Anyone else frustrated by poor choice of Lifetime ISAs?

Ed-1

jamei305 wrote: »

I haven't opened one for this reason. What if HL discontinue it in five years for example? There might only be one provider to choose from and they could whack up the fees.

I need to be confident there will be competition in the market until I'm 60.

Noone can know what the future will bring. The Government could stop paying out bonuses.

ValiantSon

greendoor665 wrote: »

It's 9 months since it was launched and there are still only a small handful of options. 1 cash, and a few stocks and shares. For stocks and shares, if you discount ones with robo-advice only or high management fees, you're left with only 2: Hargreaves Lansdown and AJ Bell Youinvest.

I've had a H2B ISA for a while and I'm planning to transfer it across soon. The main reason being the maximum property value is 250k, which no longer buys you much at all in the south east, especially if I buy with a partner. Whereas the LISA is 450k across the whole UK, not just London. Also I missed the boat on the 4% deals which were initially available and am only earning 2% which doesn't even beat inflation.

I've been waiting for more providers to launch accounts but it seems nothing is happening, so I've now given up and applied to AJ Bell. To be fair, their platform fee at 0.25% is pretty competitive, but I was hoping to have a few more options to choose from by now.

What are you intending to invest in and how regularly will you do so? AJ Bell may be the best platform to use given their 0.25% platform fee, but they also charge for trading at £1.50 per trade for funds and £9.95 per trade for ITs and ETFs. This could soon add up to quite a lot if you were, for example, investing each month. Hargreaves Lansdown, on the other hand, might charge 0.45% platform fee, but don't charge anything to trade funds and, as noted above, cap the fee at £45 p.a. for ITs and ETFs. Potentially, Hargreaves Lansdown, with their higher platform fee, could actually work out cheaper.

I don't intend to be patronising, but have you done the sums?

cjv

Yeah the lack of options is annoying. I do wish my money could of gone into a Cash LISA at a decent rate, but with Skipton the only one on offer I settled with Nutmeg.

I am happy with it so far, but if a decent Cash LISA comes on the market before the next tax year I will open one of those to hold cash alongside my S&S LISA.

ValiantSon

cjv wrote: »

Yeah the lack of options is annoying. I do wish my money could of gone into a Cash LISA at a decent rate, but with Skipton the only one on offer I settled with Nutmeg.

I am happy with it so far, but if a decent Cash LISA comes on the market before the next tax year I will open one of those to hold cash alongside my S&S LISA.

You would only be able to pay into one LISA in any given tax year, so if you open a cash LISA in the new tax year then you will not be able to make any further payments into your S&S LISA until the tax year 2018/19. Are you really sure it is worth doing this?

It is very unlikely that a new cash ISA will appear with a really good interest rate. The number of LISAs being offered is pitifully low and providers don't seem any more inclined to rush to offer them now either. I don't see why they would offer any more interest than for a regular ISA (and indeed, so far, they haven't - indeed Skipton's LISA rate is actually 0.25% lower than their 1 year fixed ISA rate). The incentive to the provider to offer more interest is not there because they will end up having to pay greater interest (which is compounding) due to the government bonus.

If LISAs are going to work, then I think the S&S model is the only one that will survive.

TheShape

I prefer the 0.25% platform fee of AJ Bell but dislike the fact that you need to leave cash un-invested inside the LISA to pay fees otherwise a disinvestment charge of £29.95 per holding applies if they need to sell holdings to pay fees. You'll also likely need to sell some holdings each year after 50 as you won't be making new contributions. You'd probably want to err on the side of caution and sell more of your holdings than you might need as strong performance would increase the fees and increase the chance of paying a disinvestment fee..

HL allows you to pay fees from a fund and share account so investing the whole amount of your LISA subscription leaving you to top up the fund and share account to cover fees whenever needed.

Alexland

Yes I am with Nutmeg and have concluded that once it's big enough in a few years I will switch to HL for the capped fees and invest in SWDA which is an accumulation ETF with 100% global equities so very volatile but I will counterbalance that with a slightly higher bond/gilt ratio in my pensions. I would rather get the long term higher growth in a wrapper that will be untaxed on withdrawal.

AJ Bell would be a bit cheaper but I am avoiding as they administer my Halifax SD SIPP and I like to spread my eggs.

I will probably contribute the £4k, wait for the £1k then invest both at once to save a trade fee. Ok the £4k might, on average, have otherwise grown by more than the trade fee by then but I really dislike paying fees.

Being able to pay the £45 platform fee from the fund and shares account will be a bonus when I am 50 and not able to contribute any more cash into the LISA. I don't want to have to pay a trade cost each year to sell units to pay the fees.

With contributions, bonuses and growth once the LISA gets to £45k the platform 0.1% and ETF fund 0.2% fees should total 0.3% which I consider attractive.

Just hoping the government doesn't change the goalposts in the meantime.

Alex

cjv

ValiantSon wrote: »

You would only be able to pay into one LISA in any given tax year, so if you open a cash LISA in the new tax year then you will not be able to make any further payments into your S&S LISA until the tax year 2018/19. Are you really sure it is worth doing this?

It is very unlikely that a new cash ISA will appear with a really good interest rate. The number of LISAs being offered is pitifully low and providers don't seem any more inclined to rush to offer them now either. I don't see why they would offer any more interest than for a regular ISA (and indeed, so far, they haven't - indeed Skipton's LISA rate is actually 0.25% lower than their 1 year fixed ISA rate). The incentive to the provider to offer more interest is not there because they will end up having to pay greater interest (which is compounding) due to the government bonus.

If LISAs are going to work, then I think the S&S model is the only one that will survive.

Yes I was hoping to open a Cash LISA and only pay into that next year, while keeping my Nutmeg account(not transfer it).

I would only consider it, if a decent rate Cash LISA was on offer for say 3% or more. Highly unlikely so I will probably be sticking with Nutmeg.

lopsyfa

AJ Bell also cap their fees for shares, ITs and ETF to £30 (https://www.youinvest.co.uk/lifetime-isa/charges-and-rates) and you can pay £1.5 to trades shares,etf and ITs using their regular investment option.

You could buy some dividend paying funds to cover the charges once you stop contributing to the account, so no need to sell investment to pay fees.