Should I s&s Lisa?

ConsistentlyLost

Hi folks!

As my 36th birthday has just passed, I contemplate again as to whether I should open a Lisa.

I'm a homeowner so it would be for retirement. I also recently increased my contributions into my workplace pension but I thought maybe it would be a good idea to open a s&s Lisa in addition for retirement.

The only thing is (and I'm sure it's the case for a number of people considering Lisa's) I've never invested before and just wondered what anyone would recommend.

I bought a book for beginners into investing and found that somewhat overwhelming. I've considered nutmeg for their simple option with having professionals do the work despite the higher fees but have since watched videos suggesting that it is preferable to go down the DIY route despite the lack of confidence. 

The most recent one I'm looking at is dodl as I thought perhaps with it's user friendly app, it may be better suited to someone like me starting out.

Any suggestions are welcome, even if any are to deter me from going this route with perhaps an alternative.

Tia!

El_Torro

Your workplace pension is probably invested, so you're an investor already, although you might not have put much thought about what you are currently investing in. Investing doesn't need to be complicated, though there are a few fundamentals that would be worth knowing. Websites like www.monevator.com can help you, maybe less intense than trying to absorb a book on the subject. 

Also it's worth considering whether it's worth investing in a LISA rather than just adding more to your pension. If you are a 20% tax payer a LISA is a pretty big advantage compared to a pension. Assuming you are happy to keep your money in the LISA until you are 60. If you pay 40% income tax or more the benefits of a LISA are less pronounced. 

ConsistentlyLost

El_Torro said:

Your workplace pension is probably invested, so you're an investor already, although you might not have put much thought about what you are currently investing in. Investing doesn't need to be complicated, though there are a few fundamentals that would be worth knowing. Websites like www.monevator.com can help you, maybe less intense than trying to absorb a book on the subject. 

Also it's worth considering whether it's worth investing in a LISA rather than just adding more to your pension. If you are a 20% tax payer a LISA is a pretty big advantage compared to a pension. Assuming you are happy to keep your money in the LISA until you are 60. If you pay 40% income tax or more the benefits of a LISA are less pronounced. 

I will take a look at the website, thank you. I'm contributing 8% of my pay into the workplace pension which my employer is matching. On top of that, they contribute an additional 4% as well.

Would it be beneficial if I decrease what I contribute into my workplace pension and put that money into a s&s Lisa instead? I pay 20% income tax.

El_Torro

You should pay enough into your pension to get the maximum employer contribution. If you're paying more you could divert some to your LISA. 

If you are paying into your pension through salary sacrifice then this makes your contributions more worthwhile. However since we don't know how the rules for pensions or LISAs will change in the coming years it's worth having both, if you can. 

Albermarle

There some pros and cons between LISA and pension.
In the second part of this article, these are clearly explained.
Lifetime ISA (LISA): how they work & best buys

Also I would recommend having a good look at your workplace pension on line.
Often they have some good basic guidance about pensions, investing etc. Plus of course you can see how your pension is doing and what it is invested in. 

ConsistentlyLost

Thanks both, that's given me a lot to think about!