Where to put this money?

Minxy1

grumiofoundation said:

Minxy1 said:

grumiofoundation said:

Minxy1 said:

Alexland said:

Minxy1 said:

I've opened and put £4k into a retirement LISA.

Do you mean a Stocks & Shares LISA and if so have you invested it too?

No. Not a Stocks and shares ISA. I don't know much about them or how they work. It's just a lifetime ISA to use for retirement. 

Cash Lifetime ISA or Stocks and shares lifetime ISA? 

Cash. Not stocks and shares. 

See Alexlands post above - saving in cash for retirement means you will lose money to inflation, over 20+ years 

Even with the interest and bonus? Surely its like having a savings account for the long term? 
Can I have a cash ISA and a Stocks and shares ISA? 

grumiofoundation

Minxy1 said:

grumiofoundation said:

Minxy1 said:

grumiofoundation said:

Minxy1 said:

Alexland said:

Minxy1 said:

I've opened and put £4k into a retirement LISA.

Do you mean a Stocks & Shares LISA and if so have you invested it too?

No. Not a Stocks and shares ISA. I don't know much about them or how they work. It's just a lifetime ISA to use for retirement. 

Cash Lifetime ISA or Stocks and shares lifetime ISA? 

Cash. Not stocks and shares. 

See Alexlands post above - saving in cash for retirement means you will lose money to inflation, over 20+ years 

Even with the interest and bonus? Surely its like having a savings account for the long term? 
Can I have a cash ISA and a Stocks and shares ISA? 

You can contribute to stocks and shares ISA, cash ISA and lifetime ISA (of either type) in same tax year.

Even with the bonus cash LISA will (most likely) lose out to stocks and shares ISA long term. 

As an example:
£4000 into cash LISA
Bonus makes £5000
1% a year interest for 20 years - final balance £6106

versus 

£4000 in stocks and shares ISA
3% per year average return (pretty conservative estimate) 
Final value = £7283

But the choice isn't between cash LISA and stocks and shares ISA but between cash or stocks and shares LISA (in both cases get the bonus so only need to compare saving in cash versus investing).

Alexland

Minxy1 said:

Even with the interest and bonus? Surely its like having a savings account for the long term?

You get the same 25% bonus on a S&S Lifetime ISA. If you are still under 40 you can ask certain S&S LISA providers (eg EQi or AJ Bell) to transfer-in your old Cash LISA account.

Having a savings account for the long term is undesirable as if inflation runs at a long term average of 2% pa and your interest rate is 1% pa (if you shop around) you are losing 1% spending power each year as the cost of goods goes up faster than your money is accumulating.

You only want to hold enough cash for short term requirements (such as emergency money or if you are saving up to buy something soon) in which case it should be in an account that you can access when you need it without penalty.

For any money you will not need for 5-7 years or longer then a S&S fund (via a tax efficient wrapper such as a S&S ISA, or S&S LISA/Pension if happy to wait until old age) is preferable. If your S&S investments grow 4.5% pa (on average, with some ups and downs along the way) then with 2% inflation and 0.5% investment costs your money is growing, in 'real terms', at a rate of 2% above inflation so in future you can buy more with your money than you could today. That's why your pension will be invested in S&S.

Minxy1 said:

Can I have a cash ISA and a Stocks and shares ISA? 

https://www.gov.uk/individual-savings-accounts

"There are 4 types of ISA:
    cash ISAs
    stocks and shares ISAs
    innovative finance ISAs
    Lifetime ISAs"
You can have a Lifetime ISA in either cash or s&s and contribute up to £4k per tax year and £20k in total across all 4 types of ISA.

Albermarle

Late 30s. I pay into work pension. Quite happy with that, although I am going to up how much I pay into it every month.

It is good you plan to start contributing more . Have you ever looked into how the pension is invested ? If not ( and over 90% never do ) then you are most likely to be invested in the default fund, which is a kind of middle of the road , medium risk fund.

At your age , with many years to go to retirement , it is usually better to be in a more adventurous fund . In English that means a fund that will grow more in the long run but that will go up and down more in the short term.

MaxiRobriguez

Best thing to do for your money at the moment is nothing.

Instead, take the time to learn about the basics of investing. If you spend a couple of hours each day for the next two months you'll get a pretty firm grasp of all the basic concepts.

You can then make a decision on what to do with your money that is right for you, and infinitely more efficient than making a decision now when your understanding isn't up to scratch and random people on the internet are trying to second guess what might be right for you.

Albermarle

MaxiRobriguez said:

Best thing to do for your money at the moment is nothing.

Instead, take the time to learn about the basics of investing. If you spend a couple of hours each day for the next two months you'll get a pretty firm grasp of all the basic concepts.

You can then make a decision on what to do with your money that is right for you, and infinitely more efficient than making a decision now when your understanding isn't up to scratch and random people on the internet are trying to second guess what might be right for you.

Good advice .