Home | Stocks | UNest Review [2024]: A Comprehensive Solution for your Child’s Investment Planning

UNest Review [2024]: A Comprehensive Solution for your Child’s Investment Planning

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In this UNest review, we’ll dive into the platform’s offerings, costs, and usability to help you determine if this investment service for your child’s financial future.

UNest Review

Quick Summary:

Unest is a user-friendly investing platform designed to make it easy for parents to save and invest for their child’s future. Using the app, parents can set up a Uniform Gift to Minors Act (UGMA) account and select from various curated portfolios based on their risk tolerance and investment horizon.

Overall Rating:

Investment Options:

Ease-of-Use:

Tools & Features:

Price:

PROS

  • Gifting feature
  • Flexible use of funds
  • Easy-to-use app

CONS

  • Limited tax benefits
  • Monthly Fees
  • May impact future financial aid

Navigating the realm of investing can be a complex endeavor, particularly when considering long-term goals such as funding your child’s future. That’s where Unest comes in.

What is UNest?

Unest

Unest is a user-friendly app designed to help parents invest in their children’s future.

The platform aims to simplify the often complicated world of finance and make saving for your child’s education or other future expenses an accessible and straightforward process. Unest does this by offering a tax-advantaged investment account for kids, known as a Uniform Gift to Minors Act (UGMA) account.

What Are UTMA Accounts?

UTMA funds refer to money saved or invested within an account established under the Uniform Transfers to Minors Act (UTMA). The UTMA is a law that allows minors to own property such as securities.

When you open a UTMA account, you’re essentially creating a trust fund for a minor where the assets will be managed by a custodian until the minor reaches the age of majority (usually 18 or 21, depending on the state). The assets in a UTMA account can include cash, stocks, bonds, mutual funds, and other types of property.

One of the key aspects of UTMA accounts is that the funds can be used for anything that benefits the child – not just educational expenses. This could be anything from college tuition to buying a car or funding a wedding.

However, once the child reaches the age of majority, they gain full control over the assets in the account. It’s also worth noting that while UTMA accounts do offer some tax benefits, they may not offer the same level of tax advantages as other types of accounts, such as 529 plans, which are specifically designed for education-related expenses.

How Does UNest Work?

UNest App
UNest Mobile app is easy to use

UNest makes it easy for parents to set up a saving and investment plan for their children. UNest saving and investment accounts are UTMA/UGMA (The Uniform Transfers to Minors Act) custodial accounts. These offer parents the flexibility to use the money they save and invest for all the life stages their child goes through including college savings.

The money saved and invested in a UNest account can be used for education and other important life stages. UNest also includes a simple gifting feature that makes it easy for family and friends to contribute to a child’s UNest account. Parents can also add valuable rewards to their child’s account when they shop with over 150 UNest brand partners.

Opening a UNest account is simple, secure, and takes less than five minutes. You can download the UNest app in the Apple and Google Play Store

Key Features

Unest provides several key features to simplify the process of investing for your child’s future. Here’s a closer look at these features:

UGMA Investment Account

Unest helps you set up a Uniform Gift to Minors Act (UGMA) account for your child. This type of account allows you to invest in a wide variety of assets on behalf of your child, providing more flexibility than other types of child-specific accounts, like 529 Plans which are specifically for education-related expenses.

Automated Tax Advantaged Investing

You can set up automatic monthly contributions to your child’s account. You have the flexibility to choose the amount and can change it at any time.

Gifting

Unest offers a gifting feature where friends and family can contribute to your child’s account. You can share a link with family and friends who want to gift money, which can be particularly useful during birthdays, holidays, or other celebrations.

Once a UNest gift link is received, it can be used anytime to send gift funds  by credit/debit card or ACH. Gifts are sent directly into a child’s UNest account.

User-Friendly Mobile App

Unest provides a user-friendly mobile app that allows you to manage your child’s account, adjust contributions, and monitor investment growth from anywhere.

Cash Back Rewards

Unest partners with brands to offer cash rewards back into your child’s account when you shop.

Investment Options

UNest has multiple 8 investment options for all kinds of investors. Its investment options are based on Vanguard ETFs, and some of the portfolio options include a portion of FDIC-insured cash holdings. Through UNest you can change your asset allocation at any time, but be aware that there may be tax implications.

Conservative Portfolio

Invests in Fixed Income and bond ETFs.

Agressive Portfolio

Invest in 100% Equities through Vanguard Equity Index ETFs.

Aged-based Options

[Conservative, Moderate, Aggressive]

Each of these portfolios includes a mix of fixed income and equity investments which shift the investment mix (what’s called rebalancing) from more aggressive to more conservative investments as the child gets older. The goal is to maximize growth at a young age and gradually reduce risk of volatility in the account as they get closer to the time they gain access to the funds.

Socially Responsible Aged Based Options

[Conservative, Moderate, Aggressive]

Three socially responsible age-based options (conservative, moderate, aggressive). Each of these portfolios includes a mix of fixed income and equity investments which shift the investment mix (what’s called rebalancing) from more aggressive to more conservative investments as the child gets older.

The goal is to maximize growth at a young age and gradually reduce risk of volatility in the account as they get closer to the time they gain access to the funds.

UNest Cost

For its services, Unest charges a flat monthly fee of $4.99 per account, or $39.99/year with an annual subscription – a 33% discount.

plus any While there are no additional trading costs or penalties for withdrawals, keep in mind that the money in the UGMA account does need to be used for the benefit of the child, and any earnings may impact the child’s financial aid eligibility when it comes time for college applications.

Who Should use UNest?

UNest is Good For…

  • Parents Who Want to Start Early: Given the power of compounding, Unest is suitable for parents who want to start investing early for their child’s future.
  • Those Who Want to Involve Family and Friends: The gifting feature allows family and friends to contribute to the child’s account, which makes Unest a good option for people who want to involve their extended network in saving for the child’s future.

UNest is not Good For…

  • Those Seeking Specific Tax Advantages: While UGMA accounts do offer some tax benefits, they do not offer the same level of tax advantages that 529 plans or other tax-advantaged accounts do.
  • Parents Concerned About Financial Aid Impact: The funds in a UGMA account are considered the child’s assets, and this could affect the child’s eligibility for need-based financial aid when it’s time to apply for college.

PROs and CONs Explained

Unest, like any investment platform, has its strengths and areas that may not suit everyone. Here are some pros and cons to consider:

PROS

  • Simplicity: Unest provides a straightforward and user-friendly platform, making it easy for parents to start investing for their child’s future.
  • Gifting Feature: Unest allows friends and family to contribute to the child’s account, which can be particularly beneficial during birthdays or holidays.
  • Investment Options: The platform provides a range of diversified portfolios to choose from, accommodating different risk tolerances and investment horizons.
  • Flexible Use of Funds: Unlike 529 plans which are specifically for education-related expenses, funds from UGMA accounts can be used for any expenses benefiting the child.

CONS

  • Fees: Unest charges a flat monthly fee of $3 per account. For those investing smaller amounts, this fee might be proportionally higher than the percentage-based fees charged by some other investment platforms.
  • Limited Tax Benefits: While UGMA accounts do offer some tax advantages, they may not provide as many tax benefits as other options like 529 plans.
  • Impact on Financial Aid: The funds in a UGMA account are considered the child’s assets and can affect the child’s eligibility for financial aid when they apply for college.

Alternatives to UNest

If you’re looking for alternatives to Unest for saving and investing for your child’s future, you have several options.

Below are some popular alternatives:

EarlyBird

Overall Rating:

EarlyBird

EarlyBird is a mobile app that allows parents, family, and friends to invest in a child’s future through a UGMA account, similar to Unest. The app also has a feature where gift-givers can record a video message for the child.

  • Account Type: UGMA
  • Minimum Investment: $5
  • Monthly Cost: $2.95/mo for one child
    $4.95/mo for multiple children
  • Processing Fee: 2% per gift (charged to the giver)

Backer

Overall Rating:

Backer

Backer is a platform that allows you to create a 529 college savings plan, and then provide a unique link to family and friends where they can contribute easily. 

  • Account Type: 529 College Savings Plan
  • Minimum Investment: $5
  • Monthly Cost: $5/mo,
  • Processing Fee: $1.99 (charged to the giver)

Is UNest Worth It?

The value of Unest largely depends on your specific needs and financial goals. If you’re looking for a simple, easy-to-understand platform that enables you to regularly set aside money for your child’s future, Unest offers a straightforward and user-friendly solution. The ability to involve friends and family through the gifting feature also adds a unique element that can help accelerate your savings goals.

However, it’s worth noting that Unest is not the only option for child-specific investment accounts. There are also 529 plans, which are specifically designed for education expenses and offer their own set of tax advantages. Additionally, while Unest’s flat fee structure is simple, it may be more expensive than percentage-based fees for those investing smaller amounts.

Frequently Asked Questions

What is the difference between a 529 and a UTMA?

529 plans and UTMA accounts both serve to invest for a child’s future, but they differ significantly. 529 plans are specifically for education expenses, remain under the control of the custodian even after the child reaches adulthood, and offer tax-free growth and withdrawals for education expenses.

On the other hand, UTMA accounts can be used for any expense benefiting the child, control transfers to the child at the age of majority, and while they offer some tax advantages, they don’t have the same tax-free benefits as 529 plans.

Adam Koprucki

Expertise: Fixed-income investing, Macroeconomics, Personal Finance, Derivatives, Options, Index Funds

Professional Experience: J.P. Morgan, Deloitte Consulting, Societe Generale, The Vanguard Group

Education: Loyola University: Bachelor of Business Administration, University of North Carolina, Chapel Hill: Certificate in Capital Markets

Adam Koprucki is the founder of Real World Investor, an investing website dedicated to reviewing the newest and latest investing tools and providing unique market insights for beginner to intermediate investors.

Before starting Real World Investor, he spent over a decade working at some of the world's largest investment banks and investment managers, such as Citibank, J.P. Morgan, Societe Generale, Deloitte, and The Vanguard Group.

His experience includes working with complex financial products such as exotic interest rate derivatives, structured products, and structured credit.

A dedicated and enthusiastic investor, he is passionate about macroeconomics and options trading. His work has been published in Nasdaq, Yahoo Finance, GoBankingRates, and Seeking Alpha. He is also a contributing author at LendStart.