H.Lansdown & AJ Bell - Lifetime ISA

JustAnotherSaver

I was googling for Lifetime ISA providers as alternatives to H.Lansdown. I forever read that they're on the expensive side & at the moment i only have the £100 opening amount in there (actually like £130 with gains but just saying - nothing major).


I noted AJ Bell at pretty much half the annual charge so i jumped on their site & noted a link to their charges.



https://www.youinvest.co.uk/lifetime-isa/charges-and-rates


£1.50 per deal on funds. £1.50 for regular investments whereas H.Lansdown states no dealing charges.



I'd be contributing each month so if i understand right then this is an extra £18 per year on top of their annual charge. I'm no whizz with numbers like that so i'm thinking now that'd bring them closer to H.Lansdown's charges.


But at the same time i can't help but think i've misunderstood it.




I know what i'm going to invest in, i just want to do it as cheaply as possible.

Alexland

You haven't misunderstood AJ Bell have a lower headline percentage rate but then if you have a small account and/or frequent trades that is wiped out by the £1.50 fund trade charges. Also remember that HL gives access to discounted funds such as L&G International, Blackrock Consensus 85/100 and Lindsell Train Global Equity.

Once the account gets big enough it's cheaper to pay the capped £30 AJ Bell or £45 HL charges for holding Shares, ITs or ETFs but then you have to change your investment and pay even bigger circa £10 trading fees.

My view is they are both 'on the expensive side' but there is less choice in the LISA market.

Alex

masonic

What is the purpose of your LISA, presumably retirement yes?

Who is cheaper depends on what you invest in. Do you really have to contribute monthly, or can you put in a lump sum at the start of the tax year, which would be cheaper if you invest with AJ Bell?

0.45% of £4,000 is £18, while 0.45% of £20,000 is £90. Those £1.50 dealing charges are much bigger in the context of the former.

Alexland

If comparing to the ISA market then VLS80 on Vanguard Investor would be 0.37% (0.15% platform + 0.22% fund OCF) compared to Blackrock Consensus 85 at HL at 0.54% (0.45% platform + 0.09% fund OCF) so you are effectively paying a 0.17% premium each year to have a LISA over an ISA.

Still worth it for the 25% bonus.

Alex

JustAnotherSaver

Well this is strange. It's like you've been checking on my past 24 hours browsing history. Those are exactly the funds i was looking at. I'd been looking at the HSBC Global Balanced as well as a possibility but yeah pretty much a toss up between those 3.



I would only be investing small amounts and yes for retirement. The bulk of my retirement pot would be the SIPP i have.



And i don't have to sub monthly, no. I could put it in a regular saver each month and then dump it in the LISA at the end of the 12 months, it makes no difference to me whether i pay monthly or yearly.

masonic

JustAnotherSaver wrote: »

Well this is strange. It's like you've been checking on my past 24 hours browsing history.

It turns out compromising people's computers and getting into their browsing history has become more difficult of late. You usually have to direct the person to a certain website or get them to click a link in email and people are getting wise to that. It's easier to dust off your crystal ball and use your psychic powers the old fashioned way these days

Alexland

JustAnotherSaver wrote: »

Well this is strange. It's like you've been checking on my past 24 hours browsing history. Those are exactly the funds i was looking at. I'd been looking at the HSBC Global Balanced as well as a possibility but yeah pretty much a toss up between those 3.

Despite the cheapness I wasn't happy with the heavy US bias of the L&G International. I flirted with LTGE (and owned it until very recently) but settled on having our whole HL LISAs in Blackrock Consensus 100. My investment accounts are getting more passive over time.

HSBC GS Balanced is a good fund but I decided best held elsewhere - in my SIPP.

I run our ISAs and LISAs with 100% equities to get maximum tax free growth and am more cautious in our safety net pensions for which the growth will be taxed.

Alex

JustAnotherSaver

Alexland wrote: »

Despite the cheapness I wasn't happy with the heavy US bias of the L&G International. I flirted with LTGE (and owned it until very recently) but settled on having our whole HL LISAs in Blackrock Consensus 100. My investment accounts are getting more passive over time.

HSBC GS Balanced is a good fund but I decided best held elsewhere - in my SIPP.

I run our ISAs and LISAs with 100% equities to get maximum tax free growth and am more cautious in our safety net pensions for which the growth will be taxed.

Alex

That's something i've been spending the past couple days doing - reading about the funds and bias. Everything seems to be biased towards something, just seems you have to make a judgement on what you'd rather be biased in (or throw in another fund to counterbalance i suppose). I'd rather not have too many funds though so for now it's a case of selecting one.


HL's direct debit setup seems to be broken though so i'll have to do it via post.

Alexland

JustAnotherSaver wrote: »

HL's direct debit setup seems to be broken though so i'll have to do it via post.

I just make a few lump sums into our LISAs each year eg when regular savers mature as it's less fiddly with reinvesting the bonuses which HL cannot do automatically. Unfortunately any work bonuses have to go into the pension to avoid higher rate tax and child benefit clawback. I keep our LISA values matching (within a few pennies) for less detail to remember and track.

My wife is younger but we are both in our 30s and I have calculated that if we are allowed to contribute £4k PA until 50 then with a 2% return above fees and inflation we should have around £100k in mine and £150k in hers at age 60.

My LISA would give around £20k to feed into my wife's pension (until she is 60) and 2x£40k for children wedding & house deposits. Then of my wife's we could use around £40k to feed into her pension (until she is 75) which leaves around £110k leftover for retirement adhoc costs.

Alex

masonic

JustAnotherSaver wrote: »

That's something i've been spending the past couple days doing - reading about the funds and bias. Everything seems to be biased towards something, just seems you have to make a judgement on what you'd rather be biased in (or throw in another fund to counterbalance i suppose). I'd rather not have too many funds though so for now it's a case of selecting one.

Do you have other investments? My strategy is to hold one fund in my LISA, which forms part of a larger portfolio, the rest held in my S&S ISA.

JustAnotherSaver

masonic wrote: »

Do you have other investments? My strategy is to hold one fund in my LISA, which forms part of a larger portfolio, the rest held in my S&S ISA.

I have a workplace pension which i currently pay the minimum in to, so right now that's hitting around £45-£50 per month give or take. This is with Now Pensions so it's not the most flexible of pensions as you can only decide whether you want to pay in more or not (compared to say NEST where you can decide to increase your risk level as well as how much more you wish to contribute).


I also have a SIPP with Cavendish, invested in one fund. I started late at 28 (early for some, i know) and for the first few years only put in £100 per month as the money was required elsewhere so my pot is not huge. Probably around £12k right now & i'm 35 so i guess i'll be forever chasing which is why i gave my siblings a kick up the backside at 19 & 20 to get started so that they don't make the same error i did in leaving it late because 'pensions are for old people'.



And then i opened the LISA with the minimum £100 on opening day just to get it open. I've contributed nothing since to it.