Lisa retirement advice
KrzyKat
Posts: 3 Newbie
Hi
I'm new to the serious business of saving for my retirement. I am looking at starting a lifetime isa as an extra bit on top of my company pension. I'm planning on saving the full amount each year until I'm 50 (scarily to close). Has anyone got any advice as to which provider to use? Or any to avoid?
I would like to see my money beat inflation by the time I'm 60 and ready to spend it
Thanks
Kat
I'm new to the serious business of saving for my retirement. I am looking at starting a lifetime isa as an extra bit on top of my company pension. I'm planning on saving the full amount each year until I'm 50 (scarily to close). Has anyone got any advice as to which provider to use? Or any to avoid?
I would like to see my money beat inflation by the time I'm 60 and ready to spend it
Thanks
Kat
0
Comments
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Hi
I'm planning on saving the full amount each year until I'm 50 (scarily to close).
How old are you? If you're over 40 you can't open one.
Skipton is the only banking based one, which if you deposit the max with give you a £1k bonus every year, while there are many Stocks and Shares LISA's you can use to invest in but you could potentially lose many as it is investing in the stock market.0 -
Assuming you're under 40 at the moment and thus eligible to open a LISA, then keeping pace with inflation would be challenging if using a cash LISA rather than an S&S one.I would like to see my money beat inflation by the time I'm 60 and ready to spend it
Yes, contributions are topped up by the one-off 25% bonus (as they are with S&S LISAs) but the value of that would be eroded steadily over the following 20+ years of sub-inflation interest - the Skipton product currently offers 0.75% interest, versus 3% CPI or 2.7% RPI, so if you were using it for long-term saving then you'd be guaranteed to lose out to inflation if those rates all continued in similar proportions.
S&S investing is generally considered a good idea for long-term planning, as this mitigates against the volatility seen over the short term. It wouldn't be unreasonable to expect gross returns of, say, 5-7% from a well-diversified portfolio, which can be as simple as putting it all into a single low-cost global multi-asset fund for those who aren't experts....0 -
Skipton is the only banking based one, which if you deposit the max with give you a £1k bonus every year, while there are many Stocks and Shares LISA's you can use to invest in but you could potentially lose many as it is investing in the stock market.
Holding cash in a LISA for 20+ years would be a complete disaster as you would be losing circa 2% to inflation each year compounding. S&S is far more appropriate and likely to deliver an above inflation return in the long term.
Alex.0 -
Holding cash in a LISA for 20+ years would be a complete disaster as you would be losing circa 2% to inflation each year compounding. S&S is far more appropriate and likely to deliver an above inflation return in the long term.
Alex.
If you want to invest in stocks, whereby you could lose money, plus the handling and account fees which come with them.0 -
If you want to invest in stocks, whereby you could lose money, plus the handling and account fees which come with them.
Investing longterm in a well-diversified, global, fund or funds (especially a multi-asset type) or global index trackers might lose some value from time to time, but you won't actually lose money as such unless you sell it - or part of it - while the value is down.
In the longer term, it will gain considerably in value, unless the global economy collapses. In such a scenario, the figures won't even matter.I am one of the Dogs of the Index.0 -
Hi
Thanks for all the replies.
I am just scrapping the age eligibility. I have been looking at the s&s lisa but I'm unsure of which company will be the best for me. What should I look for to decide which one? What measure do you use when choosing investment companies?
In the mean time if I were to open a cash lisa whilst I figure it out will I be able to transfer it to the s&s one?
I'm also trying to find out how the bonus gets paid after this year - is it the full 25% no matter if I pay in the max at the start of the year or if I pay in regularly?
Thanks
Kat0 -
I would chose a S&S LISA provider based in the investments they offer and the fees that would occur.
My view is the top 3 providers in no particular order are Nutmeg, HL and AJ Bell YouInvest.
Nutmeg is nice and easy with quality investment portfolios but they are a loss making company but there is still FSCS protection if they fail.
HL and AJ Bell both offer thousands of investment options (so research is required) and are more complicated DIY platforms. AJ Bell YouInvest have the lowest ongoing fee but charge at least £1.50 for fund trades which are free on HL. You might chose to do limited research and just invest in a low cost multi asset fund such as Vanguard LifeStrategy which would give similar results to Nutmeg.
Given that Nutmeg and AJ Bell don't have any fees to transfer out you might as well skip the cash LISA and open a S&S LISA from the start.
The bonus is still 25% of the contribution regardless of when during the tax year the money is contributed.
Alex0 -
this is exactly my dilemma - which one to go for - I want to invest the full amount yearly but do not want to pay a financial advisor thousands to set it up if I can do it myself. I just don't know which is best company. I prefer to open one and leave it for someone else to manage the funds and make sure I am getting a good return long term....0
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If you want to invest in stocks, whereby you could lose money, plus the handling and account fees which come with them.
Savings accounts have fees. You dont think the banks offer them out of love do you? The difference is that the fees are hidden an not charged explicitly. They set an interest rate that factors in a margin.
Investments have fees. Except they are not factored into the returns but charged explicitly.
It would be very foolish to make financial planning decisions on the basis of thinking cash savings is free and that makes it better.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
FIRSTTIMER wrote: »this is exactly my dilemma - which one to go for - I want to invest the full amount yearly but do not want to pay a financial advisor thousands to set it up if I can do it myself. I just don't know which is best company. I prefer to open one and leave it for someone else to manage the funds and make sure I am getting a good return long term....
You need to identify the funds that you wish to invest in. A good starting point may be to look at multi-asset funds like Vanguard LifeStrategy, HSBC Global Strategy, L&G Mulit Index, or Blackrock Consensus. You can search for details of them all (including the different asset mixes) here: https://www.trustnet.com/ You will need to determine your risk appetite to decide on the exact mix of assets.
While you are thinking about the above you should learn a bit more about investing. Have a look at the following website to begin to learn more: http://monevator.com/0
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