When/If to do a Cash Lifetime ISA transfer to a S&S Lifetime ISA

pensionplanner123

Just after a bit of advice (or what you might do in a similar situation?) for retirement planning.

I am self-employed and currently have both a managed Stocks and Shares LISA (around 30K) and a Cash LISA (7.5K) I am using for retirement as I am already a homeowner. I opened the Cash LISA when I had more cautious approach to savings, and didn't realise S&S would most probably beat Cash over a period of more than 5 years. The S&S LISA has been a bit up and down, but has definitely outperformed the Cash LISA over time.

I also did not realise until recently that I could transfer all the contents of the Cash LISA across to the S&S LISA penalty free.

I have another 17 years to wait until I can access either for retirement, so feel it being in a CASH LISA at around 3.8% for this time is a bit wasted, and inflation will erode any gains. (or does anyone think it is good to a have a smaller amount that is at least guaranteed?)

The process to transfer I have read takes 2-6 weeks. I am wondering if I should transfer the amount I have in the Cash LISA to the S&S LISA right now? Or wait until later in the year / next year because what has happened in the middle east, mid terms, S&S currently overperforming? etc. may bring stocks and share prices down, which would make it a better time to transfer.

I realise this question is a bit of a how long is a piece of string and there are ifs and buts… and advice I have read is the sooner you put money in a S&S LISA/ISA the longer it has to benefit, but just wondering if anyone has any information/advice which would help make an informed decision? Or is it all just essentially guess work?!

QrizB

Speaking very generally, delaying is likely to leave you financially worse off.

If anyone knew with confidence how the markets are going to move over the next 6 months then by Christmas they'd be the world's second trillionaire.

eskbanker

I have another 17 years to wait…

The old adage about investing is 'time in the market, not timing the market', i.e. the longer you're invested the better and don't kid yourself that you can optimise your entry point…

Isthisforreal99

Do you have any actual pension provision in a SIPP? That should be your focus if not.

pensionplanner123

https://forums.moneysavingexpert.com/discussion/comment/82039583#Comment_82039583

I'm not really in a position to save more than £4000 a year towards my pension at the moment, if I was I would look into a SIPP.

From my understanding, I think they are both good ways for self employed to save for retirement, but already having money in a LISA will give more compound growth over time than if I start a SIPP now. The LISA will be completely tax free when I retire too, whereas a SIPP would not be?

Isthisforreal99

https://forums.moneysavingexpert.com/discussion/comment/82039633#Comment_82039633

A pension will beat an ISA almost every time once you add on the tax relief and you could probably invest in the same funds you could for you S&S ISA. What other income do you think you will have in retirement?

Your £4000 in a SIPP would become £5000 with tax relief alone.

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/82039663#Comment_82039663

But the £4K annual contribution into a LISA is also turned into £5K by the government bonus…

Isthisforreal99

https://forums.moneysavingexpert.com/discussion/comment/82039667#Comment_82039667

Well, that is a good point that I missed. Being too old for such a generous product I've never really looked at them.

Edit to add - a quick google suggests you can only contribute till age 50 and can't access till 60.

pensionplanner123

https://forums.moneysavingexpert.com/discussion/comment/82039672#Comment_82039672

Still good advice to look into a SIPP for self employed people though, which I will do. As even if you have a LISA, you cannot contribute into it after the age of 50 and can only contribute a maximum of 4K a year into it before then, so if you are a high earner a SIPP would be better.

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/82039672#Comment_82039672

Yes, the LISA access age* is slightly later than the pension one, but if OP has 17 years until then, they'll have at seven more years during which they can contribute to the LISA, with the taxation benefit highlighted above - the comparison once they reach 50 will indeed be different…

Edit: as correctly clarified in subsequent post, this should read penalty-free LISA access age for homeowners (such as OP).

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/82039681#Comment_82039681

Before 50 you can of course pay into both, it doesn't have to be one or the other!