Lifetime ISA - 1 year on..
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Yes, but nobody has said there are actually any NI savings because they don't know if it is a 'salary sacrifice' scheme which would allow NI to be saved by having the salary be lower.I would up it more than 5% and use the £4k from June until June next year to replace the lost salary.
£1k bonus instantly on £4k is instant and obvious, £1280 bonus on £4k through reduced tax and NI payments over the year is a little less obvious and exciting
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The OP asked "is it only relief on income tax" and you helpfully pointed out that *if* it was salary sacrifice there would be relief on NI too, but OP didn't confirm or deny whether it was an SS scheme - they were asking us what they would save, but without sharing the details.
As the pension may get at least partially taxed in retirement anyway (especially with a good rate of contributions as they are currently making) it is going to be a 'nuanced' calculation as Eskbanker suggests. If they have the £4k to hand there is always the option of just going for it, getting the LISA, and then at some point down the line pulling it out for a small penalty and doing more into the pension. The ability to access the funds (for a penalty) if your planning has gone wrong is a decent feature of the LISA.
If it turns out that pension might be a better move financially (even though less flexible to access efficiently in retirement) then they could always do more pension in the future and give up on doing LISA in future years. A bit of both, is usually going to be fine as it's good to have options and, as they say, if you don't use the chance to contribute to one in 2017/18 you lose the chance to contribute to one in 2017/18. Though they sometimes say it more snappily.0 -
The reason I've gone for LISA vs additional salary sacrifice is purely the fact I want to be able to access it in an emergency. I don't plan to see it again until 60, but then I didn't plan on getting identical twins either. Stuff happens.0
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bowlhead99 wrote: »Yes, but nobody has said there are actually any NI savings because they don't know if it is a 'salary sacrifice' scheme which would allow NI to be saved by having the salary be lower.
The OP asked "is it only relief on income tax" and you helpfully pointed out that *if* it was salary sacrifice there would be relief on NI too, but OP didn't confirm or deny whether it was an SS scheme - they were asking us what they would save, but without sharing the details.
It is indeed SS.I would up it more than 5% and use the £4k from June until June next year to replace the lost salary.
£1k bonus instantly on £4k is instant and obvious, £1280 bonus on £4k through reduced tax and NI payments over the year is a little less obvious and exciting.
I may actually do both. When my interest free credit card is paid off by August, I'll have an extra £260/month available which would be roughly equivalent to another 12% into the pension via SS.0 -
Thrugelmir wrote: »Low is relative. You still owe £141k. When does your fixed term mortgage period end?
True, I guess I see it as low compared to all of my friends who have mortgages. At £646/month for the next 3 and a bit years I feel comfortable that we won't need savings to cover it. Ok, I could get made redundant but my share of it would be covered easily even if I had to take a significant salary drop.
Fixed term ends July 2021. Why?0 -
EJS_Superted wrote: »Now you just have the equally confusing job of choosing a platform! :undecided
With the limited time I have left I have looked at both AJ Bell and HL.
AJ Bell - 0.25% management charge but £1.50 per deal.
HL - 0.45% management charge but no deal charges.
With the £4k I imagine I will drip feed it into funds (more than likely VG LS 80) so the dealing charges will impact me, however if I opt for 4 deals of £1k it will still work out marginally cheaper with AJB.
AJB - £6 dealing charges + £10 charge = £16
HL - £18 charge
Has anyone used AJ Bell? Thoughts?0 -
I have SIPP and ISA and more recently an unwrapped trading account with AJB Youinvest (for over five years since they were branded Sippdeal). They are fine.
As you pretty much know what fund you are going to buy, and both AJB and HL offer it, it's primarily a cost consideration.
You don't need an "app" (though AJB has one...) nor a fast turnaround on withdrawals (AJB are fine, but you're not planning on withdrawing from a LISA any time soon...) , nor much "customer service" (AJB are fine, but how much service do you need to just buy something and leave it...).
Aside from the dealing costs, AJB are 0.25% and HL are almost twice that, so you can see there will be a fair few pounds saved over the years, especially if/when the fund grows in value or you add more money. Unless for some crazy reason AJB decide to hike their fee percentage up to be the highest in the fund supermarket market like HL is. 0 -
AJ Bell are fine but I needed to manually prove my ID (during working hours) when setting my LISA up last week, so if you're planning to set one up today I'd get on with it or you'll run out of time!0
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Just done a little more research which suggests that for VG LS, AJBp Bell are actually more expensive when you factor in the fund managers charge, as below:bowlhead99 wrote: »I have SIPP and ISA and more recently an unwrapped trading account with AJB Youinvest (for over five years since they were branded Sippdeal). They are fine.
As you pretty much know what fund you are going to buy, and both AJB and HL offer it, it's primarily a cost consideration.
You don't need an "app" (though AJB has one...) nor a fast turnaround on withdrawals (AJB are fine, but you're not planning on withdrawing from a LISA any time soon...) , nor much "customer service" (AJB are fine, but how much service do you need to just buy something and leave it...).
Aside from the dealing costs, AJB are 0.25% and HL are almost twice that, so you can see there will be a fair few pounds saved over the years, especially if/when the fund grows in value or you add more money. Unless for some crazy reason AJB decide to hike their fee percentage up to be the highest in the fund supermarket market like HL is.
Fund manager’s charges Notes
Initial charge 0.00% £0.00 The charge from the fund manager for buying the investment
Annual ongoing charge 0.22% £2.21 The annual charge from the fund manager for managing and operating the fund
Transaction charges 0.10% £1.02 The costs of buying and selling the underlying investments over the year
Total 0.32% £3.23
Our charges
AJ Bell Youinvest dealing charge 0.15% £1.50 The charge for buying the investment with AJ Bell Youinvest
AJ Bell Youinvest annual custody charge 0.25% £2.50 The annual charge for holding the investment with AJ Bell Youinvest – this charge is paid quarterly from your AJ Bell Youinvest account
Total of other charges 0.40% £4.00
So it is in fact 0.47% annual charge and £2.52 transaction charges, frustrating as I found this out after opening and funding the AJB account. Schoolboy error.0 -
Just done a little more research which suggests that for VG LS, AJBp Bell are actually more expensive when you factor in the fund managers charge, as below:
[ Etc.]
So it is in fact 0.47% annual charge and £2.52 transaction charges, frustrating as I found this out after opening and funding the AJB account. Schoolboy error.
I think you are confusing the terminology here. What you had in your previous post #17 was fine:
HL are going to be charging you *their fees* of 0.45%AJ Bell - 0.25% management charge but £1.50 per deal.
HL - 0.45% management charge but no deal charges.
With the £4k I imagine I will drip feed it into funds (more than likely VG LS 80) so the dealing charges will impact me, however if I opt for 4 deals of £1k it will still work out marginally cheaper with AJB.
AJB - £6 dealing charges + £10 charge = £16
HL - £18 charge
Or AJB are going to be charging you *their fees* of 0.25% +1.50 for each of your transactions.
With £1000 invested for a full year, the fee from the AJB platform would be £4.00 or (£2.50 +1.50)
With £1000 invested for a full year, the fee from HL would be £4.50
Obviously in the first year if you are drip feeding at AJ Bell, some of your £1000s are not going to be invested for a full year - and so the initial £1.50 per transaction you carry out, will feel relatively more expensive by comparison to the percentage-based component of the fee. Whereas in year two and beyond, you have relatively more money 'at work' for the year and so the percentage based component is relatively higher.
So, AJB is not a bad place to be and the charges _from the platforms_ are just as you had laid them out on post #17. Those are the only platform-specific fees you will pay.
Your extra calculations are nothing to do with those fees from the platform, they are costs of the fund manager (eg Vanguard) running their fund.
Those general fund ongoing charges are 0.22% no matter whether you choose to use AJB or HL or someone else. And their estimated annualised transaction costs of 0.102% (which are a bit of a guess really, but published by vanguard in line with regulations) will also be the same regardless of whether you use AJB or HL to buy into the Vanguard fund.
Those 0.102% transaction fees relate to the costs that the Vanguard fund itself incurs when it's buying shares of HSBC or Tesco or Facebook etc and employs a broker to do that. They are not saying that every time you do a purchase you personally incur a 0.102% fee just because you did it through AJB. They are saying that for every £1000 that you keep invested in the fund for a whole year, they'll probably spend about a pound on the costs of buying and selling the underlying investments of the fund. That includes the costs of when they have to buy and sell assets to accommodate joiners and leavers such as yourself, and to accommodate rebalancing the portfolio between asset classes, and to accommodate companies being promoted into the various indexes or relegated out.
So, you may have had a misconception about what you were reading before you did your purchase on the AJ bell site, but nothing has changed since your post 17 which would make AJB more expensive than it was going to be.
In some rare cases, platforms with high percentage fees may negotiate lower rates with certain fund managers that reduce ongoing charges from the managers and can make the platform a bit more competitive, just on those funds where they have a sweet deal. But vanguard is not one of the managers that plays that game, so, the fund-level costs wouldn't be better at HL than AJB. Only the platform fees, and the service quality you get for those fees, are the differentiator here.0
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