What and Who is Backer?
Backer wants to change the way people save money in the United States by making the process more collaborative. The company was started in September 2016 in San Francisco. It is called Principly, Inc. and is a registered investment adviser.
The CEO, Jordan Lee, changed the name of the company from CollegeBacker to Backer to show that its services can now be used for more than just college costs and to emphasise how unique it is to build a team of backers for a child.
What are the services that Backer offers?
Backer makes it easy for multiple people to put money into a single savings plan. This means that family and friends can directly put money into a child's college fund. Backer makes personalised Fund Pages where anyone can give to a child's savings goals by clicking on a link.
Donations of at least $5 can be made with a credit card, a debit card, or a bank transfer. If the Backer 529 Plan is not chosen, the money will stay in an FDIC-insured account. This is a safe option, but the money may not grow at a fast rate because it is not invested.
This could be a good choice for families who are worried about losing their principal or whose children are getting close to needing the money for college. Also, for every new person who donates to their child's fund, the family will get a $10 bonus added to their fund.
How does CollegeBacker work?
Backer helps you choose a high-performing 529 plan with low fees by asking you a few questions about your risk preferences and where you live. Plans are based on age, and as a child gets closer to college, the level of risk changes. You can also link a 529 account from 20 different states.
The money you put into the account grows tax-free, and you don't have to pay taxes when you take money out for qualified education costs. You can make a one-time donation with a debit or credit card, or you can set up monthly payments from your bank account. Backer protects sensitive financial data with 256-bit encryption and bank-level security.
Advantages of Using Backer
Earn extra funds for college through Backer Bucks
Backer Bucks is a service that lets you save some of the money you spend on shopping through the Backer portal for college. You can choose from over 100 retailers, including well-known brands like Walmart, TurboTax, and Crayola.
Benefit from contributions from family and friends
With Backer, you can ask family and friends to help save money for college for your child. On average, families who use gifting save 43% more than those who don't. The process is simple and easy. Gifts can be sent via a link or a personalised email, and the person who gave you the gift can see how much you have saved.
Use Backer's calculator for motivation and planning
Backer has a helpful calculator that makes it easy to figure out how much to save each month and how much family contributions can help. You can compare how much you might save in a 529 plan account and in a regular savings account. For example, if you save $50 a month and a grandparent adds $25 a month, the calculator says that by the time your child is ready for college, you will have saved $26,400.
Disadvantages of Using Backer
There is a monthly fee for the Backer 529 plan, which lets parents invest their child's savings. Over time, this fee can add up and reduce the amount of money that can be used for the child's education. It's important to compare the cost of the monthly fee to the possible benefits of investing in a 529 plan, such as tax-free growth and tax-free withdrawals for qualified education expenses.
Before signing up for the Backer 529 plan, it's best to compare the fees and investment options with other 529 plans so you can make an informed choice.
Is Backer Safe for My Money?
Absolutely! Your financial information and identity are kept safe with the highest level of encryption and identity protection on the platform.
Your 529 plan is also safe, since it is not part of Backer and would still be safe even if something happened to the app.
If the person you gave the gift to doesn't use it within 90 days, which is unlikely, you will get your money back.
If you decide to stop using Backer, you can move your 529 plan to another company. To start the process, just send an email to support@backer.com.
Is Backer Worth it?
If you want to put money into a 529 college savings plan, you should definitely think about Backer.
It's one of the few places to invest in this way. The only other app that's similar is U-Nest, but it only offers UGMA accounts, which don't have the same benefits as a 529 plan.
Backer is a great place to invest because it is easy to start a 529 plan, the fees are low, and the risk goes down as the beneficiary gets older.
How Do I Open An Account with them?
You can open an account at https://app.backer.com/signup
Some FAQs on Backer
Why choose Backer to save for college?
Backer is a simple and effective way to save money for college. By using a tax-free 529 Savings Plan for your child's education, which is like a retirement account, you can make the best investment for your child's future and keep them from having to pay off student loans.
With Backer, you can get your family and friends involved in helping you save for college. Your backers can easily and quickly put money into your child's college fund and stay informed as your child gets closer to college. On average, their customers who have four times as many backers in their savings plan have saved four times as much.
What Are the Costs Associated with Backer?
They believe that every family deserves access to effective
college savings solutions. That's why they offer a range of pricing
options, with simple and transparent pricing, regardless of the amount
you save. To learn more about their monthly membership options and
pricing, please visit their pricing page.
https://backer.com/pricing
Can Someone Other Than a Parent Start a Fund on Backer?
Yes, you can start a college savings fund on Backer even if you're not
the parent of the beneficiary. You can either open the account as the
fund owner or start a fund by sending a gift to the child's parent, who
will become the fund owner once they redeem it.
How Frequently Can Contributions Be Made to a Fund on Backer?
Backer allows you to make contributions to a college savings fund on a
one-time, monthly, or annual basis. Currently, there is no option to
make recurring contributions on a weekly basis.
Why Save for College with a 529 Plan?
A 529 plan is a government-run program that allows families save money for K–12 tuition, college, vocational and trade school, and apprenticeship programmes. With a 529 plan, your money can grow tax-free and you can take it out tax-free to pay for your child's education. This makes it a good investment for your child's future.
A 529 plan is similar to a retirement account and has been around for more than 25 years. It is a proven way to save money for college. With tax-free growth and withdrawals, a 529 plan is a good choice for anyone who wants to save money for their child's college.
