cash LISA + fund investment for retirement?

Alexland

csgohan4 said:My worry , they will change their charges once they have enough customers. AJ Bell has recently changed their charges already and so have Iweb to an extent

Am I right in remembering that your LISA was with EQi and if so perhaps you could comment on their service? If EQi increase their prices then AJ Bell would accept a transfer if still under 40.

TheLittleSaver said:

I see, so would you suggest to open a S&S LISA with AJ Bell AND a S&S ISA with EQi? 

Not really given EQi are cheaper for LISAs and Vanguard Investor (if you are happy with their limited choice) are cheaper for small S&S ISAs.
You get up to £85k FSCS protection (not covering normal market movements) per platform or fund manager.

TheLittleSaver

Checking the EQi website, I see there is some cost involved, plust the £1.50 pe rtrade, like AJ Bell:

https://eqi.co.uk/info/how-it-works/pricing

so perhaps it was more convienient before, but not so anymore?

But yes, I see that for LISA they are cheaper compared to AJ Bell.

Alexland said:

Not really given EQi are cheaper for LISAs and Vanguard Investor (if you are happy with their limited choice) are cheaper for small S&S ISAs.
You get up to £85k FSCS protection (not covering normal market movements) per platform or fund manager.

I thought you have an account with AJ Bell too? Anyway I think Aj Bell has more choice than Vanguard (which I think will be a more and more important factor as I get, hopefully, more experience and confidence in investing, I'm sure I will want more choice), so at this point, I might swap places and say EQi for LISA and AJ Bell for S&S ISA.

Hmm, thinking...

I mean, at the end of the day, what makes the difference is what I invest in, so basically I need the cheapest platform which proveds the widest variety of products, right?

Alexland

TheLittleSaver said:

I thought you have an account with AJ Bell too? 

Yes our LISAs are with AJ Bell but that's not what I would do if starting again now as EQi are slightly cheaper. The problem is that EQi will not accept inbound asset transfers so to sell down a £25k LISA and miss 1% of growth while it is transferring would cost £250 so not really worth moving when the difference in cost, for how we operate the accounts, is under £20 pa each and it will all be different in 10 years time.

TheLittleSaver

Alexland said:

Yes our LISAs are with AJ Bell but that's not what I would do if starting again now as EQi are slightly cheaper. The problem is that EQi will not accept inbound asset transfers so to sell down a £25k LISA and miss 1% of growth while it is transferring would cost £250 so not really worth moving when the difference in cost, for how we operate the accounts, is under £20 pa each and it will all be different in 10 years time.

Sorry, how do you pay only £20 pa with £25k LISA in AJ Bell? I ask that because, if that's what I would pay, then I don't mind, especially considering that I would take years to get to £25k in a LISA, so proportionally, I would pay even less for now?

TheLittleSaver

Is there anyone else here who would suggest EQi, or any other platform for a S&S LISA and/or ISA?

TheLittleSaver

Another think to consider, is that I am planning to open a S&S LISA, make my investment on my first £4,000, then not do anything until next tax year, when I will add £4,000 more, invest them and so on.
Same for when I would open a S&S ISA parallel to the LISA (either in a different platform or not).

I suppose this way I would minimize expenses, but would that be good in terms of investment too?

Alexland

TheLittleSaver said:
Sorry, how do you pay only £20 pa with £25k LISA in AJ Bell?

I said the difference is about £20 as EQi would cost £40 to hold a fund and we hold the accumulation LCWL ETF at AJ Bell to cap their fees at £3.50 pm plus a few £1.50 scheduled trades each year. Actually this tax year we did only 5 scheduled trades each so that's £7.50 so the difference for us is only £9.50 each or £19 total. Still no FSCS protection with ETFs.
If you have the full £4k available at the start of each tax year that would be the cheapest - one trade for the contribution and another for the bonus. The earlier the money is invested the sooner it starts earning a return so it could be a false economy to hold back on investing to save fees. Just remember to leave some cash in the account to pay the ongoing fee.

TheLittleSaver

Alexland said:

If you have the full £4k available at the start of each tax year that would be the cheapest - one trade for the contribution and another for the bonus. The earlier the money is invested the sooner it starts earning a return so it could be a false economy to hold back on investing to save fees. Just remember to leave some cash in the account to pay the ongoing fee.

Great, thanks.

By "trade for the bonus", do you mean what I would (hopefully) earn after a year with that investment? As in, I invest £4,000, which next year become let's say £4,500. So by the time I add my second £4,000 to invest, I will invest those in the LISA, plus I will have to invest the £500 separately, as I can't do one single investment of £4500, because of my £4,000 annual limit, correct?

Also, let's pretend that with my first £4,000 I buy one of AJ Bell packages for a OCF of 0.35%, then next year I have £4000 more to put in, so I invest them in another package with again a OCF of 0.35% (or I get the same package, although I supposed it would be better to get something else to differentiate?). Now, will I be charged 0.35% twice? Probably it's another a silly question, but it just came out of my mind.

TheLittleSaver

Anyway thank you so much Alexland for the time you are taking in answering, and everyone else who did so far, I really appreciate that.

Alexland

No the Lifetime ISA bonus is the 25% extra from the government added into the account a month or two after each contribution. So if you added a £4k lump sum, invested £3980 of it (leaving a £20 cash float to pay platform fees for the rest of the tax year plus a bit more) then a further £1k cash would be added a little bit later which you could then invest.
Provided you pick an Accumulation fund rather than an Income fund all the returns will be kept in the fund with no need to incur trade costs for reinvesting dividends.
The percentage fees are charged on an ongoing basis on the total amount like satanic mice nibbling away at your returns.
Try not to think of 'packages' you are buying a fund on a platform. The funds we are talking about are already sufficiently diversified that you don't need to buy a different one each time.