Subject: Re: Self funded LTC
My wife and I have been retired for a time. We're both very healthy, and both sets of parents (other than her mother) lived to near/more than 100, so we don't do anything regarding long-term care, for good or ill. Keep that in mind as you read what we do.

Aside: my parents bought an apartment in Wesley Acres, a retirement/assisted living facility in Des Moines, IA. WA also has an Alzheimers facility that Dad used in his endgame. The buy-in paid their rent, meals, communal Internet connection (such as it was), medical incidentals and a clinic.

Back to my answer: My wife and I, currently are in, mostly, cash or cash sort-of equivalents--a Fidelity dividend paying mutual fund. When our timing criteria are met, we'll go back to common stock investing.

We also own a high dividend paying SP500 stock--Franklin Resources. We don't care about the market price since we bought it: we hold it for the dividend stream.

The other stocks we still hold mostly are preferred stocks. Our criteria here center on their having at least a 6% coupon, a call date at least two years out, and be Moody's investment grade or better. There aren't many preferreds that meet these criteria these days, but there are some. We also insist that the market price when we buy range from a little bit below par to a little bit above par. The little bit above par has to be no more than two dividend payment periods' worth, so the capital loss when the preferred is called has long since been covered by the dividend stream. No more than somewhat below par, too, because a preferred market price well below par indicates the company is in trouble. Don't get greedy, either--a 10% preferred we owned went bankrupt: its coupon was an attempt to buy its way back into company performance. Preferreds are not risk-free, but they're pretty safe.

We also don't care about the market price of the preferreds once we've bought them: we hold them until they're called. QuantumOnline (https://www.quantumonline.com/ ) is a good source of preferred stock data.

Right now, the preferreds are not keeping up with inflation, but that's a cycle that will pass, and my gut tells me that with rising interest rates, the number of preferred stocks meeting our criteria will increase. 'Course my gut also produces gas....

Mostly preferred: we also own Dominion Energy, which started its life with us as a preferred. Then it underwent a series of reorganizations that included calling its preferred and issuing common shares in a couple of other, spin-off companies: DTE Energy and Dominion Midstream. Dominion Energy still pays a good dividend, so we held onto those shares. The other two don't pay as well, but since they were issued at no cash out of pocket cost to us, we hold them, also.

Perhaps a couple of definitions are in order:

Par: the price at which the issuing company has committed to buying back its preferred stock on/after its committed-to call date. The par price typically is $25/share: when the particular issuer's par is different from that, it's usually a multiple of $25.

Coupon: the dividend rate of return compared to the par price. The coupon is stated as an annual dividend. Ignore the market yield: that's irrelevant in this context.

Coupon payment schedule: typically quarterly, so to understand the dividend paid each quarter divide the coupon by 4. Some preferreds pay semianually or annually.

Eric Hines