Lisa

Danny-r · 10 July 2017 at 11:02PM

Hey Guys,

Looking for some advise (or to confirm what I think, at least).

Me and my fiance are looking at saving up to purchase a house. This is where the LISA will at least partly come in.

I understand that the 25% bonus is paid at the end of the tax year, so April 2018. So if I was to pay £4000 in to the LISA in March would I receive a £1000 bonus in April essentially?

greenglide · 10 July 2017 at 11:13PM

Yes, you would.

And from that point on all contributions from April 2018 will get the bonus the month after paid in. It is only in 2017-2018 that they are paid at the end of the year.

Danny-r · 10 July 2017 at 11:26PM

greenglide wrote: »

Yes, you would.

And from that point on all contributions from April 2018 will get the bonus the month after paid in. It is only in 2017-2018 that they are paid at the end of the year.

Thank you. So I assume then that the most efficient way to do it would be to put £333.33 in each month (£4000 / 12) in order to gain the maximum bonus? Or could I put £4000 in at any stage during those 12 months, including March 2019, and be paid a 25% bonus at the end of that month.

bowlhead99 · 10 July 2017 at 11:47PM

You could pay in a twelfth every month if you like, or the whole £4000 straight away on 6 April 2018 - or even the whole £4000 last thing on 5 April 2019 if you're confident the funds will clear that day and willing to take a £1000 risk they don't.

For many people the most effective thing to do will be to put monthly chunks into a regular monthly saver account from Nationwide or similar, which pays 5% on up to £500pm. Then once it's all piled up towards the end of the tax year, take £4000 out of the regular saver account and throw it in the LISA to make sure you don't miss out on the bonus for the contributions for that tax year. Likely the LISA will not have as good an interest rate as the best you'll find elsewhere.

Danny-r · 10 July 2017 at 11:52PM

bowlhead99 wrote: »

You could pay in a twelfth every month if you like, or the whole £4000 straight away on 6 April 2018 - or even the whole £4000 last thing on 5 April 2019 if you're confident the funds will clear that day and willing to take a £1000 risk they don't.

For many people the most effective thing to do will be to put monthly chunks into a regular monthly saver account from Nationwide or similar, which pays 5% on up to £500pm. Then once it's all piled up towards the end of the tax year, take £4000 out of the regular saver account and throw it in the LISA to make sure you don't miss out on the bonus for the contributions for that tax year. Likely the LISA will not have as good an interest rate as the best you'll find elsewhere.

Thank you. Exactly what I'm looking at doing and I just wanted to be sure I wouldn't lose out by keeping it in a higher interest account for the rest of the year.

hardleyouth · 11 July 2017 at 9:41AM

bowlhead99 wrote: »

You could pay in a twelfth every month if you like, or the whole £4000 straight away on 6 April 2018 - or even the whole £4000 last thing on 5 April 2019 if you're confident the funds will clear that day and willing to take a £1000 risk they don't.

For many people the most effective thing to do will be to put monthly chunks into a regular monthly saver account from Nationwide or similar, which pays 5% on up to £500pm. Then once it's all piled up towards the end of the tax year, take £4000 out of the regular saver account and throw it in the LISA to make sure you don't miss out on the bonus for the contributions for that tax year. Likely the LISA will not have as good an interest rate as the best you'll find elsewhere.

But wouldn't you miss out on the compounded interest or growth this way which may (or may not) exceed the benefit of a 5% regular saver?

eskbanker · 11 July 2017 at 9:58AM

hardleyouth wrote: »

But wouldn't you miss out on the compounded interest or growth this way which may (or may not) exceed the benefit of a 5% regular saver?

Not for the cash LISA scenario, where the solitary currently-available product only pays 0.5% interest, so 0.5% of a bonus-enhanced £5K (=£25) will be significantly less than the 5% of an average balance of £2K (=£100) in a regular saver. Obviously if better cash LISAs come along before April 2018 then this could change the equation but it would need a substantially more generous new proposition to outweigh the 5% regular saver option.

For a S&S LISA, nobody knows what the growth (if any at all) will be so it isn't so clear-cut. However, it's generally inadvisable to be investing property deposit money at all (unless for the long term) and anyone who does should be investing in low-risk options which are therefore less likely to deliver stellar returns (but would correspondingly soften any falls once we reach the end of this bull run).

Lisa

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