UNest Review

UNest is an app that helps families open and invest in a UTMA account. The UNest app makes it easy to set up recurring monthly contributions and to receive gifts from family and friends.

While we believe the 529 college savings plan is one of the best ways to save for college, UNest believes a UTMA is better due to the flexibility it offers. 

Due to rising college costs, most of us should be putting more money away in 529 plans each year. But, like many government-sponsored programs, 529 plans aren't typically geared towards the phone-first, tech-savvy generation.

But UNest is trying to change that. With their app, you can open a UTMA account in minutes right from your phone. Here’s what you need to know about the UNest mobile app.

UNest Inc., an SEC Registered Investment Advisor, helps families save for college by investing and managing funds in UTMA accounts. UNest was founded in March 2018 and has raised $3.8 million in funding. They are based in Los Angeles, CA. The founder and CEO is Ksenia Yudina, CFA, MBA.

"As a parent with student debt, I understand first-hand the immense pressure parents feel to get their kids to college without strapping them with massive loan debt for the rest of their lives," said Yudina in a press release. "We're excited to open up the savings market to a much broader range of families to get sensible and achievable college fund plans in place. We are committed to relieving the burden of student loans from parents and hope to change the trend for future generations."

The minimum investment amount is $25 per month and can be changed month-to-month. If you have more than one child, you can easily create multiple accounts and set the monthly contribution limit for each.

The mobile app also has a savings calculator to help you decide the right amount to save each month. To transfer funds into the app, simply link your checking account. Funds will be automatically withdrawn each month. Check out the top automatic savings app of 2020.

UNest manages the accounts completely through its mobile app, which is available on iOS and Android. UNest says that you can create an account within the app in 5 minutes in addition to making contributions and checking the performance of your investments. 

What Is A UTMA Account?

A UGMA or UTMA account is an investment account setup for a minor child. It stands for Uniform Gift/Transfer to Minor Account.

The best way to think about these accounts are they are just standard brokerage accounts - except they are custodial so the parent or guardian is on the account as well (until the child is no longer a minor).

Inside this account, you can invest in basically anything - stocks, bonds, ETFs, mutual funds, etc. UNest will take care of this part for you.

Any gains, losses, or income are all reported on the child's income or tax return. This account gives maximum flexibility, but there are no tax benefits here.

UNest says these accounts are "tax advantaged" on their homepage, but that's a bit misleading. While a 529 plan has actual tax benefits (both tax-free growth within the account, tax-free withdrawals when used for college, and depending on your state, tax deductions for contributions), a UTMA account does not. Earnings in the account are subject to the Kiddie Tax.

Currently in 2020, the Kiddie Tax brackets are set at $2,200 for unearned income. So, if you make less than $2,200 per year in unearned income, it's not taxable. That's great but that's very different than a 529 plan. Plus, that's subject to change in the future (and it has changed in the past).

As such, we rank a UTMA lower on our list of how to save for college.

Yes, UNest charges a $3 flat monthly fee for account sizes under $50,000. Once you hit $50,000 in assets under management with UNest, the advisory fee switches to 0.25% of your account balance.

It’s important to point out that the specific investments you buy will also have their own expense ratio. UNest says that the mutual funds offered on their platform are passively managed and their expense ratios range from 0.40% to 0.60%. Learn why investment fees matter.

Yes, if you want the simplicity of being able to contribute to and manage your child's investments right from your phone, UNest could be worth it.

Everything is handled through their app and people seem to really love it. Currently, the UNest app has a 4.8/5 rating from 293 reviews on the Apple App Store and on Google Play it has a 5/5 rating from 112 reviewers.

If you're wanting to compare apps for automatically investing in 529 plans, there’s really only one other alternative in the space - CollegeBacker. But if you'd like to open a 529 plan with a traditional broker, here are some of the best places to open a 529 plan today.