Am I making the most of my savings?

MDE wrote: »

Thanks. Would it be worth me looking at an S&S Lisa? Nutmeg looks to be a good offering. I understand the penalties info withdrew before I was 60 and would only look to put in money I knew I could be without.

It could be. The 25% government bonus is certainly enticing as long as you definitely aren't going to want access to the money until you are 60 (or on buying your first home). I'm not as struck on Nutmeg, however. Their fees seem a bit expensive. "Average costs" are 0.72% for their Fixed Allocation Portfolio. This compares poorly with other platforms where you could expect to pay around 0.5% (or less) investing in multi asset trackers in a regular ISA. The Fully Managed Portfolio is more expensive at an "average cost" of 1.04%. Actively managed funds are more expensive than passive funds, but this still seems quite high.

Not all platforms offer LISAs, however, so you have less choice than with an ordinary ISA, but of course without the LISA you don't get the free 25% bonus from the government. You might want to have a look at the following, however, who do offer LISAs (none of these are a recommendation, I simply offer them as areas to investigate for a comparison on costs and potential returns):

The Share Centre - Charges no operating, opening, or dealing fees. You pay the OCF (ongoing management fee) for the funds you are invested in. They only offer three funds and the one that is most suitable to you is a personal matter related to your attitude towards risk, but for a long term investment I would have thought the Adventurous Accumulation Fund was most likely. This does cost 1.82% per annum, so actually more than Nutmeg.

AJ Bell Youinvest -Charges opening fees. You pay the OCF (ongoing management fee) for the funds you are invested in plus 0.25% platform fee, plus £1.50 per purchase (or sale) of funds (if I were you it is multi asset trackers that I would be considering as they can give you a widely diversified portfolio at low cost). So, if you were to buy into a fund like Vanguard LifeStrategy (20, 40. 60, 80, or 100) - these are well-diversified and low cost multi asset passive trackers - and invest a regular amount each month from your income, then an annual cost would be 0.47% (platform fee 0.25% + fund OCF 0.22%) plus £18. This should work out cheaper than The Share Centre, but is a bit less clear compared to Nutmeg. An additional benefit, in my view, is that you would also have much more flexibility in investments than either of those two offer.

Hargreaves Lansdown - Charges no opening fees or dealing fees. You pay the OCF (ongoing management fee) for the funds you are invested in plus 0.45% platform fee. So with the above scenario of a Vanguard LifeStrategy fund you would pay 0.67% per annum and no additional charges (platform fee 0.45% + fund OCF 0.22%). This seems to me to be the best option, offering the cheapest charges and the most flexibility of investments. It also seems that they are the only platform who offer the same pricing structure as their normal ISA.

Bear in mind that the range of available platforms and funds is greater with a regular ISA, so you may want to explore that as an additional option. You can only invest a maximum of £4000 per annum in a LISA, but you can also have an ISA in the same year, in which you can invest up to an additional £16,000 (you have a total allowance of £20,000 in ISAs).

I hope this is of some help.

MDE wrote: »

Hi

I have had an FD account before so wouldn't get the £125. HSBC look to have a decent offer at the moment? £150 plus additional £50 after 12 months. Any drawbacks?

Yeah, in that case then you won't get the switching bonus to First Direct and HSBC will probably be a better bet as it would return £280.64 after the first twelve months. I didn't suggest it before as you were looking for accounts allowing the highest pay in. Of course, there is nothing to stop you from switching to HSBC for their offering and opening a new First Direct account to benefit from the regular saver (and as Cold Iron has suggested, you can actually avoid the minimum pay in for First Direct through having £1 in a savings account with them). If you did this then you would make £377.41 (if you have £550 p/m available to put in regular savers). I should have thought of this to begin with!

I can't see any major downsides with HSBC. Some people report that they can be a bit fussy to get approval for an account with, but there is no real harm in trying. If they don't accept you then you haven't really lost anything.