Advice to a 20 year old re pension or LISA

SacredStephan

BlackKnightMonty said:

The extra £1000k you get from the gov is most attractive. 

This time next year Rodney...

Linton

kempiejon said:

MissJane007 said:

Hello everyone  

How would you advise a 20 year old who has a zero hours contract (which is likely to change), with regards to putting £4k per year away.

A typical 20 year old with no immediate plans for home buying.

Would you go LISA or pension route?

Being 20 won't last long, young and commitment free, a spare £4k knocking about, there's much more to life than pension or LISA.

Better to get into the habit of saving early rather than getting into the habit of living paycheck to paycheck.

BlackKnightMonty

SacredStephan said:

BlackKnightMonty said:

The extra £1000k you get from the gov is most attractive. 

This time next year Rodney...

You could indeed see the £1k as golden handcuffs.

The flexibility of a straight Stocks & Shares ISA is hard to beat. So if you want less handcuffing - choose that.

lemontart573

BlackKnightMonty said:

I

£4k a year @ 8% x 30 years (max age to invest in a LISA) = to £7.5 million (this is including the extra £1000 a year from HMG).

Wow, love it! Alas, the maths is significantly wrong. £5k per year @ 8% compound growth for 30 years would be closer to £570k. Only way to get near £7m on these numbers is if investing £5k per month... for 30 years.

lemontart573

.. although if taking that £5k per year x 30 years @ 8% until age 50, and then leaving the accrued amount to continue compounding between age 50 and age 60 when the LISA funds were accessible could still give a nice £1.2m, if 8% per annum could be achieved.

BlackKnightMonty

lemontart573 said:

BlackKnightMonty said:

I

£4k a year @ 8% x 30 years (max age to invest in a LISA) = to £7.5 million (this is including the extra £1000 a year from HMG).

Wow, love it! Alas, the maths is significantly wrong. £5k per year @ 8% compound growth for 30 years would be closer to £570k. Only way to get near £7m on these numbers is if investing £5k per month... for 30 years.

lemontart573 said:

.. although if taking that £5k per year x 30 years @ 8% until age 50, and then leaving the accrued amount to continue compounding between age 50 and age 60 when the LISA funds were accessible could still give a nice £1.2m, if 8% per annum could be achieved.

Ooops!

this is probably (one of the many reasons) why I shouldn’t post in internet forums!!

None shall pass.