Ideas for £25k LISA no plans to add to

mobro123

I’ve got around £25k with AJ Bell in Amundi MSCI world ETF and have no plans to add to this. I won’t be accessing for 25+ years.

 I’ve seen many users use iWeb to hold ETFs as no account fees and only £5 for initial purchase. I’m now thinking of if I move the £25k to an ETF on iWeb I can forget about it and leave the fund to accumulate for the next 25+ years with no on going platform charges. Is there anything I’m missing? Any other options worth considering?
TIA

masonic

iWeb doesn't offer LISAs. AJ Bell is probably your best bet.

Alexland

Yup the LISA market is smaller and less competitive than the S&S ISA market. Several of us with decent sized LISAs are holding an ETF at AJ Bell for the capped fee. Just be careful to optimise your trade fees on contributions and bonuses as that can add up.

If you have no plans to add to the LISA (although you must still be under 50 so allowed to) you can ask AJ Bell for the ongoing fee to be taken from the dealing account which would avoid the need to occasionally incur trade fees selling down ETF unit(s) to create cash in the LISA account to pay fees. You would just need to top-up the dealing account every so often until you can access from age 60.

noclaf

My LISA is with AJBELL and am very happy overall in terms of ease or using the platform, capped fees and simplicity.

I have around £36k invested into VEVE, and happy with the risk as I can't touch this till am 60 unless I accept the 25% penalty for an early withdrawal or if the rules are relaxed at some point (selfishly I am hoping for this!).

I use the quarterly dividends received to maintain a cash balance to cover the fees.

 @Alexland - Interested to know your opinion if it's likely to be cheaper/optimum on overall long term cost to maintain a cash balance on the dealing account as you suggested above and pair with an accumulating ETF rather than the distributing VEVE? Aware from another thread you now use SWDA I think ...I would probably go with a cheaper ETF such as SWLD which I already use as the core in my S&SISA or might use something a bit more exciting (though whether that is sensible right now is another question!)

eskbanker

noclaf said:

I have around £36k invested into VEVE, and happy with the risk as I can't touch this till am 60 unless I accept the 25% penalty for an early withdrawal or if the rules are relaxed at some point (selfishly I am hoping for this!).

Don't just hope - act!

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masonic

noclaf said:

 @Alexland - Interested to know your opinion if it's likely to be cheaper/optimum on overall long term cost to maintain a cash balance on the dealing account as you suggested above and pair with an accumulating ETF rather than the distributing VEVE? Aware from another thread you now use SWDA I think ...I would probably go with a cheaper ETF such as SWLD which I already use as the core in my S&SISA or might use something a bit more exciting (though whether that is sensible right now is another question!)

That's what I do at present, although I can top it up annually. I haven't thought ahead to when I reach 50. Leaving 10 years worth of fees in cash seems sub-optimal and assumes no changes. Perhaps I'll open a trading account for the fees.

Alexland

noclaf said:

 @Alexland - Interested to know your opinion if it's likely to be cheaper/optimum on overall long term cost to maintain a cash balance on the dealing account as you suggested above and pair with an accumulating ETF rather than the distributing VEVE? Aware from another thread you now use SWDA I think ...I would probably go with a cheaper ETF such as SWLD which I already use as the core in my S&SISA or might use something a bit more exciting (though whether that is sensible right now is another question!)

I hold SWDA in my AJB LISA and VEVE in my Fidelity SIPP which includes the world's 3 biggest asset managers Blackrock, Vanguard and Fidelity so hopefully am in good hands.

SWDA is a bit of a luxury as it's not the cheapest but it's only a modest size account and I like it for possibly historical irrational reasons. There are cheaper accumulating global ETFs although they usually smaller with more upfront market spread. I remember having problems getting a reliable valuation for LCWL during the covid crash the liquidity wasn't good enough. Maybe I should consider switching to SWLD as it seems to consistently outperform SWDA by around the difference in charges, now has a similar scale and spread as VEVE which I find acceptable and State Street are no4 globally.

Holding an accumulation ETF avoids trade fees for reinvestment but I quite like seeing the divis in my SIPP and the leftovers from automatic reinvestment into whole units help to pay for platform fees where I do not contribute into that account and changing from VEVE the spread would be expensive with that many units I don't dare touch it anymore. It's only £1.50/qtr to reinvest divis on Fidelity so it doesn't matter.

While you can still contribute into the LISA there's no harm getting the fees paid from the LISA cash balance as you can just be careful when investing contributions to leave enough cash to pay fees until you can contribute again. Once you get to 50 and can no longer contribute then if you hold an accumulating ETF then it makes sense to get the fees paid for the dealing account to avoid needing to sell down units to pay fees. In theory with an accumulating ETF and paying ongoing capped fees from the dealing account you could go 10 years from 50 to 60 without paying any trade fees if AJB hold their charges model that long.

Ps this is not to say my retirement accounts are 100% equities - I hold bonds in my workplace pension.

noclaf

Thanks Masonic and Alexland.
For the time being, VEVE seems to be a decent choice for my LISA and the divi's work out well in terms of leaving enough balance for covering the fees. I will monitor/review periodically though not planning to contribute any additional funds as want to focus on building pensions and S&SISA.

I switched to SWLD last year in my S&SISA precisely because it ticks many of the boxes i.e: decent size, lowish spreads and performing well relative to similar Dev Markets Equity ETF's. Ideally would of simply used SWLD across both SIPP and S&SISA but the idea of being concentrated in one ETF made me nervous hence picked SWDA for the SIPP, it replaced JGRE which appeared to be the frontrunner over a 5 year period but has now been overtaken by both SWLD and VHVG.

Alexland

noclaf said:

I switched to SWLD last year in my S&SISA precisely because it ticks many of the boxes i.e: decent size, lowish spreads and performing well relative to similar Dev Markets Equity ETF's. Ideally would of simply used SWLD across both SIPP and S&SISA but the idea of being concentrated in one ETF made me nervous hence picked SWDA for the SIPP, it replaced JGRE which appeared to be the frontrunner over a 5 year period but has now been overtaken by both SWLD and VHVG.

Ok you've convinced me to switch my SWDA (which in my heart I knew was an inefficient luxury) to SWLD as in recent years (while I was focused on divorce and not around the forum as much) it's grown to meet my criteria of an acceptable ETF investment. I'm reassured that 2 of the 4 letters are the same. Ok we will both be in the club of holding both VEVE and SWLD although in different account types as I prefer an accumulating LISA and a distributing SIPP investment.

Goodbye SWDA and thanks for the many happy returns. My LISA will now cost around 0.2% total. I doubt the SWLD in my LISA will ever grow big like my VEVE holding which I am afraid to touch for risk of losing a month's salary in the spread. I haven't transferred anything into my SIPP this decade it's all old contributions and I'm now working to build up my workplace pension to a similar scale but that's tricky as it's now mostly bonds. A horrible market crash would help as my SIPP would reduce and I could switch my workplace pension into equities so the 2 accounts could ride the recovery together.

noclaf

Welcome to the SWLD/VEVE club! I will keep SWDA as my core SIPP holding but will review periodically.

Just out of interest and only if you don't mind sharing, roughly what is your Bond allocation? I have moved around 20% of my ISA into Bonds however SIPP and Work pension are 100% Equities as I need to focus on growth for now (overall pension value is sub £250k excluding LISA value so for now think better to stay in Equities).

Op - apologies not meant to be a hijack of your thread and hopefully some helpful info!

Alexland

noclaf said:

Just out of interest and only if you don't mind sharing, roughly what is your Bond allocation? I have moved around 20% of my ISA into Bonds however SIPP and Work pension are 100% Equities as I need to focus on growth for now (overall pension value is sub £250k excluding LISA value so for now think better to stay in Equities).

My portfolio has gone from having no bonds (apart from in tiny cashback incentive accounts) up to around 30% bonds held mostly via my workplace pension. I started with shorter duration corporates and recently moved to mixed (on average medium) duration gilts. I was quite vocal about the problems with bonds several years ago 'a return free risk' and how people were underestimating their risk as any asset can become risky if it gets too expensive. I am also focused on growth but the equity risk premium is not currently looking compelling enough to go 100% as they can disappoint for long periods. I prefer a valuation lead tactical asset allocation which gives me options to gain from a crash. At the moment it seems sensible to have a multi asset portfolio. My weighting is also slightly influenced by having taken on a much bigger mortgage as part of the divorce and wanting to perhaps repay the balance from tax free lump sum(s) in a decade. I would otherwise probably be 20% bonds right now.