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  • FIRST POST
    • sharpharp
    • By sharpharp 15th Mar 17, 2:33 PM
    • 158Posts
    • 73Thanks
    sharpharp
    Lifetime ISA Question - 10 years no bonus?
    • #1
    • 15th Mar 17, 2:33 PM
    Lifetime ISA Question - 10 years no bonus? 15th Mar 17 at 2:33 PM
    Lets take the scenario that you're using the LISA for a retirement savings....


    So you're under 40 and put up to £4k each year until you're 50 and get the 25% bonus for each year, which is great.


    But the thing that gets me is that from 50-60, in other words 10 years you will get no bonus and no interest either? Is that right?


    So effectivity, the government are giving 25% now, but will have our money to use for what they please for 10 years without it costing them anything..... Hmmm suddenly that 25% doesn't seem all that good.


    And if you even dare to withdraw the money.... well there goes your 25% and another 6.25% fee on top....


    Anyone work out what the overall interest rate is bearing in mind that the government will have your money for 10 years (50-60) without paying you a penny?
Page 1
    • edinburgher
    • By edinburgher 15th Mar 17, 2:38 PM
    • 10,668 Posts
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    edinburgher
    • #2
    • 15th Mar 17, 2:38 PM
    • #2
    • 15th Mar 17, 2:38 PM
    I think you're a bit confused about aspects of the LISA.
    • The government doesn't provide LISAs, financial providers will (so the government doesn't 'have your money'
    • Your money will be in either cash (savings) or invested (stocks and shares, bonds etc.), which will hopefully provide a return over the period you've referred to (so you don't get nothing for 10 years)
    • sharpharp
    • By sharpharp 15th Mar 17, 2:45 PM
    • 158 Posts
    • 73 Thanks
    sharpharp
    • #3
    • 15th Mar 17, 2:45 PM
    • #3
    • 15th Mar 17, 2:45 PM
    I think you're a bit confused about aspects of the LISA.
    • The government doesn't provide LISAs, financial providers will (so the government doesn't 'have your money'
    • Your money will be in either cash (savings) or invested (stocks and shares, bonds etc.), which will hopefully provide a return over the period you've referred to (so you don't get nothing for 10 years)
    Originally posted by edinburgher




    I wasn't aware of that, so as well as the 25% the government will pay in (until 50), you are saying the LISA itself (say for example stocks and shares) will also accumulate it's own returns on top?


    Will the returns be paid annually to customers or does it all stay in the same pot until you're 60?
    • bowlhead99
    • By bowlhead99 15th Mar 17, 4:14 PM
    • 6,605 Posts
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    bowlhead99
    • #4
    • 15th Mar 17, 4:14 PM
    • #4
    • 15th Mar 17, 4:14 PM
    I wasn't aware of that, so as well as the 25% the government will pay in (until 50), you are saying the LISA itself (say for example stocks and shares) will also accumulate it's own returns on top?
    Originally posted by sharpharp
    Yes, every year. Not just the years you are paying in. It will either be a cash deposit that pays interest (like a normal cash ISA), or a portfolio of one or more investment which might be investment funds paying dividends, interest, property income distributions and generally growing in value all the time (like a S&S ISA).

    Generally if you are saving for a short term goal like a house deposit you would use a cash/savings type of LISA from a bank or building society, and for a longer term goal over multiple decades like retirement planning you would use an investments /S&S type of LISA from an investment firm.
    Will the returns be paid annually to customers or does it all stay in the same pot until you're 60?
    They will be paid into the account (the pot). They can be taken out to your own bank account penalty free if you are spending them on a qualifying property purchase or at age 60, or if you're terminally ill with under a year to live... But other than that you would need to pay a penalty to take money out because it's designed as a long term account.
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