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LISAs - anything else I should know?

BrotherUuurgh
Posts: 124 Forumite

I'm 32, basic rate tax payer and enrolled into WP (5%-3%). I'm on track to clear debt by Christmas '25. I've started to dip my toes into S&S investing with a Trading212 S&S ISA, which is more to start to understand investing than for any real purpose.
Having been thinking for a few months now, and with some great advice on here, I believe a LISA will be the most appropriate product for me to put some more money away for the future. It gives me the opportunity to build a house deposit (I'd be a FTB), or should life not take me that way, to build a secondary retirement fund that I could access earlier then normal pension age. There's the 25% state bonus which is actually a higher amount than my employer WP contribution. I can pay in until 50. I can access at 60 or for first property purchase, and any withdrawals outside of these conditions will incur a 25% penalty. This would be money I'd put away and 'forget about' for a while.
If I understand correctly, they're tax free on the way in and on the way out - the money I use to deposit into one has had basic rate tax and NI already applied. It's then tax free upon legitimate use, right? If so, a nice thought there.
I'm just wondering if there's anything else I'm missing? Need to know? Considering I'm more likely to want to use it for retirement, would S&S be more suitable? Or should I play it safer with a Cash LISA and hope that in around 5 years I might be in a position to put down a deposit and pay a mortgage? Should I start with a Cash LISA and see if homeownership will be a thing for me, and if not could I transfer it to a S&S one?
Having been thinking for a few months now, and with some great advice on here, I believe a LISA will be the most appropriate product for me to put some more money away for the future. It gives me the opportunity to build a house deposit (I'd be a FTB), or should life not take me that way, to build a secondary retirement fund that I could access earlier then normal pension age. There's the 25% state bonus which is actually a higher amount than my employer WP contribution. I can pay in until 50. I can access at 60 or for first property purchase, and any withdrawals outside of these conditions will incur a 25% penalty. This would be money I'd put away and 'forget about' for a while.
If I understand correctly, they're tax free on the way in and on the way out - the money I use to deposit into one has had basic rate tax and NI already applied. It's then tax free upon legitimate use, right? If so, a nice thought there.
I'm just wondering if there's anything else I'm missing? Need to know? Considering I'm more likely to want to use it for retirement, would S&S be more suitable? Or should I play it safer with a Cash LISA and hope that in around 5 years I might be in a position to put down a deposit and pay a mortgage? Should I start with a Cash LISA and see if homeownership will be a thing for me, and if not could I transfer it to a S&S one?
Debt @ LBM 01/11/24 - £14,161.59
Debt current - £10,845.80
"When it's good, it's fun. When it's bad, it's funny". Trying to take things one step at a time.
"When it's good, it's fun. When it's bad, it's funny". Trying to take things one step at a time.
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Comments
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Nothing you’re missing. It’s just a savings account with specific conditions on how you can withdraw it.1
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While there remains a reasonable chance of you using it towards a first time property purchase, it would be sensible to stick to a cash LISA, unless you believe it will be many years before you can afford to buy.0
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Thank you. I've gone with my gut and am in the process of opening a Cash LISA with Moneybox. I won't be able to max the contributions until debt free, but figured I might as well start now as I do have a little left over each month.Debt @ LBM 01/11/24 - £14,161.59Debt current - £10,845.80
"When it's good, it's fun. When it's bad, it's funny". Trying to take things one step at a time.0 -
Just a brief one - is it normal for Moneybox to ask for ID over email? I've replied to their email asking if there's a secure portal on the app or something, but I want to be sure before I send my actual ID in an unsecure way.Debt @ LBM 01/11/24 - £14,161.59Debt current - £10,845.80
"When it's good, it's fun. When it's bad, it's funny". Trying to take things one step at a time.0 -
BrotherUuurgh said:Just a brief one - is it normal for Moneybox to ask for ID over email? I've replied to their email asking if there's a secure portal on the app or something, but I want to be sure before I send my actual ID in an unsecure way.0
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In the end though it was brief, I just wasn't comfortable with the means to provide ID. Instead I've closed that application and have opened one with HL.Debt @ LBM 01/11/24 - £14,161.59Debt current - £10,845.80
"When it's good, it's fun. When it's bad, it's funny". Trying to take things one step at a time.0
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