Lifetime ISAs guide

eskbanker

dmmc wrote: »

My help to buy ISA currently has around £9700 in it; can I initially transfer all £9700 in to a new LISA and benefit from the 25% bonus within the LISA? Or I am limited to the £4000 per year?

If I am limited to seems to me that I will be better continuing saving in the help to buy ISA, as I aim to buy a house within the next 2 years.

You're limited to £4K per tax year, even for transfers from other types of ISA.

How important to you is the higher price cap with the LISA? If this is an issue for you then you'd still be able to shift £8K into a LISA by April 2020, and £12K by April 2021 - you would reach £12K quicker than that in your HTB but wouldn't earn any bonus on amounts above that....

Oasis1

Does transfering your LISA to a different provider reset the 1 year you have to hold the account before using it to buy a property? Thinking of moving my Skipton to Moneybox...

masonic

Oasis1 wrote: »

Does transfering your LISA to a different provider reset the 1 year you have to hold the account before using it to buy a property? Thinking of moving my Skipton to Moneybox...

No, it is treated as being the same LISA.

namanjohnson101

Hey all, I’ve been a lurker in this sub for a while and I’ve been wondering this question for a bit and thought I’d ask for some advice.

I’m a mid-20s male in London currently working in the transport sector. I’m earning a comparatively good wage compared to friends I graduated with. I’m also not a huge spender but still enjoy myself, my rent is quite reasonable (share with a old uni friend and don’t live that central). Also due to my job, my travel costs are minimal.

At the moment I aim to max out my Club Lloyds monthly saver (£400/month) which has 3% gross interest which in the current climate seems pretty decent.

I’m placing £250/month into a AJ Bell stocks & shares lifetime ISA. I’m investing that primarily in their own managed funds and on some advice from my dad, a select few other funds.

Unfortunately as you all know it’s been a fairly dire year to start investing. Whilst the shares I’ve invested in have lost about 5-6% / £200 across the year, I do get government bonuses on (I think?) 25% I deposit, so £62.50 each time. That still gets invested into shares and so I’ve probably about broken even.

I was wondering should I keep pursuing this? I know lifetime ISAs and shares are a long-term goal and I’m probably saving for a house down the line, but I don’t want to be too risky and plunge my money into something that might give great returns, but ultimately I may never see again. The problem is there seem to be so few lifetime ISAs out there (even fewer cash ones), and with Brexit and god knows what else shares seem very volatile for the future.

Any advice is gratefully received (including telling me not to worry).

masonic

namanjohnson101 wrote: »

I’m placing £250/month into a AJ Bell stocks & shares lifetime ISA. I’m investing that primarily in their own managed funds and on some advice from my dad, a select few other funds.

Unfortunately as you all know it’s been a fairly dire year to start investing. Whilst the shares I’ve invested in have lost about 5-6% / £200 across the year, I do get government bonuses on (I think?) 25% I deposit, so £62.50 each time. That still gets invested into shares and so I’ve probably about broken even.

Looking at 1 year returns from multi-asset funds, they are in the 5-10% range in general. For example, Vanguard Lifestrategy 60 and 80 have both generated 10% returns over the last 12 months, and about 5% over the last 6 months. The sector average for global equity funds is about the same.

Of course, whether this is a good time or a bad time to start investing will depend on what happens in the next 5-10 years, but whether it is a good time or a bad time now is largely irrelevant if you are holding for 20+ years and topping up regularly.

It is true that you get a 25% Government bonus on your contributions, so your losses would need to exceed 20% for you to actually get back less than you paid in. That's a very unlikely scenario if you are investing over the long term.

I was wondering should I keep pursuing this? I know lifetime ISAs and shares are a long-term goal and I’m probably saving for a house down the line, but I don’t want to be too risky and plunge my money into something that might give great returns, but ultimately I may never see again. The problem is there seem to be so few lifetime ISAs out there (even fewer cash ones), and with Brexit and god knows what else shares seem very volatile for the future.

Any advice is gratefully received (including telling me not to worry).

It is ok to invest in your LISA if you have no firm plans to buy a house, but if your situation changes you should really move to cash in the years ahead of your house purchase to avoid the risk of a badly timed stockmarket crash.

You may wish to reconsider your investment choices, if the returns you are achieving are negative at a time when almost all asset classes are going up. Brexit should be of little consequence to investors - the UK makes up a tiny proportion of global stockmarkets and the FTSE 100 is full of global companies. In fact, I view my investments as insurance against the UK economy taking a nosedive, or the pound being further devalued.

Ghostcrawler

Does govt. pay 25% bonus even on S&S Lifetime ISA? If yes then how that works? 25% bonus is calculated on the accumulated amount (deposited amt + returns) or just on the money despoited by me? And how 25% bonus amount is used - reinvested or kept as in cash for me to decide?


I tried to find the answer to this question on the forum but didnt get anything.

Alistair31

Ghostcrawler wrote: »

Does govt. pay 25% bonus even on S&S Lifetime ISA? If yes then how that works? 25% bonus is calculated on the accumulated amount (deposited amt + returns) or just on the money despoited by me? And how 25% bonus amount is used - reinvested or kept as in cash for me to decide?


I tried to find the answer to this question on the forum but didnt get anything.

Yes, and the bonus is on the amount you pay in per year, up to max £4K from you, boosted by £1000, to £5000.

You will receive it as cash within the LISA account for you to invest as you wish.

barneystuta

I've searched far and wide for this but struggling to get a straight clear answer.

Me and my wife are both first time buyers. On the Help to Buy Isa guide it says you can each use individual Help to buy ISAS.

Similarly the LISA guide says the same thing.

But both guides state you can only claim the bonus on one type of ISA. All sort of makes sense.

But a joint mortgage is where I get confused - does the one type of ISA bonus limit apply to a single applicant? Or, with a joint application, you must both have the same type of ISA?

For example:

Me - LISA
Wife - Help to buy ISA
Both first time buyers

Are we both eligible for the bonus?

masonic

barneystuta wrote: »

For example:

Me - LISA
Wife - Help to buy ISA
Both first time buyers

Are we both eligible for the bonus?

Yes, you can each either make a penalty free withdrawal from a LISA or claim the HTB ISA bonus. You do not have to make the same choice.

Ghostcrawler

thank you and can I have S&S ISA (say with Fidelity), LISA S&S ISA (say with HL) and LISA Cash ISA (say with Moneybox), paying into each every year?


Also I understand that you can pay only till age 50, so won't be getting bonus either after that, then what happens to all my LISA accounts - they are just invested for another 10 years? do they allow to continue deposit atleast so that it atleast grows further?


Lastly, I assume after 50 or 55 of age I can move from LISA S&S ISA to LISA Cash ISA without any penalty?