Editor's Update: According to reports, it appears that UNest may be facing financial difficulty and could be shutting down soon. If you're planning on opening an account, you might want to consider other options. Check out these custodial account recommendations.
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.
- Helps families save for college through a UTMA account.
- $4.99 per month flat-fee
- Low minimums investment of only $25 per month
$25 per month
$4.95 per month
Who Is UNest?
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."
What Do They Offer?
The UNest College Savings App allows parents to easily invest in their child’s college education. UNest does this by investing savings into a UTMA account. UNest picks the various investments for the plan based on the parent’s savings settings. By depositing a certain amount each month, parents can monitor their child’s portfolio’s performance through the app.
Note: Unest previously offered the ability to invest via a 529 plan. This was discontinued in October 2020.
Their rationale is as follows: "As a financial advisor, we are constantly evaluating the best kinds of investment products for our families. We had a lot of feedback on where funds can be used, and since 529 is restricted solely for education, it didn't make sense for a lot of our families who wanted to save for their kids' future (college, wedding, first house, etc....)."
UNest outlines the setup process in four easy steps:
- Download the app.
- Set the amount to contribute each month.
- Invite friends and family to contribute.
- Periodically monitor your plan’s performance.
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 apps.
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, the Kiddie Tax brackets are set at $2,500 for unearned income. So, if you make less than $2,500 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.
Are There Any Fees?
Yes, UNest charges a $4.99 flat monthly fee.
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.
$2.95/mo for one child
$4.95 per month for multiple children
3.5% + $0.99 processing fee
(For the giver)
2% per gift
(For the giver)
$1.99 per contribution
(For the giver)
How Do I Open An Account?
Accounts are opened through the UNest mobile app. You can find the download links for the app at https://www.UNest.com/download.
Is My Money Safe?
Yes, UNest uses bank-grade encryption with its app. And depending on the investment options, funds that are invested in savings accounts or CDs may be FDIC-insured.
Is It Worth It?
Maybe, 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.
However, we think there are better alternatives - specifically a 529 plan or directly opening a UGMA account with your favorite broker (Fidelity, Vanguard, Schwab, etc.).
If you're wanting to compare apps for automatically investing in 529 plans, there’s really only one other alternative in the space - Backer. 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.
Features and Tools
UNest is an app that makes it easy to invest in a UTMA account with low minimum investment amounts and reasonable fees.
- Easy to save and invest for your child
- Discontinued 529 plans and only offers UTMA accounts
- Management fees are higher than we’d like to see, especially with a UTMA account-type
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him on the About Page or on his personal site RobertFarrington.com.
He regularly writes about investing, student loan debt, and general personal finance topics geared toward anyone wanting to earn more, get out of debt, and start building wealth for the future.