Age 18, to LISA or not to LISA?

miniemma
miniemma Posts: 505
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edited 5 March 2018 at 9:28AM in Savings & investments
Hi All

Our daughter turns 18 next month and I am keen for her to open a LISA but my husband is concerned that she may never be able to get a mortgage and therefore her money will be stuck there until she is 60!

Living in the South Bucks doesn't help with house prices so high and she may not ever earn very much (wants to be a zoo keeper :)) She is about to finish school and already has a part time job in Waitrose - really enjoys it.

I would much rather she has a house of her own than rent forever. What do renters do when they retire?

I'm still keen to open it and my husband is coming round to the idea but I'd like to see what others think?

Thanks in advance.

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  • bowlhead99
    bowlhead99 Posts: 12,295
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    edited 5 March 2018 at 10:37AM
    miniemma wrote: »
    Hi All

    Our daughter turns 18 next month and I am keen for her to open a LISA but my husband is concerned that she may never be able to get a mortgage and therefore her money will be stuck there until she is 60!
    She will need investments in retirement anyway, whether pension or other route, as once the employment dries up in her 50s or 60s she may still have around 40 years or more of living to fund, out of what she has put away over the years. That pot will need to be even larger if there's 40 years of property rent to pay because she doesn't have her own property.

    So if you are willing to open one with your money now and put the money into investments with an expectation she won't be accessing them for a property deposit for the next decade or more... then if in a decade or two she can both afford to buy a property and wants to buy a property, she can do that - or if not she can go a little lighter on her personal pension contributions giving her spare cash in her pocket for funding new cars, weddings, roofs over her head etc.

    However in her twenties and thirties she would not want to be feeling so set up with retirement that she didn't bother contributing to an employer pension at all because she might miss out on valuable free money from the employer (who often only put money in for you if you're putting in x amount of money for yourself).
    Living in the South Bucks doesn't help with house prices so high and she may not ever earn very much (wants to be a zoo keeper :)) She is about to finish school and already has a part time job in Waitrose - really enjoys it.
    If she wants a relatively low paying career but wants to be able to afford Waitrose prices for the forseeable she will need every bit of tax break and government bonus possible :)

    Rewarding jobs working with wildlife could take her out to conservation areas in the middle of nowhere and who knows how her career will unfold. You can get property in some desolate area of 'the north' for much less than South Bucks prices.
    I would much rather she has a house of her own than rent forever. What do renters do when they retire?
    a) wish they were not renters;

    b) be grateful they put away such a large proportion of their salary in pensions and investments to give them a high income to be able to afford the rent;

    c) spend a large proportion of their income on rent and hope that they soon win the Lotto or that their elderly parents die before spending all their wealth on healthcare, so that they can get some inheritance to make up for not putting enough money away during their career to buy a permanent roof over their head;

    d) some other much more pleasant but perhaps less-realistic outcome
  • Plus
    Plus Posts: 433
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    You could take the view that it's a three-way gamble:
    1. Use it for a house (within the limits). Win 25%
    2. Keep it for pension. Win 25%
    3. Withdraw the money for something else. Lose 6.25%

    Given the possible upsides of 1 and 2, you might consider that the possible outcome of 3 is a risk worth taking. If she is investing, average investment growth would cover it in a year or two anyway (though no guarantees).
  • aj23_2
    aj23_2 Posts: 1,155
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    Anything she saves from now until buying a house is eligible towards a deposit, which could be thousands in bonus payouts for years to come until she claims it. If not, it's a growing pot for retirement, which our generation will need more than any previous generation. Either way, it's a good deal.
  • miniemma
    miniemma Posts: 505
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    Many thanks you lovely people :)
  • sovsov1357
    sovsov1357 Posts: 38
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    Whack in a quid to start the ball rolling, then you have the option to invest should you decide to go ahead in the future...
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