LISA - AJ Bell

tombon92 · 8 March 2018 at 10:23PM

Hello,

I am about to put £4,000 of my savings into a LISA First Time Buyer 25% bonus fund for the home I plan on buying in 3-5 years. I have set up an account with AJ Bell but before I place the money there, I just wanted to check their reputation first. Does it matter which provider I use? My bank (Natonwide) doesn't offer the LISA so I just went for the first one I found on Google. I can close my account within 30 days.

I do not plan on making any other investments with AJ Bell or anyone else until I buy my home.

Anything else you need to know, ask away.

ValiantSon · 8 March 2018 at 10:35PM

AJ Bell provide a S&S LISA. I'm not entirely sure that is what you want. Do you intend to invest the money in stocks and shares? If not, then you want a cash LISA, and the only provider is Skipton Building Society.

tombon92 · 8 March 2018 at 10:49PM

I want the one where you invest £4,000 and the government contributes £1,000. An article on here gave about 12 places which did this. I do not intend to invest in stocks and shares until I have bought my home so not for about 7 or 8 years.

ValiantSon · 8 March 2018 at 10:58PM

tombon92 wrote: »

I want the one where you invest £4,000 and the government contributes £1,000. An article on here gave about 12 places which did this. I do not intend to invest in stocks and shares until I have bought my home so not for about 7 or 8 years.

All LISAs will receive the government bonus, but the AJ Bell LISA is a stocks and shares LISA. You would normally only open one of these if you were going to invest the money. You don't want to invest the money so you need to open a cash LISA. Currently, the only cash LISA provider is Skipton Building Society.

tombon92 · 8 March 2018 at 11:58PM

ValiantSon wrote: »

All LISAs will receive the government bonus, but the AJ Bell LISA is a stocks and shares LISA. You would normally only open one of these if you were going to invest the money. You don't want to invest the money so you need to open a cash LISA. Currently, the only cash LISA provider is Skipton Building Society.

Forgive me as I'm a beginner. Does it matter if I invest in S&S or cash as I am purely using it for the government bonus? What is the difference for cash?

All I want the LISA is to buy a new home. Investment in other things is no concern to me.

ValiantSon · 9 March 2018 at 12:10AM

tombon92 wrote: »

Forgive me as I'm a beginner. Does it matter if I invest in S&S or cash as I am purely using it for the government bonus? What is the difference for cash?

All I want the LISA is to buy a new home. Investment in other things is no concern to me.

Investments should be for the long term as they are volatile and their value can go down as well as up. Over the long term you could reasonably expect to get better returns through investments as opposed to savings, but the long term means a minimum of at least 10 years. You would also need to choose what you invested in. Given your stated aims, timeframe, and uncertainty about investments, I think you would be best off with a cash LISA.

tombon92 · 9 March 2018 at 12:20AM

ValiantSon wrote: »

Investments should be for the long term as they are volatile and their value can go down as well as up. Over the long term you could reasonably expect to get better returns through investments as opposed to savings, but the long term means a minimum of at least 10 years. You would also need to choose what you invested in. Given your stated aims, timeframe, and uncertainty about investments, I think you would be best off with a cash LISA.

Ok sorry but I still don't understand. If I am just using AJ Bell for the First Time Buyer LISA, what difference does it make moving to Skipton? Can I just not use AJ Bell once I've withdrawn the money for the deposit?

And investments are something I will be interested in once I have a mortgage if that makes a difference.

ValiantSon · 9 March 2018 at 12:57AM

You'll earn interest at 0.75% with Skipton. AJ Bell will only pay you 0.05% interest on a cash balance. You will end up with more money by using Skipton.

When you are ready to start investing in a few years you can open an S&S ISA, but you won't get any benefit from having previously had an S&S LISA.

tombon92 · 9 March 2018 at 12:17PM

ValiantSon wrote: »

You'll earn interest at 0.75% with Skipton. AJ Bell will only pay you 0.05% interest on a cash balance. You will end up with more money by using Skipton.

When you are ready to start investing in a few years you can open an S&S ISA, but you won't get any benefit from having previously had an S&S LISA.

Thanks a lot. I understand now I think.

So if I had 4k sitting in my Skipton account from now until the end of the year, I could expect another 30 quid roughly whereas AJ Bell it would be more or less nothing?

Credit-Crunched · 9 March 2018 at 12:38PM

tombon92 wrote: »

Thanks a lot. I understand now I think.

So if I had 4k sitting in my Skipton account from now until the end of the year, I could expect another 30 quid roughly whereas AJ Bell it would be more or less nothing?

Not quite true, the first point is accurate (have not done the maths) as it is a pre determined amount of interest payable on the amount you put in.

With the S&S ISA you may have the same more or less than you put in. If you keep it in cash in the S&S ISA then as the previous poster states the returns are poor, as this is not the aim of the ISA (its generally used as a holding pool prior to purchasing the shares) It depends upon the underlying stocks that it is invested in. It may be 10% up but may be 10% down. The S&S ISA is generally for people looking to invest in a 5 year plus timeframe.

LISA - AJ Bell

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