h2b ISA plus s&s LISA = keeping them concurrently

Cash-Strapped.T32

Hi, just a random thought I had on reading up on the LISA due to come in next year.

I'm going to be opening a h2b ISA soon, no plans to buy for a good few years.
I earn a modest wage, so I'm unlikely to hit the upper limits of what I can save in any accounts - I'm currently 35, so would probably be buying very late 30's, early 40's.
Oh, and I don't live in the South East, so a £250k limit on a house is still pretty good round here...

So you'd think a LISA is easily my best bet - better yet, start on a h2B ISA now, and then transfer the balance in, allowing me to possibly deposit £4k plus the transferred-in bal in the first year. Nice.

However, can anyone forsee a benefit to opening, and keeping, a h2b ISA (which is a cash isa) for it's home-buying function, and also opening a s&s LISA, solely for it's retirement function?

My understanding is that over the long term, a s&s ISA is likley to outperform a cash ISA, right?
So assuming the 25% bonus is open to me on the h2b, and I'm not likely to buy a house worth nearly half a mill, is it not a good idea to allow the long-term benefits of the s&s LISA to accumulate for the time when I'll want it at 60+, while using the h2b ISA for the mid-term goal of home-buying?

I haven't read explicitly (but I assume) one can only hold a single LISA.
(Or am I wrong? can I hold multiple LISAs of differing types, but only contribute to one or the other per tax year?)

Foolish question?

Ed-1

Cash-Strapped.T32 wrote: »

Hi, just a random thought I had on reading up on the LISA due to come in next year.

I'm going to be opening a h2b ISA soon, no plans to buy for a good few years.
I earn a modest wage, so I'm unlikely to hit the upper limits of what I can save in any accounts - I'm currently 35, so would probably be buying very late 30's, early 40's.
Oh, and I don't live in the South East, so a £250k limit on a house is still pretty good round here...

So you'd think a LISA is easily my best bet - better yet, start on a h2B ISA now, and then transfer the balance in, allowing me to possibly deposit £4k plus the transferred-in bal in the first year. Nice.

However, can anyone forsee a benefit to opening, and keeping, a h2b ISA (which is a cash isa) for it's home-buying function, and also opening a s&s LISA, solely for it's retirement function?

My understanding is that over the long term, a s&s ISA is likley to outperform a cash ISA, right?
So assuming the 25% bonus is open to me on the h2b, and I'm not likely to buy a house worth nearly half a mill, is it not a good idea to allow the long-term benefits of the s&s LISA to accumulate for the time when I'll want it at 60+, while using the h2b ISA for the mid-term goal of home-buying?

I haven't read explicitly (but I assume) one can only hold a single LISA.
(Or am I wrong? can I hold multiple LISAs of differing types, but only contribute to one or the other per tax year?)

Foolish question?

You can open a new LISA every tax year. So you can open a cash LISA one year and a S&S LISA the next.

Cash-Strapped.T32

Ah, so that rather removes the entire premise from the question then!
Thanks, I hadn't seen that stated anywhere explicitly.

I guess then that my best option would be to open the h2b ISA now to get as much in there before next April as possible, and transfer it all over to a cash LISA when they're available.

Then, the next year I can open a s&s ISA, and my only *concern* at that point is deciding what proportion to put into each.
Nice - thanks again Ed.

Ed-1

Cash-Strapped.T32 wrote: »

Ah, so that rather removes the entire premise from the question then!
Thanks, I hadn't seen that stated anywhere explicitly.

I guess then that my best option would be to open the h2b ISA now to get as much in there before next April as possible, and transfer it all over to a cash LISA when they're available.

Then, the next year I can open a s&s ISA, and my only *concern* at that point is deciding what proportion to put into each.
Nice - thanks again Ed.

See the following document:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/553333/Lifetime_ISA_technical_note_September_2016_update.pdf

"1.9 Individuals will be able to open more than one Lifetime ISA during their lives, but will only be able to contribute to one Lifetime ISA in each tax year."

Note that there will be 4 ISA types from April 2017, of which you can contribute to a new one of each per tax year within the overall £20,000 ISA limit:

Cash ISA, S&S ISA, IF ISA, LISA.

Cash LISAs and S&Ss LISAs are not separate types of ISA account, so while you can open new ones in different tax years, you can only contribute to one LISA (either cash or S&S) per tax year. So if you had a cash LISA and a S&S LISA going, you could only contribute to one per year.