When to transfer funds to to my LISA?

ChrisJones94

Hello,

I have recently opened a LISA with the intention of using it to purchase my first home in the coming years (Noting that I have to wait a year from opening the account to use it). I currently have a couple of thousand pounds in my Help to Buy ISA and I am wondering when I should transfer this to my LISA? Should I do it instantly or should I wait until after the LISA has been open for a year? Or transfer it just before the LISA has been open for a year to take advantage of the higher interest rate in my help to buy account?

Once the LISA has been open for a year I plan on putting the full £4000 allowance in per year.

Any advice would be great.

Thanks,
CJ

eskbanker

As the LISA contribution allowance is £4K per tax year (i.e. unrelated to the year between opening and penalty-free access), the approach often recommended in your situation is to save elsewhere and transfer money over to the LISA towards the end of the tax year, i.e. in March, which optimises interest-earning potential if you're going to fill the LISA each year.

Difficult to generalise though, if you're only saving £200pm in the HTB but plan to save £4K/year in the LISA, suggesting more funds becoming available - if you have access to other money then you may benefit from regular saver accounts for example, if you've effectively accepted that you won't be using the HTB to support your first property purchase....

normantd

eskbanker wrote: »

the approach often recommended in your situation is to save elsewhere and transfer money over to the LISA towards the end of the tax year, i.e. in March, which optimises interest-earning potential if you're going to fill the LISA each year.

Hi eskbanker - would you suggest this is also the best approach for a S&S LISA? Just re: the money being invested, I wonder if you might know whether in this case it is beneficial to be paying in monthly (with the value changing - hopefully increasing - on a smaller amount monthly), or whether it is still recommended to earn interest elsewhere and transfer annually (with the value changing on a larger amount over the much longer term)?

Hope that's clear? I opened a S&S LISA with the view that I wouldn't be using it to purchase a house for at least 5 years. Probably more like 7-10. Right now I pay in a small amount monthly - will be increasing this, but wondering whether to do so in a savings account and transfer at financial year-end.

Thanks!

eskbanker

normantd wrote: »

Hi eskbanker - would you suggest this is also the best approach for a S&S LISA? Just re: the money being invested, I wonder if you might know whether in this case it is beneficial to be paying in monthly (with the value changing - hopefully increasing - on a smaller amount monthly), or whether it is still recommended to earn interest elsewhere and transfer annually (with the value changing on a larger amount over the much longer term)?

Hope that's clear? I opened a S&S LISA with the view that I wouldn't be using it to purchase a house for at least 5 years. Probably more like 7-10. Right now I pay in a small amount monthly - will be increasing this, but wondering whether to do so in a savings account and transfer at financial year-end.

Thanks!

My suggestion about delaying funding a LISA until towards the end of the tax year was very much referring specifically to cash LISAs and the exact opposite applies to S&S ones.

The rationale for cash LISAs is that the few products on the market all pay sub-par interest of 1% or thereabouts (so can be beaten elsewhere while still ultimately doing enough to earn the LISA bonus), but with S&S LISAs (or any other S&S investing) there's generally no value in delaying the investment, on the basis that the direction of investments is more often up than down and therefore on average getting invested sooner rather than later is more often advantageous than not....