UNest, the first-of-its-kind mobile app that helps parents invest in their children’s future financial wellness, announced the launch of UNest Investment Account, a tax-advantaged custodial account that enables parents to save for more than just their child’s education. In addition to funding college and other educational expenses for their children, parents can use the UNest Investment Account to plan for and cover the cost of goals and milestones such as buying a first car, house, or a wedding.
UNest is the first and only savings and investment app to offer multiple types of saving plans to meet the preferences and priorities of parents when planning for their children’s future. The UNest Investment Account combines age-based saving plans, free planning tools, and advice and advocacy resources from financial advisers. The UNest Investment Account offers five investment portfolio options depending on the age of the child, the family’s unique situation, and their investment profile. Unlike traditional 529 accounts, there are no penalties on early withdrawals from UNest Investment Accounts. Parents can set up their UNest Investment Account in five minutes or less through UNest’s award-winning app.
Traditionally, parents across the income spectrum have had to parse through the multitude of complicated 529 plans offered by each state and by financial institutions to identify the best college savings approach for their children. In addition to complex application processes, 529 plans are often saddled with hidden fees, and subject families to heavy financial penalties when funds are not used for college. Many families are also forced into a savings silo with 529s that fails to reflect their future needs since 529s can only be used for education expenses.
An additional benefit of the UNest Investment Account for Kids is that there is no attachment to the parent’s home state. With 529s, parents often wrongly assume that they can only use the plan offered by their home state. This results in parents often selecting a 529 plan that performs poorly, or is misaligned with their family goals. Once they select a 529 plan, parents then typically have to complete an arduous, paper-based application process. These problems are more acute for lower- and mid-income families that cannot call on financial planners to help navigate to the right solution.
“Our decision to offer The UNest Investment Account for Kids was born out of feedback from our rapidly-growing community of UNest families,” said Ksenia Yudina, CEO and Founder of UNest. “Our users often asked us what would happen if their kids do not go to college, or they receive full-ride scholarships or financial aid. Especially during a pandemic, when a lot of education has shifted online and families are worried that the cost of tuition is simply unsustainable, the new type of account with tax advantages and greater flexibility presented an excellent balance for parents.”
The launch of the UNest Investment Account is particularly timely with the pandemic leading to many families evaluating and refining their future financial goals. This, plus the fact that parents are increasingly concerned about tuition costs, means that flexibility in how funds are used, and avoidance of potentially costly penalties from early withdrawals, are critical requirements.
The UNest Investment Account will join UNest’s existing 529 solution as part of its product portfolio. UNest has eliminated many of the issues parents faced when selecting and applying for a 529 including dramatically reducing the time and effort required to establish and manage a 529 plan. By offering both 529 plans and the UNest Investment Account, parents of all income levels and backgrounds will have access to a solution that meets both their short and long-term needs. UNest develops investment portfolios using Vanguard funds that are recognized for offering the lowest fees in the industry.