Hargreaves Lansdown LISA/JISA

anonmoose

My children are 15 and 17 and I want to transfer some money currently in savings accounts over to a S&S Junior ISA and start contributing regularly to build up a house deposit pot.  My eldest is 18 next year so the plan is to move the balance in the JISA at that point over to the LISA in order to get the LISA bonus.  So I thought it would make sense to have the JISA and LISA with the same provider for simplicity. 

We won't be hitting the max so allowances aren't an issue.  But it sounds like you can move directly your funds from JISA to LISA with some providers and I spoke to a guy at HL who didn't sound 100% sure but thought you could!  So as I understand if you have over 4K you can transfer over from the JISA without affecting your LISA allowance for the year.  Does this sound correct?

Also I just wondered if anyone had experience of HL and if they are a good provider to go with for both these products.  The fees don't look too bad.  I was thinking global tracker for simplicity as it's at least 10yrs before they will access the cash.  I use vanguard myself and would have preferred to use them but they don't offer these products.

Alexland

Even if a provider can transfer money between the matured JISA (adult ISA) and LISA it would still be limited at £4k per tax year to earn a max £1k bonus. It's just that the ISA transfers wouldn't use any of the overall £20k annual ISA contribution allowance.
HL are hardly market leaders in either type of account so I would suggest using a good value JISA provider until age 18 (such as Fidelity who have no charges on their JISA if you stick to funds and still give access to discounted funds such as Fidelity Index World at 0.10% after rebate) then pick the most suitable LISA provider at 18 however be aware the £450k price cap may become increasingly restrictive on what can be purchased over time with any property price inflation that may occur (although if interest rates continue to rise we could see deflation over the short term). If they need to withdraw the money as the property exceeds the price cap the penalty is slightly greater than the bonus received.

anonmoose

Ah thanks Alexland.  I was looking at the Fidelity JISA but decided against it because they don't do a LISA.  I did however misunderstand and think you could transfer the whole lot into the LISA with the same provider and were not restricted to the 4K. 

If you can only put the 4K max in from the ISA into a LISA then there is no benefit with sticking with the same company.  

I have just opened them both junior SIPPs with fidelity so it makes it easy having the JISA with Fidelity also.

I did see the £450k price cap and wondered if it would be a problem.  You would think they would have that price cap linked to average price changes or even take into account regional variations.  

MX5huggy

They must already have Child Trust Funds if they were born in the UK unless you have already converted these to JISA’s you can’t have a CTF and JISA. 

Alexland

Good point forgot to mention that and Fidelity don't accept CTF transfers so any CTF would need transferring into a Junior ISA (cash, or S&S elsewhere with onward transfer) first before making the S&S JISA contribution .
Another option given they are close to 18 and a LISA may not be suitable given the price cap may be too restrictive in 10 years is just to go with Vanguard now for the JISAs (they don't accept CTFs either) and let them mature into good value adult ISAs.

anonmoose

Yes when I said they had a savings account I meant cash JISA with a building society that I had already transferred the old ctf into.

I have gone with fidelity for the S&S Jisa and then we can re-assess when it converts to an adult one. 

I have vanguard global all cap for my equities, is fidelity index world similar? I just want broad ranging low cost.

I will have to think about the LISA as in theory it sounds great but if you end up buying close to London it is far more restrictive and it seems harsh getting a small penalty on top of losing the bonus if you don't buy in the price bracket! 

When you are looking at over 10yrs away you don't know if the goal posts will be changed by then.

anonmoose

Originally the cash jisa money was intended to go towards our uni contribution I am massively frustrated by how we won't be able to give them much towards house deposit so I am putting that few k into S&S now to start them off towards house deposit and will just pay uni accommodation out of our monthly outgoings and tighten our belt.

Likewise with the sipp it's just a small one off payment for now but it's a start and hopefully will encourage them to save. 

Alexland

anonmoose said:

I have vanguard global all cap for my equities, is fidelity index world similar? I just want broad ranging low cost.

The Fidelity fund is half the cost but only covers Developed World which is most of what you would find in the Vanguard All Cap anyway. It doesn't include the modest weightings to Emerging Markets and smaller cap companies found in the Vanguard All Cap. Which will perform better in the long term? Who knows but at least you know your costs are lower with the Fidelity fund. Some of us don't want to be investing in China anyway which makes up a large proportion of an EM weighting. Still if they are likely to transfer the ISA to Vanguard Investor at 18 for the lower platform fee on an adult account then maybe start them on a Vanguard fund now at Fidelity which can be transfered in specie without time out of the market.

anonmoose

Ah that's true I hadn't thought about the transfer and time out of the market. Especially as we could well be still seeing lots of volatility when the eldest turns 18 next yr.

And I guess if we did go for the LISA lots of providers offer vanguard funds so we could at least stick with the same fund if we went Global all cap.

Albermarle

anonmoose said:

Yes when I said they had a savings account I meant cash JISA with a building society that I had already transferred the old ctf into.

I have gone with fidelity for the S&S Jisa and then we can re-assess when it converts to an adult one. 

I have vanguard global all cap for my equities, is fidelity index world similar? I just want broad ranging low cost.

I will have to think about the LISA as in theory it sounds great but if you end up buying close to London it is far more restrictive and it seems harsh getting a small penalty on top of losing the bonus if you don't buy in the price bracket! 

When you are looking at over 10yrs away you don't know if the goal posts will be changed by then.

LISA House Price Limit — MoneySavingExpert Forum

anonmoose

Thank you for that link Albermarle very interesting. I agree that 450k is a lot for a first time buyer in most of the country now but we don't know the direction of travel for house prices, inflation etc in the next 10 - 20yrs.

I don't even know what kind of salaries they will achieve and how young they will be in a position to buy. I bought my first house with my partner (now husband) in my early twenties with us both having very little uni debt.

They won't have the luxury of being in that position so they might be first time buyers in their 30s, 40s or even move abroad!

It seems too many unknowns to put into a LISA at this stage.