LISA for retirement?

Polly05

grumiofoundation said:

Polly05 said:

Alexland said:

A cash LISA would be totally unsuitable for saving for 20+ years until age 60 as the interest rate is likely to spend most of the time below inflation eroding your spending power. 

Why are cash LISAs a thing then, if they aren't suitable? 

House buying. 

Sorry, why are retirement cash LISAs a thing? 

Albermarle

If you are paying into a LISA , you have a choice of a cash LISA earning a small amount of interest and guaranteed not to go down in value . Or you can have a Stocks and shares LISA, which hopefully in the long run will grow more but along the way will go up and down .
If you are using the LISA for a house purchase in the next few years it is normally recommended to use a cash LISA for stability and certainty . If you are using the LISA for retirement purposes then it is normally better to have a S&S LISA.
When you take out a LISA the provider does not know what purpose you intend to use it and gives you the choice of either .
Both are available and the customer chooses.

Alexland

Polly05 said:

Sorry, why are retirement cash LISAs a thing? 

They are not unless the customer is happy to see loss of spending power or gets confused and opens the wrong one. A similar problem happens when first time buyers open S&S LISAs not understanding stock markets can go down and take years to recover. One of the biggest problems with LISAs is the required level of understanding to navigate the market. Some cash LISA providers put bold warnings on their accounts that they are unsuitable for retirement.

https://www.skipton.co.uk/savings/isas/lifetime-isa/funding-your-retirement

"A Cash Lifetime ISA may not be the best option for retirement savings."

grumiofoundation

Polly05 said:

grumiofoundation said:

Polly05 said:

Alexland said:

A cash LISA would be totally unsuitable for saving for 20+ years until age 60 as the interest rate is likely to spend most of the time below inflation eroding your spending power. 

Why are cash LISAs a thing then, if they aren't suitable? 

House buying. 

Sorry, why are retirement cash LISAs a thing? 

As above they only exist if someone chooses to use them. In the same way that someone is perfectly able to refuse to ever pay into a pension or to hold their money within a pension in cash for years even though in both cases this is poor financial planning. 

Or indeed as comments above mention someone have all their house deposit invested in a stocks and shares LISA in (unsuitable) volatile investments. Which reminded me of this article from earlier in the year.
https://www.dailymail.co.uk/news/article-8096097/Family-miss-325-000-dream-home-coronavirus-crash-wipes-4-500-ISA.html

Alexland

grumiofoundation said:

Or indeed as comments above mention someone have all their house deposit invested in a stocks and shares LISA in (unsuitable) volatile investments. Which reminded me of this article from earlier in the year.
https://www.dailymail.co.uk/news/article-8096097/Family-miss-325-000-dream-home-coronavirus-crash-wipes-4-500-ISA.html

Well if they gradually put it into a FTSE100 tracker then, with dividends reinvested, they might be back in profit by now.