How to pick a S&S LISA for a beginner

strawb_shortcake

I have read through the LISA guide on here and had an initial lookat the AJ Bell and HL websites, but not sure I'm anything but more confused.
I'm considering a LISA to help bridge a gap between retirement and being able to claim my state pension and work pension with minimal reductions as its tied to state pension age. At present I don't have a retirement age in mind.
I would be able to add the full £4k this FY and possibly next but don't expect to be able to do so every year for the next 12 years. 
I've never done anything with S&S so wouldn't want to manage it myself, but how do I know what fund to pick? I know I wouldn't want to track the FTSE 100. Given that its 22 years before I can withdraw this money I'm more relaxed about the level of risk I'm prepared to take, but am typically risk adverse. I assume I can reduce the risk the closer I get to 60? 
I don't fully understand the fees for funds, I assume with a fund I wouldn't be trading so trading fees wouldn't apply - unless I'm adding more money maybe?
Nutmeg and Money Box both feel a bit Fisher Price, but given my post so far perhaps it is more suitable for me?
Outside of this I have a good work pension, a healthy emergency fund, and other savings besides including a help to save account.
TIA

thegentleway

Just stick it in a Vanguard life strategy fund that matches your appetite for risk.  Both AJ Bell and HL are reputable platforms, the former was cheaper when I looked about a year ago.

Thrugelmir

annabanana82 said:

Nutmeg and Money Box both feel a bit Fisher Price, but given my post so far perhaps it is more suitable for me?

That's their aim. The investing universe is broad and complex. Packaged options that meet smaller investors needs. 

strawb_shortcake

thegentleway said:

Just stick it in a Vanguard life strategy fund that matches your appetite for risk.  Both AJ Bell and HL are reputable platforms, the former was cheaper when I looked about a year ago.

Sorry, I feel proper thick here, but can I get a Vanguard life strategy through a S&S LISA? I've read about them and would be quite happy with that 

Alexland

You can get access to thousands of funds inc the VLS series on a DIY platform such as HL, AJ Bell or EQi. The investments offered at Nutmeg or Moneybox will be very limited. The cheapest LISA option for someone holding funds is currently EQi.
Have a read of this thread and the previous one linked from it:
https://forums.moneysavingexpert.com/discussion/6222726/aj-bell-lisa-v-eqi-lisa

Herbalus

annabanana82 said:

thegentleway said:

Just stick it in a Vanguard life strategy fund that matches your appetite for risk.  Both AJ Bell and HL are reputable platforms, the former was cheaper when I looked about a year ago.

Sorry, I feel proper thick here, but can I get a Vanguard life strategy through a S&S LISA? I've read about them and would be quite happy with that 

Think of it like supermarkets. You can go to any number of shops (the platform like Hargreaves or AJ Bell) and when there you can choose your product (your fund like the Vanguard Lifestrategy range). Not all products are available in all shops, so if you’re after a specific product/fund then you have to seek out which shop/platform offers it. Eg vanguard is available at Hargreaves and AJ Bell, but not at nutmeg.
The S&S Lisa is just the wrapper that defines how you can act with the product, so where vanguard is offered, you can buy it both inside or outside the Lisa wrapper.

Albermarle

I've never done anything with S&S so wouldn't want to manage it myself, but how do I know what fund to pick?

Just to be clear on the terms used . Not managing it yourself means you have to pay someone to manage it for you , like a financial advisor ( which for these sums is not practical or necessary ). I guess what you mean is you do not want to manage a portfolio of shares etc and just want one simple fund to invest in . However you have to pick that fund so you are managing the situation in a basic way ,

Also you say you have never done anything with S&S but I have a good work pension. Unless it is a final salary pension it will be invested in S&S and this needs managing as well.

Given that its 22 years before I can withdraw this money I'm more relaxed about the level of risk I'm prepared to take, but am typically risk adverse. I assume I can reduce the risk the closer I get to 60? 

Yes 

Alexland

Herbalus said:

Eg vanguard is available at Hargreaves and AJ Bell, but not at nutmeg.

Without wanting to make it even more complicated some of the Nutmeg portfolios use Vanguard ETFs not that you get to specifically select them just choose the basic investment style and amount of volatility you accept and they generate you a portfolio of underlying assets from various managers. More like buying a box of mixed sweets compared to getting your favourites via a pick n mix station.

thegentleway

annabanana82 said:

thegentleway said:

Just stick it in a Vanguard life strategy fund that matches your appetite for risk.  Both AJ Bell and HL are reputable platforms, the former was cheaper when I looked about a year ago.

Sorry, I feel proper thick here, but can I get a Vanguard life strategy through a S&S LISA? I've read about them and would be quite happy with that 

You're not thick at all. It's very smart to plan for retirement and you're asking the right questions. It's generally better to pay into work pension rather than LISA though  (especially if you are higher rate taxpayer) so I'm not sure you need a LISA. Also benefits from a pension can be taken from age 55 rather than age 60 for a LISA so if you're not sure about retirment age you work pension offers more flexibility (you can access earlier).

Alexland

thegentleway said:

It's generally better to pay into work pension rather than LISA though  (especially if you are higher rate taxpayer) so I'm not sure you need a LISA.

All depends on circumstances. For higher rate income or to get matched employer contributions a pension would beat a LISA. For someone at basic rate and salary sacrifice (to save NI) it's about the same either way. But for someone at basic rate without access to salary sacrifice then having made sufficient pension contributions to get employer matching (if available) then anything extra would be better in a LISA as it's the same 25% uplift but no risk of tax on withdrawal. I use a pension to avoid higher rate tax but contribute to a LISA from basic rate income (even though I have access to salary sacrifice) as the pension might otherwise have greater pension lifetime allowance risk. If there is a delay in the OP getting access to their workplace pension and a LISA at 60 would bridge the gap it suggests it might be a DB scheme? Still worth looking at if they are making the most of what it offers.

strawb_shortcake

So to answer a couple of the questions, I'm a civil servant so on Alpha, with a bit of Premium at the moment its not clear what the McCloud judgement will mean for me. Current retirement age is 68, but fully expect this to move along with probable changes to my pension. 
I can take my pension earlier but it reduces by 5% a year, I also have no automatic lump sum and I understand the exchange is pretty poor in pension terms. But I agreed to no automatic lump sum when I joined Premium.
I'm a basic rate tax payer, it would take me two promotions and a good pay rise to get to higher rate which is likely to be 10 years to get close to it in today's terms.