LISA payments

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Pound_Coin
Pound_Coin Posts: 4 Newbie
in ISAs & tax-free savings
Hi There,
I was hoping someone could give me some advice on my current strategy for investing - This is new terriotory for me so bare with me.
I currently have 1 ISA and 1 LISA (stocks and shares) and am paying in to them both simultaneously.
My question is:
Is it be better to prioritise maxing out the Lisa contributions in order to get the full £1000 bonus and then make one investment transaction to save on platform charges (£1.50 a time)
This would in theory have it invested earlier for compound interest.
Or continue to drip feed both accounts and purchase stocks monthly?

thanks for the advice in advance

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  • Alexland
    Alexland Posts: 9,653 Forumite
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    edited 20 April 2019 at 9:45PM
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    It generally makes sense to contribute to the S&S LISA at the start of the tax year and then move on to contributing to other ISA types.

    On average stock markets go up so the sooner the bonus is invested the better (although you could always hit unfortunate timing) and it minimises the number of required trades if you are paying £1.50 each on AJ Bell.

    Personally I find tracking the LISA bonus payments tiresome so am glad to get it all done as soon as possible each tax year.

    For people with Cash LISAs it's the other way around as they can probably earn a significantly better interest rate elsewhere for most of the tax year.

    Alex
  • Pound_Coin
    Pound_Coin Posts: 4 Newbie
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    That does make a lot sense, thank you.
    Can I also ask also if I need to declare the earnings on these investments as they are already tax free?
  • Alexland
    Alexland Posts: 9,653 Forumite
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    You don't need to declare the growth on any of the ISA types however your ISA provider will do some reporting back to HMRC so they can check the rules have been followed.
  • Pound_Coin
    Pound_Coin Posts: 4 Newbie
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    That’s great! Thanks so much.
  • adonis10
    adonis10 Posts: 1,810 Forumite
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    On a related note, I topped up my LISA by 3k at the end of March and another 4k since 6/4/19 but it is all sitting in cash currently due to the level of increase I have seen in my investments over the past few months; namely VG lifestrategy 80 and 100 - my overall return is currently 14.4% which has increased massively over the past few months (3-4 months ago it was 0.5-1%). I am holding off topping up the investments at present as am sure this growth cannot continue, but timing the market is also not an easy task for the average investor so am in a bit of a pickle at the moment as I have some 9k sitting in cash not working. Any thoughts?
  • philbo2
    philbo2 Posts: 18 Forumite
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    Just fire in it the Lifestrategy. It is going to go up and down, no point trying to time it. For instance you missed out on 1 single day 1% gain last week, that could quite easily reverse this week.
  • Alexland
    Alexland Posts: 9,653 Forumite
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    adonis10 wrote: »
    I am holding off topping up the investments at present as am sure this growth cannot continue, but timing the market is also not an easy task for the average investor so am in a bit of a pickle at the moment as I have some 9k sitting in cash not working. Any thoughts?

    I agree the short term risk/reward on buying more equities is not looking attractive with the weak pound and strong global markets. We are continuing to invest regularly but running at a slightly more conservative equity/bond ratio than if we saw more opportunity. Given how difficult it is to time the market we are still invested within a suitable risk profile range for the long term returns we seek.

    Alex
  • adonis10
    adonis10 Posts: 1,810 Forumite
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    Alexland wrote: »
    I agree the short term risk/reward on buying more equities is not looking attractive with the weak pound and strong global markets. We are continuing to invest regularly but running at a slightly more conservative equity/bond ratio than if we saw more opportunity. Given how difficult it is to time the market we are still invested within a suitable risk profile range for the long term returns we seek.

    Alex

    Thanks. Do you invest through funds or select all of your own equities and bonds? I really need to do more reading and research around the subject; monevator a good place to start? Following that, where next for an investing novice?


    I am 35 so in it for the long haul (20-30 years) so probably overthinking it with regards to timing the market as I will experience many peaks, troughs and recessions over the next 2-3 decades.
  • Alexland
    Alexland Posts: 9,653 Forumite
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    edited 25 June 2019 at 12:55AM
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    My preference is funds but with some platforms, when the valuation is high enough, it makes sense to use ETFs to cap platform fees. I have held investment trusts but don't really see the point in using leverage at current market valuations and negligible discount levels. I have no interest in gambling with individual company shares having done that before and learned the hard way.

    Alex
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