Investing with a lifetime ISA

smjjam

Hi everyone,

I'm looking at dipping my toe into investing, so total newbie here. 

I currently have a lifetime ISA with money box. Can I use this to invest with or does it have to be a stocks and shares LISA? Can't seem to find an answer to this online 🤔

Thanks! 

P1Fanatic

Yes it has to be the Stocks and Shares version of the ISA as the Cash version just pays interest. From your remark I presume you opened the Cash version? It does seem that Moneybox will let you transfer from Cash to S&S:

https://www.moneyboxapp.com/faqs/lisa/moneybox-isa-to-moneybox-lifetime-isa/#:~:text=Related questions-,How do I transfer my existing Moneybox ISA into a,then 'Transfer between accounts'.

If that's something your interested in then I would advise waiting for others to suggest best practice as may make sense to have the full £4k in the cash ISA for this tax year (if you don't already) and govt bonus paid before moving the funds across to a S&S in case it causes issues with the bonus payments due to using 2 different ISA.

eskbanker

smjjam said:

I'm looking at dipping my toe into investing, so total newbie here. 

I currently have a lifetime ISA with money box. Can I use this to invest with or does it have to be a stocks and shares LISA? Can't seem to find an answer to this online 🤔

As above, you can only invest via a S&S LISA rather than a cash one, but the first thing to establish is how old you are and when you anticipate needing the money?  If you're using the LISA towards a first property purchase then staying in cash is generally advisable, but if it's long term retirement money that you're happy to lock away then S&S should offer better prospects of avoiding real terms loss of value....

smjjam

Thanks for your responses

Yes I currently have a cash lifetime ISA, I'm 27 and I'm looking primarily towards saving for my first property. It makes sense when you say a lifetime ISA would be best for this - I'm guessing you don't get the 25% annual bonus with a stocks and shares LISA? 

I've always been intrigued by investing and I'm looking to start using something like freetrade to buy a few shares for a couple of bucks to get a feel for it, but I figured I may as well try and use the best kind of ISA for this, I even if it's only teeny investments! 

Alexland

You earn the same 25% bonus up to £1k per tax year by contributing into either type of LISA so the choice depends on which product is most suitable for your circumstances.

To stand a good chance of a postiive return from S&S investing you really need a medium term 5-7 years preferably longer time period to average out the good and bad market years. Anything shorter is just a gamble that the next few years will be more positive than negative. So if you are using your LISA to buy a property it's more likely that the cash product will be suitable unless the purchase will be a very long time away in which case you might consider if the £450k price cap might become too restrictive with property price inflation. However for those of us putting money to work for age 60+ then the S&S product is most likely to be suitable.

eskbanker

smjjam said:

Yes I currently have a cash lifetime ISA, I'm 27 and I'm looking primarily towards saving for my first property. It makes sense when you say a lifetime ISA would be best for this

Any S&S investment should only be considered if you're prepared to lock the money away for the long term (5-10 years or more), so it's generally an option unsuitable for first property purchasing, unless it really is a long way off into the future.

smjjam said:

I'm guessing you don't get the 25% annual bonus with a stocks and shares LISA?

You don't get an annual bonus as such with any LISA, you just get a 25% bonus added to anything you pay in, which applies equally to cash or S&S variants.

smjjam said:

I've always been intrigued by investing and I'm looking to start using something like freetrade to buy a few shares for a couple of bucks to get a feel for it, but I figured I may as well try and use the best kind of ISA for this, I even if it's only teeny investments! 

No harm in playing about with investing if it's fun money you can afford to lose, but if you're going to do that, then probably best to do so in a (non-Lifetime) standard S&S ISA while keeping your house money safe in the LISA.

Albermarle

I've always been intrigued by investing and I'm looking to start using something like freetrade to buy a few shares for a couple of bucks to get a feel for it, but I figured I may as well try and use the best kind of ISA for this, I even if it's only teeny investments! 

Although it is not an official definition, most posters on here would think like this >

Investing = Long term 'buy and hold' investments in mainstream diversified funds via an ISA, or more likely a pension. So very boring but ultimately very likely to produce a positive result.

 Short term buying and selling individual shares ( aka Trading) = Very short term outlook and most likely will make a loss. More fun maybe, as it is more like gambling than investing.

So as the previous poster said, Trading and saving for a house with the same money is not advisable.