LISA, ISA or SIPP

Clairebearx

Hello all,

Firstly sorry if this in the wrong category, i wasn't sure where it would fit best.

I recently came across LISA's a couple of months ago (a little late to the game i know) as I'm self employed with no workplace pension and these seemed like a good option to help save for retirement. I'm already 39 and turn 40 in June, so i took the chance to open a Cash LISA this year (Moneybox) with the intent to open a S&S LISA in April when i've had chance to do a little homework and I'm able to open a S&S one.

I've done quite a bit research the past several weeks into S&S LISA's which has really helped, but also has created a few more queries i didn't have before.

As I'll be keeping this for the next 20ish years and will be riding out the ups and downs, the 'Growth' rather than 'Income' looked to be the better option with possibly a tracker better than an active? Bearing this in mind (i think) i've narrowed it down to either the AJ Bell 'Moderately Adventurous Fund' or the HL 'Simply Invest' option that uses the L&G UK Index Fund. Of course i could be going down the wrong path entirely.

I also wanted something in addition to a S&S LISA so anything over the £4000 allowance (we're only talking around £1000 per year) could be put to some use. Again keeping it in there for the next 25ish years and focusing more on growth than income. But I'm not sure whether a S&S ISA or a SIPP would be better. I did notice the Vanguard 'Target Retirement Funds' but after some research (mostly on here) the LS80 maybe a better option as the equity can come down too soon and i could keep the LS80 at a higher rate until i was ready to lower it (once again i may be completely wrong). Of course once i know which option might be better, I'll be doing more research into those.

So as someone who doesn't know a great deal about these things i wonder if anyone could let me know if I'm off in the right direction.... or should i buy a new map?

mcooke999

Roughly what is your annual profit from your self employed business? This will help answer the question.

Clairebearx

Oh sorry, i did mean to put that in my original post! It varies but not that much, around 15-16,000

Albermarle

either the AJ Bell 'Moderately Adventurous Fund' or the HL 'Simply Invest' option that uses the L&G UK Index Fund.

Just a possible word of warning . Aj Bell and HL are investment platforms that offer a huge range of possible investments.

To make it 'easier' for inexperienced investors they also offer their own branded funds , like the ones you are looking at .

Often they are not very good value for money in terms of annual charges  . These might be different, but would be worth checking the charges in comparison to the Vanguard ones for example, if you have not already done so . A difference of 0.1% is not significant but 0.5% is .

Username999

Clairebearx said:

AJ Bell 'Moderately Adventurous Fund' or the HL 'Simply Invest' option that uses the L&G UK Index Fund.  Vanguard 'Target Retirement Funds' , LS80 

Do you know what any of those funds consist of?
Or do you like their names?

Clairebearx

Albermarle said:

either the AJ Bell 'Moderately Adventurous Fund' or the HL 'Simply Invest' option that uses the L&G UK Index Fund.

Just a possible word of warning . Aj Bell and HL are investment platforms that offer a huge range of possible investments.

To make it 'easier' for inexperienced investors they also offer their own branded funds , like the ones you are looking at .

Often they are not very good value for money in terms of annual charges  . These might be different, but would be worth checking the charges in comparison to the Vanguard ones for example, if you have not already done so . A difference of 0.1% is not significant but 0.5% is .

Thanks for that heads up. It's certainly one of the things I'm checking and bearing in mind.

Clairebearx

Username999 said:

Clairebearx said:

AJ Bell 'Moderately Adventurous Fund' or the HL 'Simply Invest' option that uses the L&G UK Index Fund.  Vanguard 'Target Retirement Funds' , LS80 

Do you know what any of those funds consist of?
Or do you like their names?

Wow, could you have made that any more patronising? Probably not.

Putting aside the condescending wording....yes, Ive looked into both of those and no, i don't just like their names.

Clairebearx

Perhaps I'll just look at getting a SIPP and an ISA then 🤷🏼‍♀️

Dh6

I’m in a similar situation to you Clare. After some very helpful advice on this forum I’ve opened a cash LISA and have invested in a global equity tracker via cavendish online. 

I’ll maybe look at an ISA in the near future but I’m happy for the time being. 

cloud_dog

Clairebearx said:

Perhaps I'll just look at getting a SIPP and an ISA then 🤷🏼‍♀️

A LISA is likely to be more tax efficient for you so, would suggest that and a ension if you have spare monies.

Alexland

If you are putting money aside until age 60+ then a Cash LISA would be unsuitable as the interest rate is too low to maintain spending power so you are essentially burning your bonus on inflation. Cash LISAs are only intended for those who are going to make a qualifying property purchase soon.

Assuming your income is at basic rate tax then S&S LISA contributions will be more efficient than using a SIPP as they both offer the same 25% uplift but a SIPP is likely to be partially taxed on withdrawal.

You may find AJ Bell is your most suitable S&S LISA provider as they will allow transfer-in of your existing Cash LISA (unlike HL), they have a viable business model (unlike most others) and offer capped fees on exchange traded assets when the account gets bigger. HL also offer capped fees but at a higher level in particular with AJ Bell you can use the regular investment lower trade rate for the bonus money which is not possible on HL.

We started our LISAs with Nutmeg, transfered to HL (when they supported inbound transfers) and are now happy on AJ Bell's capped fees. If you are starting from a lower balance you might be better with funds and on percentage platform fees for the first few years.