Help a Reader: Investment for Infant

Here's an email I recently received from a reader:

I'm a daily reader! 26 y/o male near Pittsburgh who's life has changed dramatically due to Crohn's disease. My girlfriend found out a baby was on the way a year ago and my wheels fell off. I've been struggling with bowel trouble since age 8, but lived, worked and saved normally. I may not be able to do that in the foreseeable future after repeated hospitalizations and heavy medication. As of today, I have $5500 invested through Sharebuilder, $3000 in ING Savings Account, $0 Credit Card debt and about $10k in student loans my mom helps with. The problem is $0 income right now. Disability may be in the near future.

My son is turning 1 in Nov and I've been eBaying years of trinkets, DVDs & videogames to raise funds to put away for him. My parents purchased a Zero Coupon Bond for me at that age, it matured to some $5000 and at age 20 I was able to spend a semester in NY for film work and buy a laptop. How can I best invest $1000-$3000 today to provide for my son in 20 years? I am unsure of 529s at the moment and would rather find a less restricted vehicle.

Any suggestions for him?

Comments

[RDS]

First of all, I think that you deserve a big congratulations for having zero debt except for a modest amount of student loans and having a good bit of money saved up.

If I understand you correctly, it sounds like you are in a pretty tight financial situation right now. Its great that you want to put something away for your son. Given that you have no income right now I agree that you should not do anything too restrictive with this money for your son. I would consider putting it in a high yield savings account separate from your own savings account. That way, the money will be set aside for him and will grow at a reasonable rate. However, you will have access to that money should you need it before you can turn around your financial situation. Additionally you will have complete freedom to move it to a different type of account in the future should you so desire.

RDS

[Bad_Brad]

I agree with what RDS said about fixing some short-term things (i.e. securing your ability to pay your bills given that you have zero income right now) before planning for your son's college. On the other hand, I am not one to discourage saving for that (I'm doing it for both my son, 1, and my daughter, 4). The right vehicle for you, if you're looking for flexibility, is a Coverdell account. A Coverdell allows you to invest in whatever you want. The biggest downside of the Coverdell is the annual contribution limit is $2000 (and phases out at high income levels but that's not an issue at this point). But given you are looking for what to do with $1000 to $3000, this seems like a good fit.

[PW]

My heart goes out to you. Although the advice I have is not financial advice I feel that it may help you. I would highly recommend that you pick up a copy of "The Makers Diet" written by Jordin Rubin. I met the author personally b/c he was friends with my old pastor. He also had Chron's disease but manage to be cured. You can read Jordin's story here: http://www.makersdiet.com/publicsite/funnel/pop_info.aspx?page=aboutjordan

[Kevin]

Honestly, I would just park it in a high yield savings or CD for awhile until things settle down. You are undoubtedly going through a lot right now, so I would keep it liquid in case something happens medically and you need it.

You can always invest it in a 529 or even a bond or something later on. If I were you, I'd also start looking into alternative streams of income such as working from home so you have the flexibility you need and can still provide for your child. Good luck to you.

[whatever you choose to call me sir]

depends on your goals, but i went with the vanguard life strategy growth fund. couldn't go wrong with the vanguard 500 fund. opened the life strategy fund for my son a couple months ago when he turned a year too. poor kid has some serious losses right now. i'm trying to take a lesson from him and not watch the market everyday. it'll pay off in the end.

[Seth]

I agree with the other posters that you may want to keep the money liquid in the event something goes wrong.

I suffer from Crohn's as well and I want to offer you a word of encouragement. You can beat this disease - I know because I am beating it. Put your mind to it and seek the best medical care you can. You may be able to qualify for an assistance program through Centocor for low cost or free Remicade since you have no income at the moment. All you have to pay on the program is for the administration of the IV, and they may give you a discount as well.

Above all don't get discouraged. You can beat this disease and live a very good life.

[MB]

Thank you FMF for posting my question!

Thanks to Seth for the medical advice and to all the comments with suggestions. Unfortunately Seth, i already use Humira through their patient assistence program ($1600 a month without!), a Remicade style drug. I've lost my colon & have a constructed internal pouch in it's place. I'm suffering more from side effects & complications of Crohn's & the surgeries than the inflammatory disease itself. I'm so glad you and others are finding relief with the newer drugs, but I'm not there yet. Am seeking a consult at Cleveland Clinic's Digestive team this month.

I think I'll continue looking into Vanguard and other index funds but will park some money in an ING savings for the time being. I guess I can buy index shares at a discount this week right? Haha.