We want to hear about your Lifetime ISA (LISA) experiences

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  • snowqueen555
    snowqueen555 Posts: 1,523 Forumite
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    masonic said:
    masonic said:
    masonic said:
    The interest rates are lousy right now. Bath BS has the highest rate at 3.74% but they don't allow transfers in. Despite the rising in interest rates the providers have chosen to not pass any savings onto us. Moneybox's 3.25% has been in place for a year or something now and I am stuck with them as no better rate.
    Nude offers 3.8%, although it has a £2 monthly membership fee that makes it less attractive for smaller balances. You'd expect rates to be a little behind easy access ISA rates (currently up to 4.5%), but due to lack of competition in this rather small LISA market rates have trailed rather more than might have been anticipated.
    If you do the calculations it is reaching the point where it isn't worth contributing anymore. The £1000 extra per year in the LISA is becoming negated by the lower interest rate. I'm getting 4.8% in a standard account which equals an extra £600 per year than in the Lisa for the same amount of money. You're essentially getting £400 extra per year for the benefit of having it locked up and with restrictions. 
    An extra £600 per year from an interest rate difference of 1.55% implies a LISA balance in excess of £38k. If you have additional non-ISA savings as well, then you are probably nearing the point where you could use the LISA towards a first property, and it is generally advantageous to do so at the earliest opportunity. Over the period you accumulated that sum, you are likely better off to the tune of something north of £5k for using the LISA. There will come a point, however, where long term use of a cash LISA is detrimental.
    For those who are using a LISA for retirement, a S&S LISA would be the vehicle of choice, and the good news is the charges on S&S LISAs are competitive with charges on S&S ISAs and SIPPs.
    Yup you are right. I can't afford anything, which shows you how long I've been saving up for.
    Then you are probably also at risk of breaching the £450k maximum property value when you are finally in a position to buy.
    Definitely not. Its because I earn so little that I am saving for so long.
  • Alexland
    Alexland Posts: 9,668 Forumite
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    edited 4 May at 11:22AM
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    Well my experience is that having contributed into a LISA since launch in 2017 it's now worth almost £50k. It would have been more if I had made contributions earlier in past tax years or in the current year.
    It started with Nutmeg, moved to HL then moved to AJ Bell where I am paying around £50 pa in capped and occasional trade charges so circa 0.10% platform costs and it's currently invested in LGGG which costs 0.10% in fund management.
    There was a period in our divorce negotiations when mortgage interest rates were higher and I was resigned to paying the LISA early withdrawal charge to raise enough cash to buyout our family home so temporarily switched the investment into a money market fund but then rates came down (and so did the house valuation) and so I was able to borrow enough to keep both the house and account. I will probably keep filling the LISA until age 50 now unless the rules change.
    I expect the LISA money will be given away to to help the kids with weddings or house deposits when I am 60+ so I don't consider it when planning my own retirement income.
    I live in hope some future government will abolish the early withdrawal charge after I am 50 and allow me to transfer my LISA into an existing S&S ISA to save £500 of duplicate platform fees for the final 10 years.
  • josephlck
    josephlck Posts: 3 Newbie
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    I have had a stocks and shares LISA with Hargreevs Lansdown for about 2.5 years.  We have a house so I am just using it as a retirement account. 

    I have put in about £12400 and it is worth £18400 so theoretically, I could withdraw it with the 25% government penalty and still be up about £1000 so still better than a fixed rate saving account. 

    Charges are a bit high at a 0.12% fund fee and 0.45% platform fee but the limited providers of S&S LISAs limits things a lot. I don't know if a SIPP would be a bit better but I like the transparency and simplicity of the LISA vs the more complex tax rules around a SIPP. LISAs also seem a bit more flexible. 
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