Are you thinking about how to best put aside money for your child’s college savings -particularly when it comes to gifts from friends and family?
In This UNest review, we’ll tell you everything you need to know about why an UNest investment account could be one of the best ways to secure your child’s future.
Investing involves risk, but UNest aims to take some of that uncertainty out of the equation with their accounts. Ready to learn more? Let’s get started with this UNest review!
What is UNest?
UNest is a money app for your kids’ college savings. It is similar to a 529 college savings plan in that it will allow you to set up recurring monthly contributions and to receive gifts from friends and family.
However, what’s different is that UNest offers more flexibility than a traditional 529 college savings plan, as it is an UTMA account instead of a 529.
It’s offered by UNest, Inc. an SEC Registered Investment Advisor that helps families secure their child’s future by putting away money and investing funds in UTMA accounts. Founded In 2018, this app is based out of California and helps make college savings plans more accessible to people all over the country.
Is UNest a UTMA?
Yes. UNest is an UTMA, or a Uniform Transfers to Minors Act college savings account. It’s a type of plan that makes it easy to put aside money for college expenses.
In the past, UNest also offered the ability to invest via a 529 plan. That is no longer the case. That’s because a 529 plan can only be used on qualified college expenses, while a UTMA can be used for other aspects of your kid’s future.
For example, you can use the funds for kids’ education expenses as well as for other expenses, like a house, wedding, and so on.
How to Use UNest
UNest is quite simple to use and offers families some of the best investment options and avenues to lower student loan debt. You deposit your money into a UTMA account with UNest, and UNest will select the various investments for the plan based on your preset savings settings.
You can make a set monthly contribution and monitor the portfolio of your child’s investment account right through the app.
To get started, you will need to download the UNest app and then set the monthly contribution you’d prefer. You can also invite family and friends to invest in these sorts of custodial accounts, too.
You will need to make a minimum monthly contribution of $25, but you can change this and play around with your investment options whenever you’d like.
This $25 is not a significant minimum investment, so it’s a great way to save for your kids future – whether that’s for qualified education expenses, a home, or something else.
You can get started by downloading the app via the Apple App Store or the Play Store.
What is the Difference Between UTMA and 529?
A UTMA account is an investment account that is set up for a minor child. The acronym stands for Uniform Gift/Transfer to Minor Account. These are custodial accounts that allow the parent to choose the investment options until the child is no longer a minor.
Within one of these accounts, you can invest in just about anything. UNest will serve, in a sense, as your personal financial advisor, helping you choose between bonds, stocks, mutual funds, ETFs, and so on.
All income, losses, and gains are reported on the child’s tax return. You’ll have maximum flexibility but unfortunately, no real tax benefits.
Unlike other types of savings plans in which the earnings are tax-free, that is not necessarily the case with a UTMA. There aren’t always annual tax benefits, since UTMA accounts are subject to the Kiddie Tax. It is only nontaxable if you make less than $2200 in unearned income. That’s quite different from a 529 account, in which there is a myriad of tax benefits.
In the case of a 529 plan, your child’s account grows tax-free.
UNEst is not free, nor is it tax-free. You’ll have to pay taxes and UNest charges a $3 flat monthly fee for accounts that hold more than $50,000.
After $50,000, the account fee is 0.25% of your account balance.
Some individual investments that you can buy will also have their own expenses ratios, with some as high as 0.60%.
Is UNest Trustworthy?
UNest is safe to use, with bank-level security that protects your most sensitive financial data.
Everything is encrypted and, depending on the investment options you choose, the funds can be invested in CDs or savings accounts that are also FDIC-insured.
UNest Customer Service
You can’t beat the customer service team at UNest. It’s one of the few apps out there that actually has a phone number you can call with any questions.
In addition, the company also has an email support line for direct help.
UNest Pros and Cons
Here are some of the biggest benefits and disadvantages of using UNest to save for your child’s educational (or other life) expenses.
Pro: Additional Ways to Earn
Investments aren’t the only ways you can achieve profits with UNest. While you can make or change your monthly contribution at any time, it is also important to note that UNest offers a sign-up bonus of $10 on a child’s first account. It also allows you to get a referral bonus – you can get $500 for five successful referrals.
There is a “UNest Rewards” feature, too. You can purchase various services and products that have partnered with UNest and receive cash directly into your child’s account.
Pro: Allows for Passive Management
If you want to save for your child’s future but aren’t really interested in all the day-to-day minutiae, UNest is the way to go. You don’t have to worry about a thing – you set your preferences ahead of time, then a financial advisor within the UNest app will handle the investments.
Pro: App is Easy to Use
The UNest app is one of the most user-friendly out there. It has a smooth interface that integrates your investment options seamlessly and makes it easy to see any changes to your portfolio.
Con: Not Free to Use
UNest is not an app that is free to use. Unfortunately, you will be charged at least $3 per month for a regular account, in addition to other investment fees.
Con: No Tax Benefits
If you’re hoping to save money tax-free, this isn’t the way to do it. While there’s no limit to how much money you can save – you can change your monthly contribution anytime – you don’t get any kind of tax benefit by saving more money.
It’s a good idea to use a savings calculator to figure out how much money you should put away in UNest ahead of time. Since there’s no tax benefit, you don’t want to save more than you really need to.
Of course, UNest is not the only app you can use to save for your child’s future.
It’s a good idea to meet with a financial advisor before setting up such an account for any child. They can advise you on the best option for you based on your tax status, income, number of children, and other factors.
The Acorns Family Plan is one alternative. This app has offerings for adults to use, too, but the Family Plan gives clients access to UTMA/UGMA accounts in addition to all of Acorn’s other products. It’s also a great way to teach your child about investing.
The bottom line is this – no matter which app or service you use to invest money for your child’s future, it’s important that you do so. Otherwise, student loan debt could be a very real concern.
So should you choose a UTMA like UNest or a 529 plan?
If you know that your child will eventually attend college, a 529 plan is the way to go. However, if you aren’t sure that college is in his or her future, investing in a UTMA account (or making a 50/50 split between the two) is a better decision, particularly if you have a lower income and a lower tax burden.
Is UNest Legitimate?
UNest is 100% a legitimate way to save for your kids’ future. Although it does not allow for tax-free growth as a 529 plan would – and will serve as your child’s account, not your own – it is a great way to help reduce your child’s student debt.
You can save more money to put toward achievable college fund plans, all without requiring you or your family members to acquire massive loan debt. Be aware of its limitations as an investment platform, but consider investing money with UNest today.
UNest Review Ratings
- Ease of Use: 4
- Cost: 3
- Safety: 5
- Customer Service: 4