Should I keep investing into VLS?

Corbula

pjcox2005 wrote: »

I think key action would be to transfer help 2 buy into a LISA if you're not looking to buy in the next 12 months. Can save £1,600 more per year in it so that's £400 a year from the government that you're missing out on.

If you have spare funds then I'd keep ploughing if in to stocks and shares and would keep it simple with VLS. Sounds like you have cash savings as a back up if needed rather than breaking the stocks and shares.

Other option is to consider peer to peer lenders (ratesetter etc) and put money in those to get the sign up bonuses.

The reason I haven't transferred my HTB into a LISA is because although I fully intend on buying a house, who knows what will happen in the next couple of years. So if I do and then something happens and I either can't or have no need to buy a house that money is then stuck there unless I take the penalty.

They are spare funds but it would mean I would have less money for a deposit in a couple of years time.

I thought though that to keep investing a little each month it would put that ISA in a better position long term.

So I'm not sure what to do at the moment.

Bravepants

I believe Mr Money Mustache (www.mrmoneymustache.com) invests solely in US funds, and he seems to be doing OK!

Alexland

Corbula wrote: »

The reason I haven't transferred my HTB into a LISA is because although I fully intend on buying a house, who knows what will happen in the next couple of years. So if I do and then something happens and I either can't or have no need to buy a house that money is then stuck there unless I take the penalty.

Even if you didn't buy a property having the money trapped in the LISA until 60 could still be useful in your retirement plan. We have LISAs for retirement investing (alongside pensions). Might be worth sticking £4k in this tax year if you have remaining ISA allowance?

Alex

Corbula

I still have allowance, other than what's gone into my help to buy I haven't used any. If I paid into a LISA for retirement then I would be able to keep contributing to my stocks and shares isa as well. Personally I don't think a LISA will do better when I get to retire. I have my doubts that a LISA will still be around when I get to retire either.

bostonerimus

Bravepants wrote: »

I believe Mr Money Mustache (www.mrmoneymustache.com) invests solely in US funds, and he seems to be doing OK!

That's probably ok of someone living in the USA, but it is not a recommended asset allocation for US residents and is definitely not a sensible allocation for non-US residents.

bowlhead99

Corbula wrote: »

If I paid into a LISA for retirement then I would be able to keep contributing to my stocks and shares isa as well. Personally I don't think a LISA will do better when I get to retire. I have my doubts that a LISA will still be around when I get to retire either.

Maybe you misunderstand how a LISA works.

It works the same as an ISA except you get 25% on top of your own money that you contributed to it between ages 18 and 50 (up to £4k a year), for free. That money is invested in whatever you like, and you can take it out, penalty-free, once you are age 60.

So, it seems a bit strange to doubt that it will do better than a regular ISA. Between now and age 50 your contributions will literally give you 25% more money to invest than a 'normal' ISA, and it can be invested in the same things as a normal ISA. Investing £125 into the same funds, giving the same percentage return, as investing only £100 in those funds... gives you more money.

Alexland

Corbula wrote: »

I still have allowance, other than what's gone into my help to buy I haven't used any. If I paid into a LISA for retirement then I would be able to keep contributing to my stocks and shares isa as well. Personally I don't think a LISA will do better when I get to retire. I have my doubts that a LISA will still be around when I get to retire either.

Sure you could continue with the S&S ISA provided all your types of ISA contributions don't exceed the £20k annual limit.

It might be worth starting with a LISA in cash with Skipton while you are saving for a property and then, if you determine this will never happen or after your property purchase, transfering across to a s&s LISA provider to continue accumulating money for retirement.

If using a LISA for retirement saving they are complementary to a workplace pension which can offer higher rate tax relief (for high earners) and matched employer contributions. Still the main benefit of a LISA is the 25% bonus and, unlike a pension, is untaxed on withdrawal.

Even if you are not confident that the LISA product will continue there are over a hundred thousand customers now and growing by the day so the government would be under pressure to provide a roadmap to a replacement product (as they have done with HTB ISAs). As the ability to open a HTB ISA is time limited more financial institutions will have to offer the LISA to attract the target FTBer customers.

Alex

Bravepants

bostonerimus wrote: »

That's probably ok of someone living in the USA, but it is not a recommended asset allocation for US residents and is definitely not a sensible allocation for non-US residents.

Indeed, but there is a definite contradictory thought process going on when someone buys a so called one-stop fund like VLS, and then decides, "Oh hang on, it's a bit heavily weighted in this or a bit light on that". The idea is "fire and forget", otherwise the aim of purchasing it is defeated.

I'm not suggesting anyone should solely buy US equities/bonds etc. Global is the way to go. But I wanted to point out that some people aren't too bothered about those sorts of details like geographical diversification, even to the extreme.

Joe_Bloggs

Corbula wrote:-

For me, the accounts like the Nationwide Flexdirect aren't really worth the small return to me. As it's only on £2500 and that 5% is only for a year. Plus I don't know if I could keep putting £1000 in each and every month. I know a lot of people will disagree as any money is a bonus but £125 for a year and then having to move it again isn't worth it to me.

You do not have to keep the additional £1000 per month inside the Flex Direct account for any minimum time. Multiple smaller faster payments in and out all contribute to the total through.

If you take out the Regular saver account of 250 per month (239.80 using the Flex Direct Interest on £2500) you will have a regular savings lump of 3032.40. With this you can do any further investment strategy you like. You can chop and change at any time during the year.

Building a reputable financial relationship with a prospective future lenders is probably a good thing. Making 5% on your money at the same time makes good sense.

I chose to invest the proceeds of a 0.75% cash ISA into an ISA for VLS60 and VLS80. I am close to breaking even after 6 months. This investment was done out of despair at the alternatives once all the regular savings and current account rates were taken. I have no regrets about my decision. It seems that whenever Theresa May or Donald Trump says something about the economy the value falls.
J_B.

Corbula

Alexland wrote: »

Sure you could continue with the S&S ISA provided all your types of ISA contributions don't exceed the £20k annual limit.

It might be worth starting with a LISA in cash with Skipton while you are saving for a property and then, if you determine this will never happen or after your property purchase, transfering across to a s&s LISA provider to continue accumulating money for retirement.

If using a LISA for retirement saving they are complementary to a workplace pension which can offer higher rate tax relief (for high earners) and matched employer contributions. Still the main benefit of a LISA is the 25% bonus and, unlike a pension, is untaxed on withdrawal.

Even if you are not confident that the LISA product will continue there are over a hundred thousand customers now and growing by the day so the government would be under pressure to provide a roadmap to a replacement product (as they have done with HTB ISAs). As the ability to open a HTB ISA is time limited more financial institutions will have to offer the LISA to attract the target FTBer customers.

Alex

As far as I'm aware the deadline for transferring a help to buy ISA into a LISA has past now. So as I have more than the £4000 limit I won't be able to transfer it in the next tax year anyway.

If I did have one and didn't end up using it for my first house so transferred it to a stocks and shares LISA, then that would make my current Stocks and Shares ISA pointless having both. However I can access my stocks and shares ISA money anytime and can't with a LISA.

My stocks and shares ISA isn't necessarily for retirement, just later in life however I will probably still have it (or whatever the equivalent is then). I'm 28 this year so I've got a long way to go before then.

I don't really want to rely on just my workplace pension for retirement, that's one of the reasons I think I should be continuing to invest a little each month to my Stocks and Shares ISA.

My cash ISA is with Nationwide, I transferred this to their Loyalty Single Access ISA yesterday.