Stocks+Shares Lifetime ISA -any recommendations??

JadEle

My partner and I are thinking we should each open a Lifetime ISA with the plan being to not use it until retirement. As retirement is ~30years away we think a stocks+shares would be best.

After looking online, we don't really recognise most of the banks/companies offering LISAs. Does anyone have any recommendations as to which are good banks/companies or any we should really avoid?

Thanks for your help.

Alexland

Yup S&S is most suitable for long term investing as the spending power of cash would likely get eroded by inflation.

For a beginner to S&S LISA investment then a robo like Nutmeg who charge percentage fees using their cheaper Fixed Allocation portfolios might be good but before the age of 40 you might want to consider transferring to a DIY platform that can offer capped ongoing charges on a higher account valuation such as AJ Bell YouInvest. Nutmeg are backed by JP Morgan and AJ Bell are a long established and now FTSE250 company.

Before you invest for retirement using a LISA consider if you might do better making increased pension contributions depending on your circumstances and available pension options.

MX5huggy

Pension is I believe a better wrapper for retirement saving. If you ever end up claiming benefits or going bankrupt you keep the money. They are ignored for student loan assessments on your income for your kids going to uni. There’s a minimum 6.25% tax advantage (currently), more if you can contribute by Salary Sacrifice or are a higher rate tax payer. 

grumiofoundation

MX5huggy said:

Pension is I believe a better wrapper for retirement saving. If you ever end up claiming benefits or going bankrupt you keep the money. They are ignored for student loan assessments on your income for your kids going to uni. 

Depends on a persons circumstances.

Looking at it purely from a bonus/tax relief perspective LISA is better/equal to pension for a basic rate tax payer (assuming no additional employer contributions available and non-salary sacrifice).

Pay in 4000, both cases bonus/tax relief bumps up to 5000. 
Ignoring investment growth (same in pension and LISA assuming invest in same thing) at retirement 5000 in both. 

Basic rate tax payer, no tax in retirement - LISA, pension equal
Basic rate tax payer, basic rate (20%) tax in retirement - LISA beats pension (5000 vs (4250 - 1/4 tax free, 3/4 taxed at 20%).


For higher rate tax payer, assuming 20% tax payer in retirement, pension beats LISA.
For basic rate on salary sacrifice pension will also beat LISA but only by a small amount if basic rate tax payer in retirement. 

Obviously as you say based on current tax treatment of pensions which could change - potentially an advantage to LISA?

There’s a minimum 6.25% tax advantage (currently), more if you can contribute by Salary Sacrifice or are a higher rate tax payer. 

For clarity as well the 6.25% tax advantage is not relative to LISA but relevant to ISA.

Alexland

Also remember pension options might include employer matching, defined benefits, life insurance, etc so adding into a pension needs careful consideration before going down the LISA route but overall I agree there is no winner as it depends on personal circumstances. We contribute to both types of account.

DireEmblem

As above, check out if you would be better off increasing your contributions to your works pension policy first, and then LISA.

Assuming you go with the LISA route, then you want a platform with a low fee, as I think you can only add 4k a year, so that's something to consider.  Fidelity I think are 0.35%, and then you have plenty of choice of managed funds to pick.  If not sure, then you could stick with the LifeStrategy range from Vanguard.

grumiofoundation

DireEmblem said:

As above, check out if you would be better off increasing your contributions to your works pension policy first, and then LISA.

Assuming you go with the LISA route, then you want a platform with a low fee, as I think you can only add 4k a year, so that's something to consider.  Fidelity I think are 0.35%, and then you have plenty of choice of managed funds to pick.  If not sure, then you could stick with the LifeStrategy range from Vanguard.

Fidelity don't offer a lifetime ISA. 

Albermarle

This link explains all the pros and cons of Pension vs Lisa for retirement ( ignore the stuff about LISA for home buying ) .
Also it mentions only four providers of S&S LISA's , there may be more ( not Fidelity or Vanguard as they do not offer LISA's )
Lifetime ISA (LISA): how they work & best buys - Money Saving Expert

JadEle

Thanks all for your comments, after reading through I think increasing our current work pension contributions may be the best option.