Parents Are Saving for Their Kids - But Missing a Big Opportunity
A recent Vanguard survey revealed something surprising:
Nearly three-quarters of parents are setting money aside for their children—but most are doing it in low-yield savings accounts that may not keep up with inflation.
This “savings inertia” could have long-term consequences. While the intention is there, the strategy may be falling short.
The hidden cost of playing it too safe
According to the same survey, most parents are prioritizing accessibility and safety when saving for their kids—understandably so. But when those funds sit in traditional savings accounts earning less than 1% interest, they’re quietly losing purchasing power.
Meanwhile, over the last 30 years, the average annual return of the U.S. stock market (S&P 500) has been approximately 10% before inflation and 7% after inflation—significantly higher than the returns on most savings accounts.
📊Source: NYU Stern School of Business, 2024 update on historical asset class returns
Even modest investing over a long period can result in meaningful gains.
Why a UNest UTMA could help
At UNest, we make it simple to open a UTMA (Uniform Transfers to Minors Act) custodial account, which allows parents to invest for their children in a flexible, accessible way.
Unlike traditional savings accounts, a UTMA lets you invest in a diversified portfolio. That means your contributions aren’t just sitting—they’re working.
Whether you start with $25/month or more, the key difference is the potential for long-term growth, especially when starting early and staying consistent.
Real growth starts with a simple habit
Saving is a powerful first step. But investing, even modestly, can help families keep up with rising costs - from education and extracurriculars to future life milestones like a car, a laptop, or a down payment.
If you’re already setting money aside for your child, you’re ahead of the game.
But if that money is sitting idle, it might be time to rethink your strategy.
Start investing for your child’s future in minutes
With UNest, you can:
- Open a UTMA custodial account in minutes
- Automate a monthly contribution that fits your budget
- Let your investments work while you focus on parenting
💡 Every contribution is a step toward giving your child more options - and more security - down the road.
👉 Get started with UNest today
Past performance is not indicative of future returns.
Don't just take our word for it
Hear what trusted money experts say about why UTMA and UGMA accounts can be a smart way to invest for a child’s future.
There are some tax advantages to using UGMA and UTMA accounts… Since they’re in your child’s name, the accounts will be taxed according to their tax bracket… There are no contribution limits on UGMA and UTMA accounts.
Dave Ramsey
Personal Finance Expert
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Investing for your kid’s future
Dave Ramsey
Personal Finance Expert
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...you could consider opening an account where you can dive deeper with the kids by your side. The easiest way to do so is to open a custodial account, known as an UGMA ... or UTMA ... account.
Jill Schlesinger
Emmy winning Business Analyst
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Straightforward “starter” investing account for kids
JILL SCHLESINGER
Emmy winning Business Analyst
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You can give children money that can accumulate somewhat tax-free over time... I love them (UTMAs) because they were like, trusts that you didn't need lawyers to create.... I think it's one of the better tax breaks around though. I know hunting for tax breaks may not sound very exciting, but that's how you take care of your family.
Jim Cramer
CNBC Host
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Give children money that can accumulate over time
Jim Cramer
CNBC Host
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