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  • FIRST POST
    • greendoor665
    • By greendoor665 12th Jan 18, 10:39 AM
    • 67Posts
    • 129Thanks
    greendoor665
    Anyone else frustrated by poor choice of Lifetime ISAs?
    • #1
    • 12th Jan 18, 10:39 AM
    Anyone else frustrated by poor choice of Lifetime ISAs? 12th Jan 18 at 10:39 AM
    It's 9 months since it was launched and there are still only a small handful of options. 1 cash, and a few stocks and shares. For stocks and shares, if you discount ones with robo-advice only or high management fees, you're left with only 2: Hargreaves Lansdown and AJ Bell Youinvest.

    I've had a H2B ISA for a while and I'm planning to transfer it across soon. The main reason being the maximum property value is 250k, which no longer buys you much at all in the south east, especially if I buy with a partner. Whereas the LISA is 450k across the whole UK, not just London. Also I missed the boat on the 4% deals which were initially available and am only earning 2% which doesn't even beat inflation.

    I've been waiting for more providers to launch accounts but it seems nothing is happening, so I've now given up and applied to AJ Bell. To be fair, their platform fee at 0.25% is pretty competitive, but I was hoping to have a few more options to choose from by now.
Page 1
    • Drp8713
    • By Drp8713 12th Jan 18, 10:53 AM
    • 802 Posts
    • 686 Thanks
    Drp8713
    • #2
    • 12th Jan 18, 10:53 AM
    • #2
    • 12th Jan 18, 10:53 AM
    Im happy with HL and opened the LISA account and transferred the HTB straight away.

    Ive invested quite defensively in the LISA in RIT Capital, Personal Assets, TR Property and a chunk in cash.

    Even so, my gains are currently 5.6% so around 400, more than offsets the 30 fee.

    I also need to think people need to quantify fees. HL is expensive, is it? I hold ITs, so when I get over 10k invested in April when the bonus arrives I will be capped at 45 a year. Which is 0.45%, but in a few years when I have 20K invested that same 45 will be 0.225%.

    I spent 34 on a Papa Johns yesterday for a family of 3. So is 45 to look after my LISA alot?
    Last edited by Drp8713; 12-01-2018 at 11:13 AM.
    • greendoor665
    • By greendoor665 12th Jan 18, 11:44 AM
    • 67 Posts
    • 129 Thanks
    greendoor665
    • #3
    • 12th Jan 18, 11:44 AM
    • #3
    • 12th Jan 18, 11:44 AM
    You make a good point about HL's capped charges. AJ Bell's charges are not capped on funds so indeed they could be more than HL after a couple of years contributions.
    • ColdIron
    • By ColdIron 12th Jan 18, 11:55 AM
    • 4,266 Posts
    • 5,397 Thanks
    ColdIron
    • #4
    • 12th Jan 18, 11:55 AM
    • #4
    • 12th Jan 18, 11:55 AM
    You make a good point about HL's capped charges. AJ Bell's charges are not capped on funds so indeed they could be more than HL after a couple of years contributions.
    Originally posted by greendoor665
    HL's charges are not capped on funds unless you count the tiered reduction at 250,000. They are competitive for ITs with a cap of 45
    • msallen
    • By msallen 12th Jan 18, 1:54 PM
    • 840 Posts
    • 922 Thanks
    msallen
    • #5
    • 12th Jan 18, 1:54 PM
    • #5
    • 12th Jan 18, 1:54 PM
    No. I'm frustrated by the fact that I'm not allowed to open one.
    • jamei305
    • By jamei305 12th Jan 18, 2:21 PM
    • 339 Posts
    • 394 Thanks
    jamei305
    • #6
    • 12th Jan 18, 2:21 PM
    • #6
    • 12th Jan 18, 2:21 PM
    I haven't opened one for this reason. What if HL discontinue it in five years for example? There might only be one provider to choose from and they could whack up the fees.

    I need to be confident there will be competition in the market until I'm 60.
    • CavendishWobble
    • By CavendishWobble 12th Jan 18, 2:31 PM
    • 36 Posts
    • 74 Thanks
    CavendishWobble
    • #7
    • 12th Jan 18, 2:31 PM
    • #7
    • 12th Jan 18, 2:31 PM
    Its a complicated & risky product, you can only withdraw if you want to buy a house around a specific value or for your pension in x years time.

    Consider this with historic products such as PPI and more recently packaged bank accounts where billions have been paid to customers who were mis-sold, i cant say i blame financial services from being cautious or deciding not to get involved.
    Save 12k in 2018 = 8,747/15,000 (58.31%) #36
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    • adonis10
    • By adonis10 12th Jan 18, 2:40 PM
    • 1,570 Posts
    • 204 Thanks
    adonis10
    • #8
    • 12th Jan 18, 2:40 PM
    • #8
    • 12th Jan 18, 2:40 PM
    I currently have a S&S ISA with HL but presumably I can open a LISA alongside it, with the same provider? At what point does the Government's 25% bonus get added?
    • greendoor665
    • By greendoor665 12th Jan 18, 3:07 PM
    • 67 Posts
    • 129 Thanks
    greendoor665
    • #9
    • 12th Jan 18, 3:07 PM
    • #9
    • 12th Jan 18, 3:07 PM
    For 17/18, the government bonus will be added for the entire year some time after 6th April 2018. After this the bonus will be added monthly on any new contributions for the month. When exactly you receive the cash is not quite clear though, I imagine there will be a lag of a few weeks at least.
    • kidmugsy
    • By kidmugsy 12th Jan 18, 3:16 PM
    • 10,885 Posts
    • 7,440 Thanks
    kidmugsy
    Consider this with historic products such as PPI and more recently packaged bank accounts where billions have been paid to customers who were mis-sold, i cant say i blame financial services from being cautious or deciding not to get involved.
    Originally posted by CavendishWobble
    Indeed. Wallies and crooks extort money from the banks and then everyone wonders why the banks become ultra-cautious about new retail products, or why IFAs are reluctant to take on DB pension transfer business. It's almost as if incentives matter, isn't it?
    Free the dunston one next time too.
    • AirlieBird
    • By AirlieBird 12th Jan 18, 3:16 PM
    • 1,038 Posts
    • 847 Thanks
    AirlieBird
    For 17/18, the government bonus will be added for the entire year some time after 6th April 2018. After this the bonus will be added monthly on any new contributions for the month. When exactly you receive the cash is not quite clear though, I imagine there will be a lag of a few weeks at least.
    Originally posted by greendoor665
    You receive the bonus within 28 days of the end of the reporting month (the reporting month being the 6th to the 5th of the following month.)
    • Ed-1
    • By Ed-1 12th Jan 18, 3:54 PM
    • 2,230 Posts
    • 1,187 Thanks
    Ed-1
    I haven't opened one for this reason. What if HL discontinue it in five years for example? There might only be one provider to choose from and they could whack up the fees.

    I need to be confident there will be competition in the market until I'm 60.
    Originally posted by jamei305
    Noone can know what the future will bring. The Government could stop paying out bonuses.
    • ValiantSon
    • By ValiantSon 12th Jan 18, 6:43 PM
    • 2,025 Posts
    • 1,880 Thanks
    ValiantSon
    It's 9 months since it was launched and there are still only a small handful of options. 1 cash, and a few stocks and shares. For stocks and shares, if you discount ones with robo-advice only or high management fees, you're left with only 2: Hargreaves Lansdown and AJ Bell Youinvest.

    I've had a H2B ISA for a while and I'm planning to transfer it across soon. The main reason being the maximum property value is 250k, which no longer buys you much at all in the south east, especially if I buy with a partner. Whereas the LISA is 450k across the whole UK, not just London. Also I missed the boat on the 4% deals which were initially available and am only earning 2% which doesn't even beat inflation.

    I've been waiting for more providers to launch accounts but it seems nothing is happening, so I've now given up and applied to AJ Bell. To be fair, their platform fee at 0.25% is pretty competitive, but I was hoping to have a few more options to choose from by now.
    Originally posted by greendoor665
    What are you intending to invest in and how regularly will you do so? AJ Bell may be the best platform to use given their 0.25% platform fee, but they also charge for trading at 1.50 per trade for funds and 9.95 per trade for ITs and ETFs. This could soon add up to quite a lot if you were, for example, investing each month. Hargreaves Lansdown, on the other hand, might charge 0.45% platform fee, but don't charge anything to trade funds and, as noted above, cap the fee at 45 p.a. for ITs and ETFs. Potentially, Hargreaves Lansdown, with their higher platform fee, could actually work out cheaper.

    I don't intend to be patronising, but have you done the sums?
    Last edited by ValiantSon; 12-01-2018 at 6:45 PM.
    • cjv
    • By cjv 12th Jan 18, 6:54 PM
    • 222 Posts
    • 109 Thanks
    cjv
    Yeah the lack of options is annoying. I do wish my money could of gone into a Cash LISA at a decent rate, but with Skipton the only one on offer I settled with Nutmeg.

    I am happy with it so far, but if a decent Cash LISA comes on the market before the next tax year I will open one of those to hold cash alongside my S&S LISA.
    • ValiantSon
    • By ValiantSon 12th Jan 18, 7:06 PM
    • 2,025 Posts
    • 1,880 Thanks
    ValiantSon
    Yeah the lack of options is annoying. I do wish my money could of gone into a Cash LISA at a decent rate, but with Skipton the only one on offer I settled with Nutmeg.

    I am happy with it so far, but if a decent Cash LISA comes on the market before the next tax year I will open one of those to hold cash alongside my S&S LISA.
    Originally posted by cjv
    You would only be able to pay into one LISA in any given tax year, so if you open a cash LISA in the new tax year then you will not be able to make any further payments into your S&S LISA until the tax year 2018/19. Are you really sure it is worth doing this?

    It is very unlikely that a new cash ISA will appear with a really good interest rate. The number of LISAs being offered is pitifully low and providers don't seem any more inclined to rush to offer them now either. I don't see why they would offer any more interest than for a regular ISA (and indeed, so far, they haven't - indeed Skipton's LISA rate is actually 0.25% lower than their 1 year fixed ISA rate). The incentive to the provider to offer more interest is not there because they will end up having to pay greater interest (which is compounding) due to the government bonus.

    If LISAs are going to work, then I think the S&S model is the only one that will survive.
    • TheShape
    • By TheShape 12th Jan 18, 7:17 PM
    • 1,293 Posts
    • 1,103 Thanks
    TheShape
    I prefer the 0.25% platform fee of AJ Bell but dislike the fact that you need to leave cash un-invested inside the LISA to pay fees otherwise a disinvestment charge of 29.95 per holding applies if they need to sell holdings to pay fees. You'll also likely need to sell some holdings each year after 50 as you won't be making new contributions. You'd probably want to err on the side of caution and sell more of your holdings than you might need as strong performance would increase the fees and increase the chance of paying a disinvestment fee..

    HL allows you to pay fees from a fund and share account so investing the whole amount of your LISA subscription leaving you to top up the fund and share account to cover fees whenever needed.
    • Alexland
    • By Alexland 12th Jan 18, 7:35 PM
    • 2,591 Posts
    • 1,971 Thanks
    Alexland
    Yes I am with Nutmeg and have concluded that once it's big enough in a few years I will switch to HL for the capped fees and invest in SWDA which is an accumulation ETF with 100% global equities so very volatile but I will counterbalance that with a slightly higher bond/gilt ratio in my pensions. I would rather get the long term higher growth in a wrapper that will be untaxed on withdrawal.

    AJ Bell would be a bit cheaper but I am avoiding as they administer my Halifax SD SIPP and I like to spread my eggs.

    I will probably contribute the 4k, wait for the 1k then invest both at once to save a trade fee. Ok the 4k might, on average, have otherwise grown by more than the trade fee by then but I really dislike paying fees.

    Being able to pay the 45 platform fee from the fund and shares account will be a bonus when I am 50 and not able to contribute any more cash into the LISA. I don't want to have to pay a trade cost each year to sell units to pay the fees.

    With contributions, bonuses and growth once the LISA gets to 45k the platform 0.1% and ETF fund 0.2% fees should total 0.3% which I consider attractive.

    Just hoping the government doesn't change the goalposts in the meantime.

    Alex
    Last edited by Alexland; 12-01-2018 at 8:01 PM.
    • cjv
    • By cjv 12th Jan 18, 8:10 PM
    • 222 Posts
    • 109 Thanks
    cjv
    You would only be able to pay into one LISA in any given tax year, so if you open a cash LISA in the new tax year then you will not be able to make any further payments into your S&S LISA until the tax year 2018/19. Are you really sure it is worth doing this?

    It is very unlikely that a new cash ISA will appear with a really good interest rate. The number of LISAs being offered is pitifully low and providers don't seem any more inclined to rush to offer them now either. I don't see why they would offer any more interest than for a regular ISA (and indeed, so far, they haven't - indeed Skipton's LISA rate is actually 0.25% lower than their 1 year fixed ISA rate). The incentive to the provider to offer more interest is not there because they will end up having to pay greater interest (which is compounding) due to the government bonus.

    If LISAs are going to work, then I think the S&S model is the only one that will survive.
    Originally posted by ValiantSon
    Yes I was hoping to open a Cash LISA and only pay into that next year, while keeping my Nutmeg account(not transfer it).

    I would only consider it, if a decent rate Cash LISA was on offer for say 3% or more. Highly unlikely so I will probably be sticking with Nutmeg.
    • lopsyfa
    • By lopsyfa 12th Jan 18, 9:19 PM
    • 62 Posts
    • 33 Thanks
    lopsyfa
    AJ Bell also cap their fees for shares, ITs and ETF to 30 (https://www.youinvest.co.uk/lifetime-isa/charges-and-rates) and you can pay 1.5 to trades shares,etf and ITs using their regular investment option.

    You could buy some dividend paying funds to cover the charges once you stop contributing to the account, so no need to sell investment to pay fees.
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