Lifetime ISA - Stocks & Shares

cmbailey

Hi all,

I'm new to the forum so apologies as no doubt this will have been discussed previously.

I've done some research on Lifetime ISA's as I'm interested in opening one. I'm already a homeowner so the purpose of this would be for retirement. Given it will be long term investment (20+ years) everywhere seems to be pointing me towards a stocks and shares LISA rather than a cash LISA. I've read and now understand that in the short term it is easy to lose value but over a longer term there is an extremely high chance (read somewhere it was 99% for 10+ years) that the gains would be greater than a cash ISA. However, I am complete beginner when it comes to investments.

I've looked in to numerous companies (AJ Bell, HL & Nutmeg) and 'managed' portfolios as well as reading some rather worrying reviews on Trust Pilot. Basically, I've no idea which company to go with or which account to open. At this early stage, I'd be looking to put £25/month in the account with a view to increasing this at a later stage.

What would people recommend I go with as a beginner in stocks and shares LISAs? Is it worth the hassle or should I stick to cash LISA?

Thanks in advance!

capital0ne

Over 20+ years a stocks and shares ISA of any type is the way to go. Inflation will erode any cash ISA right now

At £25/month is too low, but at least it's a start, but be careful of trading fees and platform fees which could seriously dent your£25/month if you don't pick wisely. Maybe save for a year in a cash ISA and transfer it to a Stocks and Shares ISA once a year.

Good luck

foofi22

Certainly, for long-term investments, stocks and shares (equities) have beaten cash.

As far as I can remember, the only providers offer S&S Lifetime ISA (LISA) are those you have listed. For your intended contribution amount I believe HL would be cheapest. AJ Bells "headline" rate is cheaper, however note their regular investment charges would eat a large proportion of your regular investment. HL and AJ Bell will offer more investment choice than Nutmeg.

Once you have decided on a provider, you will have to decide on what to invest in. Initially this can be cash whilst you decide. Typically, people will go for one of the various cheap multi-asset funds available when starting out, have a search on this forum. They take the investment decisions on your behalf and are for the most part well diversified (i.e. invest in a lot of things)

You are planning this for your retirement – therefore it would be worth considering what pension provision you have before doing this. For example, are you employed? If so, do you contribute enough to your pension to maximise employer matching?

cmbailey

Thanks for the response and advice. Yes I'm employed and pay into a pension scheme which my employer also contributes. This would be in addition to that.

Alexland

For £25 per month you would be better with a HL LISA as the £1.50 fund trade fees at AJ Bell would make them a very expensive option. We are with HL for our LISAs and the service is alright. Consider investing in a discounted multi asset fund such as Blackrock Consensus 85.

menziesthefish

I'm already a homeowner so the purpose of this would be for retirement.

I'm sure you came across this in your research, but just to be sure you're aware: if you intend to use the money for your retirement it means committing to not accessing it until at least age 60. If you do, you will incur a hefty 25% charge.

Also worth bearing in mind that you will not be able to contribute to the LISA once you turn 50, which also means you will stop receiving any government bonuses at that point too.

cmbailey

Thanks everyone for the help. By the sounds of it £25/month is a bit on the low side given the fees some companies charge. Think I'll take capital0ne's advice and put the £25 to one side until I've got couple of hundred quid to deposit in. From then I'll put £25/month in unless my situation has changed and I can put in a bit more. Unless anyone sees an issue doing it this way? Thanks again!

Alexland

cmbailey wrote: »

Thanks everyone for the help. By the sounds of it £25/month is a bit on the low side given the fees some companies charge. Think I'll take capital0ne's advice and put the £25 to one side until I've got couple of hundred quid to deposit in. From then I'll put £25/month in unless my situation has changed and I can put in a bit more. Unless anyone sees an issue doing it this way? Thanks again!

If you go with HL investing in a fund like the Blackrock Consensus 85 fund then there are only percentage fees so you won't have to worry about any fixed account or trade charges damaging your return. HL are happy to take contributions of £25 per month.

https://www.hl.co.uk/investment-services/vantage-service/regular-savings

Alex

cmbailey

I see. Exactly why I needed to ask this forum! Cheers.