Should I use Lifetime ISA to save for my young child long term?

Alexland wrote: »

Argh this is so frustrating. Yes the OP if UK resident can open a S&S LISA if under 40 regardless of if they already own property and contribute until 50 then withdraw at 60 and gift the money (inc accumulated bonuses) to be spent on anything the 20 something wants.

Sorry, didn't realize that about the LSA.

Thanks for clarifying.

fiestaman87 wrote: »

Sorry, didn't realize that about the LSA.

You were correct about the HTB ISA which you cannot open or hold if you have owned property.

The LISA is a dual purpose product to both help people to save for their first property purchase or invest for retirement. Some of us parents in our late 30s have noticed that it also works quite well for future child gifts.

Of course it is not suitable for money that has already been gifted as that would already be the child's money and the parent should not stop them getting access without penalty at 18.

Alex

Hellsbellshg wrote: »

Thanks for alerting me to the S&S Lisa Alexland I hadn’t thought to look at those only the cash Lisa.

My view is the most attractive S&S LISAs are provided by Hargreaves Lansdown and AJ Bell YouInvest and the choice depends on the pattern and amount you intend to contribute. AJB has a lower percentage fee but charge £1.50 per fund trade which are free on HL.

Then for fund investments consider the Vanguard LifeStrategy or Blackrock Consensus (discounted on HL) series. These are available for different risk profiles. Alternatively consider the Vanguard Target Retirement 2040 fund which will automatically reduce volatility as the target withdrawal date approaches so it is less of a problem if stockmarkets crash just before you intend to withdraw.

Your money will go up and down which might take some getting used to and beware the temptation to sell when you see it going down. Often when its really looking down that's a good time to put more in!

Alex

kidmugsy wrote: »

Personally I'd be inclined to indulge in market-timing. That is, while market values look excessively high (at least in the US) I'd use a Cash LISA. When I feel they are better value I'd transfer to an S&S LISA. The challenge is that you will have to screw up your courage and do the transfer at some point.

I’m not sure somebody who has just learnt about the existence of S&S LISAs should be tempted to consider playing the market.

Judging whether a market is overvalued is probably best reserved to those with a bit more experience, and I am under the impression that the OP is new to investing.

Absolutely; if you weren't using your LISA subscription yourself and you're happy to reduce your overall ISA subscription ability by £4k (max) per year, that could be a simple and effective way to get a good return on money for future gifting.