a “fund of funds.” By owning a portfolio of closed-end funds that specialize in different forms of high-yield portfolios, you have the benefit of greater diversification.

That’s nice, but it doesn’t deserve to be called a superfund. Indeed, since each of the ETFs in the portfolio has its own management expense, the additional management expense of this fund could be called “fee pyramiding” — increasing the total cost burden on each of your investment dollars.

Is it a safe investment? Not likely. Remember, its reason for existence is to provide a much higher-than-average income yield. You don’t get high yields without taking on risk.



Reader Comments ...


Next Up in Business

Have a great workplace? Let us know
Have a great workplace? Let us know

Help us spread the word about the best places to work in Austin. Nominations are now open for the American-Statesman’s 2017 Top Workplaces of Greater Austin project. The project recognizes employers that stand for the best in leadership, vision, an employee-centered culture and other qualities. Any employer is eligible — private company...
Up the Ladder

Biomedical Aeglea BioTherapeutics has named Anthony Quinn interim chief medical officer. Health care St. David’s HealthCare has named Diana Kraus assistant vice president of trauma. Professional honors Sandra D. Gonzalez of Greenberg Traurig has been elected to the Fellows of the Texas Bar Foundation.
Top Local Business Stories of the Week
Top Local Business Stories of the Week

WHOLE FOODS TAKEOVER? Report says Albertsons considering takeover bid for Whole Foods: Supermarket chain Albertsons is exploring a possible takeover of Austin-based Whole Foods Market, the Financial Times reported last week, citing unnamed sources. Albertsons, which operates about 2,200 stores, is controlled by buyout group Cerberus Capital Management...
House tax plan has surprising implications

Last June, Republicans in the House Ways and Means Committee rolled out their “Better Way” tax reform plan. It proposes big changes to business and personal taxation. Critics say it’s regressive and will likely decrease revenues because of the cut in personal rates. But a closer look suggests neither is true. Moreover, the business...
Business Digest: Germany-based group buys Austin office building

COMMERCIAL REAL ESTATE Germany-based group buys Austin office building The Capital Ridge office building in Southwest Austin has a new owner. GLL Real Estate Partners, a real estate fund management group based in Munich, Germany, recently purchased the building from Capital Ridge-RE LP, according to Travis County deed records. The purchase price was...
More Stories